APPLIANCES Sears says it will add products, cut prices

Lowe's and Home Depot are stealing appliance buyers from Sears.
CHICAGO TRIBUNE
CHICAGO -- In an effort to stop customers heading to rivals to buy appliances, Sears, Roebuck & amp; Co. said it will add more products and lower prices.
The strategy to protect the crown jewel of Sears' retail operation -- the largest business at its full-line stores -- comes as the company's traditional hold on appliance sales has started to slip.
Longtime stalwart
For decades, Sears has been a stalwart in the home appliance industry, selling close to 9 million washers, dryers and refrigerators each year. The company is the only retailer that carries all six top national brands.
But Sears' competitors -- notably home-center giants Lowe's Companies Inc. and Home Depot Inc. -- have started taking significant market share for the first time in recent memory. Lowe's and Home Depot, which respectively rank second and third in appliance sales, stole roughly 2 percentage points of Sears' market share in appliances last year.
"Sears is encountering much more competition and it can no longer be as haughty about it," said Walter Loeb, a retail consultant in New York. "While consumers still trust the brand, it is no longer the same as it was three years ago, and Sears needs to recapture the momentum they are losing."
The Sears executive in charge of appliances agrees.
"It was surprising to some degree," said Tina Settecase, vice president and general manager of appliances for Sears, of the market share loss. "But we did it to ourselves.
"We had a nice run for about 10 years where we picked up about 10 points on share. We were on a roll," Settecase said. "Our high point was 41 percent market share."
Last year, that share slipped to 39 percent while Lowe's share increased to 13.7 percent and Home Depot to 6.4 percent.
Home Depot's plans
By the end of the year, Home Depot plans to introduce appliances to all 1,500 of its stores and beef up the department from anywhere between 1,200 square feet to 2,500 square feet. The Atlanta-based home improvement warehouse, which started selling appliances in 1999, wants a stronger emphasis on that category and hopes to replicate the success at rival Lowe's.
Sears executives point to a number of reasons for its declining share. The company reconfigured its store layout, causing disruptions to its shopping environment. It realized that consumers perceive that Sears competitors have better prices and selection on entry-level appliances.
Beefing up competition
To combat that, Sears is lowering prices on key items to match its competitors, will make more appliances available for immediate delivery and has adopted an aggressive advertising campaign to remind consumers of its price-matching policy that gives buyers an additional 10 percent rebate.
"We are making the changes to make sure we stay relevant to customers," Settecase said.
In the past, six out of 10 shoppers looking to buy a home appliance stopped at Sears, according to the company. One reason is the powerful Kenmore brand.
These days, Kenmore has the largest market share of any other national brands, beating out names like Whirlpool, Maytag and GE.
While executives won't disclose how much of its sales come from appliances -- it was estimated at $7.5 billion in 2002 -- the company's new plan comes amid poor overall sales for the retailer. Sears has reported 20 straight months of declining sales at stores opened for at least one year.