Sears, Kmart see strong bedding business ahead
By Carole Sloan -- Furniture Today, April 18, 2005
Hoffman Estates, III. — Bedding is set to play a strong and growing role in the various store formats of the soon-to-be-merged Sears and Kmart, including in Sears Essentials, a new off-mall chain ready to launch this spring in converted Kmart stores.
Alan Lacy, vice chairman and CEO of parent company Sears Holding Corp., said that "mattresses are doing very well at Sears, and we'll continue to expand points of distribution. They'll be part of Sears Essentials."
Sears Holdings Chairman Edward Lampert noted cross-merchandising opportunities, particularly with Martha Stewart Everyday products, now a Kmart exclusive in the United States and a Sears Canada exclusive in that country.
"We have an opportunity going forward," Lampert said. "But we won't put the identical Martha Stewart merchandise that is in Kmart in Sears. Sears Canada also has different Martha Stewart merchandise. We will be designing product in the very near future."
Martha Stewart Living Omnimedia recently announced plans for a ready-to-assemble furniture program under the Martha Stewart Everyday label at Kmart. Sears dropped RTA furniture several years ago.
Lacy, former chairman and CEO of Sears, Roebuck and Co., and Lampert spoke here after back-to-back Sears and Kmart shareholder meetings approved the merger. Government regulatory approval is pending.
Bedding now is featured in over 460 mall-based Sears units, and soon will be added to all 18 The Great Indoors stores, following its introduction in the metro Chicago unit. Bedding also is in Sears Grand stores and will be in about 90% of the new Sears Essentials stores.
Sears ranked No. 13 on Furniture/Today's latest list of top U.S. bedding retailers, with estimated 2003 sales of $105 million, a 16.7% increase over 2002.
In 2003, Sears launched its Sears Grand off-mall format, with stores in the 175,000- to 180,000-square-foot range. There now are four Sears Grand units, with four more expected to open this year. "I'm delighted to say the (Sears Grand) stores are doing fantastic," Lacy told shareholders.
Sears Essentials will launch this spring with 25 stores, all converted from Kmart units that Sears acquired before the merger. At the Sears shareholder meeting, Lacy said there could be 100 Sears Essentials stores this year, and 400 conversions of Kmart units over the next several years. "We're doing it cheaper and faster" by renovating existing stores ratehr than starting from scratch, he said.
Both off-mall formats feature merchandise for home and family, including paper products, pet supplies, and key Sears brands. Sears Grand also sells some food.
Lacy, who also is chairman of Sears Canada, which is 54% controlled by Sears Holding, pointed out the Canadian business operates differently from the United States, with a catalog and a strong, broad home furnishings presence, including freestanding home stores. It's the nation's No. 2 furniture and bedding retailer after The Brick Group.
As for Sears Canada's proposed acquisition of Cantrex, Canada's No. 2 furniture buying and marketing group, Lacy said "it is very relevant" to the business in Canada.
Discussing The Great Indoors, the upper-end home decorating/ home renovation chain, Lacy said the struggling chain "is a very good store concept — customers like it — but it has been difficult to get financial results." He said recent changes had resulted in more consistent performance and a positive cash flow, but added there are no plans for new The Great Indoors units.
The combined Sears and Kmart would be the No. 3 U.S. retailer after Wal-Mart and Home Depot.
