Key Success Factors of the Sears and Kmart Merger

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The merger of Kmart and Sears has created a better retail experience.
The merger of Kmart and Sears has created a better retail experience. (Image: Matthias Tunger/Photodisc/Getty Images)

The merger between Kmart and Sears in 2004 coupled two of the oldest retail stores in the nation. The $11 billion merger was beneficial for both retailers. The complementary strengths in products that the stores offer blended to create a better retail experience. In addition, Kmart and Sears were both able to save millions of dollars by streamlining their purchases and offering products to the same audience.

Complementary products

Both Sears and Kmart struggled to keep up with growing customer trends. Sears had competitive appliances and was known for Kenmore and Craftsman items. Kmart appealed to their customers with appealing clothing lines and decorative home accessories. Sears had a reputation for excellent service, while Kmart had a reputation for good prices. The merger between the two complements the strengths and weaknesses of the two companies.

Preferential locations

Kmart and Sears both faced struggles with their store locations. Without more products, Kmart faced tough competition from similar stores, such as Walmart. Sears also struggled to maintain a steady amount of customers from their mall-based locations. The merger between the two companies was successful because many of the local Kmart stores became Sears stores that offered the best of both stores in a convenient neighborhood location.

Combined profit

The two companies expected an additional $500 million profit from the merger alone. An expected $300 million of this came from streamlining the system for purchasing products, while the other $200 million was from cross-selling products to the same customer base. The combination of the two stores blending their purchases and sales saved both companies several million dollars.

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