Sears (SHLD) has become the latest brick-and-mortar retailer to turn to Amazon.com (AMZN) to get a desperately needed sales lift.
The struggling department store on Thursday said it would begin selling its popular line of Kenmore appliances on Amazon, a retailer that has siphoned away a huge chunk of business from the likes of Sears over the years. The company also announced the integration of the full line of Kenmore Smart appliances with Amazon Alexa.
Despite the potential risks of “sleeping with the enemy,” it’s easy to see the appeal of the Amazon deal for Sears: the partnership marks “the broadest distribution of Kenmore,” Sears said, and comes at a time of abysmal financial results for Sears.
Sears Holdings shares rose 17% on the news.
“The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Sears Holdings CEO Eddie Lampert said in a statement. Sears Holdings also operates the Kmart chain.) Sears could use the business: Sears namesake department stores saw comparable sales fall 12.4% in the first quarter, despite closing dozens of weak stores in the last year. (The company recently announced the closing of another 43 stores across both chains.)
But perhaps more importantly, the potential boon comes as Sears Holdings continues to look at options for wringing out money from Kenmore, one of its prized assets, in an initiative announced last year, moves that could include selling off Kenmore or licensing it out, the value of which would obviously be enhanced by greater sales. (Earlier this year, Sears sold its Craftsman line of tools in a $900 million deal, part of a number of efforts to generate $2 billion in cash and stay solvent amid the crashing sales.)
The move also comes as a number of retailers stake a claim in the growing “smart home” industry which centers on tech that does things like let people turn off the air conditioning remotely: Best Buy (BBY) recently announced it was giving more floor space at 700 of its stores to better showcase Amazon’s Echo as well as Google Home. And mall rival J.C. Penney (JCP) has moved aggressively into the appliance space Sears dominated not so long ago and is dipping its own toes in the smart home waters. Sears itself recently launched a smaller-format store dedicated just to appliances.
While it may seem hazardous for a retailer to sell on Amazon, many companies seem to be accepting the reality that the online retailer is an incontrovertible way to reach customers at a time it is behind about 50% of the growing in U.S. E-commerce. Nike (NKE) recently said it would start selling some items directly on the site after years of hesitations. Last year, Gap Inc (GPS) said it was an idea worth considering. As for Sears, given how many shoppers it has lost in the last few years, it doesn’t really have much choice but to make that bet.
