There's a new Sears in town
Sue White of South Elgin walked into the new Sears Home Appliance Showroom on Thursday as if on cue.
She had been driving along Randall Road in South Elgin when she decided to pop into this new kind of Sears store, which only sells appliances.
"Wow," she said out loud as she walked in and saw a couple hundred refrigerators, washing machines, vacuum cleaners and a host of other household appliances shining and lined up in rows and display areas.
The larger, higher-end, higher tech appliances are near the front door for visual impact.
"We look for that 'wow' factor," said Robert Mackey, director of marketing and merchandising for Hoffman Estates-based Sears Holdings Corp.
The first Sears store of its kind in Illinois, its grand opening is tonight. It is the seventh Home Appliance Showroom store in the Sears chain. Other stores are in the Houston and Minneapolis areas.
Another such store is planned to open around June in North Aurora, Mackey said. And sites are being considered in Oswego, Montgomery and other Chicago suburbs.
The store's sales strategy gets good reviews from retail analysts who say the long-struggling Sears can leverage its strength in appliances, particularly the Kenmore brand.
"Sears is going to need a bunch of initiatives if it is going to survive, and this is one that makes sense," said David Davidowitz & Associates, a New York-based retail consulting and investment banking firm.
The Home Appliance Showroom strategy is to open along "power roads" such as Randall Road, with high visibility and traffic, Mackey said. The stores open near rival Home Depots and Lowe's to create a shopping dynamic, Mackey said.
The Houston stores opened in spring last year and have been outperforming their appliance market rivals, Mackey said. Sales have run higher than Sears' expected, Mackey said. They even gained appliance sales market share in the area.
"I think this is a fairly smart strategy for them," said John Melaniphy Sr., a Chicago-based retail consultant.
Melaniphy said he has not studied the performance of the Home Appliance Showroom model but estimated they could generate more than $2 million a year in store sales.
After a few years of a slow-growth strategy, Sears' dealer store plan is its top growth vehicle, Mackey said, along with online services.
Sears has long operated non-mall-based dealer stores, mostly privately owned and carrying appliances, consumer electronics, lawn and garden equipment, tools and automotive batteries. It has more than 850 such stores and plans to open another 100 this year, Mackey said. Last year, it opened 63.
The dealer store category, of which the Home Appliance Showroom is a part, could grow by 1,000 in the next six years, according to some estimates within the company.
How many Home Appliance Showroom stores open probably depends on its success in markets outside Texas and Minnesota, Davidowitz said. The new stores feature tiled floors and model display areas showing sample kitchens.
"It's a showroom rather than a big box where you're fighting off a fork lift," Mackey said.
The stores are smaller, stand-alone operations with staffs of about eight employees who greet customers as they come through the doors.
The stores feature more than Sears products. Brands include General Electric, Jenn-Air, Frigidaire, KitchenAid, Bosch, LG, Maytag and Whirlpool.
For years, Sears has been experimenting with store strategies and product mix. Since the 2005 merger of Sears and Kmart, traditional Sears appliances are now stocked at Kmart stores. Some Sears dealer stores can be found in more than a half dozen Kmarts across the country.
In recent quarters, Sears Holdings has reported falling same-store sales, profits and cash reserves.
Sears generated $53 billion in sales last year, so while positive the Home Appliance Showrooms won't have the scale to turn Sears' numbers around, according to Davidowitz.
"It's too small to move the needle," Davidowitz said.