Having spent 12 years of my career at Sears, I find it particularly sad to see the once-storied retailer sink slowly into oblivion in what I frequently refer to as the world’s slowest liquidation sale. Equally troubling is the continued efforts by Eddie Lampert, chairman and CEO of Sears Holdings SHLD +8.72%, to suggest a transformation is still possible. As I have written before — and there is no nice way to say this — you’d have to be either gullible or stupid to believe that anything resembling a turnaround is in the cards.
So from a “Can Sears be saved?” point of view, despite the short-term pop in the stock price, there is nothing remotely hopeful in last week’s announcement that will start selling Sears’ tires. As with last year’s similar Kenmore deal, Sears may slightly delay the inevitable, but Amazon is likely the real winner.
Having held the title of vice president for corporate strategy at Sears at one point, I know that its private brands (and the services that surround them) once represented the core of Sears’ consumer and shareholder value. Set the wayback machine to 15 years or so ago, and brands like Kenmore, Craftsman and DieHard collectively were worth many multiples of what Sears Holdings in its entirety is worth today. Starting in the mid-1990s, as Sears lost market share to category killers such as Home Depot, Lowe’s and Best Buy, the value of these proprietary brands began a pronounced and prolonged descent.
Since Lampert has owned and run Sears, it has only gotten worse, as nothing of any consequence has been done to reverse the retailer’s overall fortunes. Simply put, the value of these brands continues to decline as Sears shrinks.
At this point, almost anything that expands distribution and generates cash is probably worth doing. Opportunities to have struck a grander bargain with those omnichannel brands with the best distribution power, market share and growth potential — which my team aggressively explored in 2003 — have long since passed. These retailers frankly don’t need anything material from Sears anymore.
For Amazon, however, this makes good sense. First, Amazon does not have a significant position in the tire category. Second, as with the Kenmore deal, Amazon gets access to a well-known brand and related services at what is likely to be at or near fire-sale prices. Third, we already know that Amazon is starting to push an aggressive private-brand strategy, and this gives it a decent jump-start in a sizable segment. And while selling Sears’ house brands is not exclusive right now, for all intents and purposes, it may be in the not too distant future as Sears continues to close stores and struggles with its own e-commerce offerings. Lastly, given its scale and scope, Amazon can well afford to do some experimentation.
Importantly, this particular deal is different from the Kenmore partnership in that it drives sorely needed traffic to more than 400 Sears’ Auto Centers. However, the likelihood that this traffic is material, particularly as Sears continues to shrink its fleet, is relatively small. Still, clearly every little bit helps, particularly when Sears is faced with so few viable alternatives.
From an Amazon perspective, even if Sears Auto Centers shrink considerably — or go away entirely — it has started to build category knowledge and insight to inform future bricks-and-clicks partnerships and/or the opening of its own physical stores.
As Sears’ market position continues to deteriorate, moves such as these smack more of desperation than the renaissance that Lampert et al. would like us to believe. Don’t be fooled. While it turns out there are still a few worthwhile assets within the Sears portfolio, the cupboard is growing increasingly bare.
A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.