How are you leveraging
the strengths of Orchard Supply Hardware and Sears Hardware?
This partnership has allowed
Orchard Supply Hardware to benefit from our private brands such as
Craftsman, Kenmore and DieHard. Additionally, Orchard benefits from Sears
Hardware's great expertise in the big-ticket tool and lawn and garden
business. Sears Hardware has benefited from Orchard's legendary customer
service. Orchard has demonstrated it knows how to service customers
looking for a quick solution to their home maintenance problems better
than anyone in the hardware store industry. They've been doing it for more
than half a century. As a result, their customers are extraordinarily
How are you addressing competition from big-box retailers entering
Big-box retailers have an impact when they enter a
market, but remember, our hardware stores are targeting the customer who
is on a different shopping mission. Our research shows that customers go
to the big boxes for big projects, but when they have small maintenance
projects to do at home - repair a leaky faucet, repaint a weathered door
or replace a broken screen - they prefer a local hardware store. We have a
broad assortment, are competitively priced and have the Craftsman brand,
which is not available from our competitors. We also have a higher level
of service in our stores. So while we don't ignore the big boxes, we're
serving a different shopping occasion.
How are Sears dealer stores doing?
The dealer stores have
performed well from the time we launched the format in 1993, and they've
been getting hotter ever since. We describe this format as the superstore
for appliances, electronics, and lawn and garden equipment in smaller
communities - those with a population of fewer than 20,000. We have more
than 650 units open currently. Before long, we'll have 800 and ultimately
1,000 stores. The key issue is finding sites and qualified owners in those
communities. Almost all of the stores are run by families that are very
entrepreneurial and committed.
Given the early success of The Great Indoors, what are your
Our second store will open in Phoenix later this
year, and we're planning for two more sites in the third quarter of 2000.
That will give us enough locations, in markets with different demographics
and weather patterns, to give us a sense of the concept's breadth of
Automotive had a tough year in 1998. What are you doing to improve
the business in 1999?
For the last two years, we have been repositioning Sears Automotive Group
to grow our industry-leading position. We created and launched the NTB
brand, opened more than 100 new stores and developed state-of-the-art
systems and logistics dedicated to the tire and battery business. These
changes deflected our focus on sales generation. Now, we are ready to
focus 100 percent of our attention on our customer, offering a compelling
assortment, highly trained personnel, strong leadership and flawless
execution. We are confident the pieces are now in place for us to
strengthen our position as the leading tire and battery retailer in our
How important are Sears Auto Centers to Sears automotive
They are the backbone of our automotive business today.
Through Sears Auto Centers we serve the loyal Sears customer, and also
provide multiple opportunities to capture value for the company by
maximizing our strong brands, especially DieHard and Sears Card. We will
attract new customers through broader marketing while we continue to
target the Sears customer who may not be using the Sears Auto Center
What differentiates NTB from Sears Auto Centers?
Sears Auto Centers are already in the best malls in the country, NTB
clearly offers the most growth potential. NTB's competitors are regionally
or locally based, and therefore do not always have the assortments,
pricing and services the customer desires. We believe with NTB we can
leverage our reputation for expertise and strong brand and vendor
relationships, and effectively compete against local and regional players.
Moreover, NTB attracts customers who might not think of Sears first for
their automotive needs.