Sears Kmart Merger

Due to slow sales and less traffic at both Sears and Kmart, the two have decided to merge creating one entity named Sears Holdings. Kmart has agreed to buy Sears for $11 Billion. This puts Sears Holdings at the third largest retailer behind Wal-Mart and Home Depot. Although Wal-Mart is a direct competitor with Kmart, Sears Holdings goal is not to compete with Wal-Mart directly, but find areas that have been overlooked by other retailers, and take advantage of the expanded line of products the new company has to offer. Sears has had higher sales than Kmart, so hundreds of Kmart's will be transformed into Sears stores. As of now, most of Sears 870 stores are only found in malls. The new strategy would be to open Sears stores in current Kmart locations, to offer consumers with a different variety of products than what's currently available from large retailers like Kmart and Wal-Mart. Sears is known for selling items such as their exclusive line of craftsman tools and Kenmore appliances. In the future these Sears exclusives will be found in Kmart stores, and Kmart exclusives such as Martha Stewarts line of housewares will be found in Sears.

This merger will bring a wide array of products to a larger group of consumers. Currently consumers looking to buy home appliances like stoves or refrigerators have to go to a mall with a Sears store or a specialty store like Best Buy or Circuit City. Not all consumers live near a mall, so buying from Sears may not be an option. Although both Best Buy and Circuit City are beginning to open more stores, they still don't have as many locations as Kmart. Changing some Kmart stores to Sears stores and bringing home appliances to Kmart, would offer customers shopping for those products with more locations to choose from. As a customer, this merger brings a wider array of products to more locations, making it easier to get everything you might need in one place. The merger of these two corporations would create more jobs.

Sears is looking to create more of a presence outside of shopping malls, creating more Sears locations in single store setups in a similar way to Kmart. Current CEO of Sears Alan J. Lacy, will become the Vice Chairman of the new company. His strategy of opening more Sears stores outside of the usual shopping mall would require many of the current Sears locations to be closed. In the long run jobs at new Sears locations would have to be filled, but the creation of those new jobs would have to be postponed until the new Sears stores are opened. In the meantime, the news of many Sears closings would put many workers out of a job.

Currently Kmart has been constantly losing to competitors such as Wal-Mart and Target. Target