Direct marketing industry observers saw that possible direct marketing good could come out of Kmart’s $11 billion acquisition of Sears Roebuck & Co. but that it’s really too early to tell now.
On Wednesday, Kmart Holding Corp. said it would acquire Sears, Roebuck and Co., in a surprise $11 billion deal that will create the nation’s third largest retailer.
“It’s way too early to speculate on what they will do with the direct marketing,” said Harry Chevan, principal, in direct marketing investment bank Gruppo, Levey.
He expressed some skepticism on how successful any new venture might be, judging from recent efforts by both companies.
“Kmart’s Bluelight.com was not terribly successful,” he said.
At the same time, he said Sears’ efforts with cataloger Lands’ End “are not overwhelming.”
“I see this as an opportunity for Kmart to learn something about direct marketing from Sears,” said catalog consultant Katie Muldoon, noting, however, that this is a merger of two weak brands.
“Maybe they can make something positive come out it, I don’t know,” she said.
“If they’re smart, they will keep Lands’ End as a separate stand-alone business” catering to a more upscale clientele, said Don Libey, managing director of investment bank Libey-Concordia, noting that the Kmart acquisition is part of a strategy on the part of both companies’ to stay competitive with discounting giants Wal-mart and Target.
According to Sears, the two firms signed a definitive merger agreement that will combine Sears and Kmart into a major new retail company named Sears Holdings Corp., headquartered in Hoffman Estates, IL and will have nearly 3,500 stores.
Under the terms of the agreement, Edward S. Lampert, chairman of Kmart, will be the chairman of Sears Holdings. Alan J. Lacy, current chairman/CEO of Sears, and Aylwin B. Lewis, current president/CEO of Kmart, will join him in an office of the chairman.
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