11/17/2004

Wal-Mart's Potential New Competition

Kmart just bought Sears for 11 billion dollars. Kmart and Sears are merging to one company. Now consumers will be able purchase Martha Stewarts and Joe Boxers product line in the mall. On the other hand, consumers will be able to purchase Craftmens tools in Kmarts. Because of this merger, this company just created a larger consumer base, will have greater buying power with distributors and wholesalers. Both Kmart and Sears stock moved up. Sears went from $9.43 to $54.63 per share (NYSE) and Kmart jumper from $16.58 to $117.80 (NASDAQ) this morning.

Because of this merger, will Kmart and Sears give the Wal-Mart a run for its money and be able to compete more efficiently or is this more to save both companies from Wal-Mart's empire?

Something else to think about, Craftsmen tools have built a reputable name for itself for sometime and now Kmart will be able to sell these tools in their store. Will Craftsmen tools reputation stay the same or will Kmart give it a bad, cheaper name?

7 comments:

Taber Wolrab said...

I don't think this merger will give Wal-Mart a run for their money. I don't think the newly merged companies will be able to compete with Wal-Mart's prices. They are probably trying to save themselves from further plumeting. You raise a good point about Craftsmen tools. However, I think the faithful Craftsmen users will continue using them. Others who have not used or heard of Craftsmen may not use them though - if they are cheap enough to sell at Kmart.

Bryce Larkin said...

If this new merger wants to give Wal-Mart a run for its money they will have to make some extreme changes to their stores. They will have to either fight Wal-Mart on their prices which will be very hard or try to differentiate themselves. Wal-Mart is probably not too worried yet but it is a potential threat.

Bryce Larkin said...

Also, the name and reputation that Craftsman tools have is extremely strong. I don't believe that Kmart could reduce this name; it can make it stronger because it will be available at more stores. I do see a problem occurring if; Kmart’s brand of Craftsman tools has less quality than Sears' Craftsman. They need to keep them the same quality to keep their reputation strong.

Maudi said...

I agree with the writter that Sears has done a fine job over the years of building up their Craftsman tool reputation. This new merger is going to be a bad thing for Sears because K-Mart's strategy has always been low cost leadership. Craftsman tools are not the low cost tools that K-Mart should be selling If K-Mart decides to sell the Craftsman line they will have to lower the price thus destroying the reputation of quality that Sears worked so hard to build. I am thoroughly disscusted with the idea of this accuisition.

Kova said...

Wal-mart has no reason to be scared. Neither K-mart nor Sears are sources of real competition alone and I don't foresee them being a threat together. I hope that Sears doesn't lower its prices in an attempt for the new company to go head-to-head with Wal-mart.

Also, I think that as long as Craftsmen tools maintains it's price and it's market positioning it will be fine.

Dr. Tufte said...

This is all good, but I commented on two later posts about K-Mart and Sears. Go check them out!

Tim said...

WalMart is a worthless Store. They never have what you need, only what they are selling. Their Goods have the Quality of Harbor Freight, which is a joke.

There are some goods you can get at walmart....But The Sears/KMart merger is a force to be reckoned with. Home Depot better watch out too.

Only way WalMart can compete is buying Home Depot.