The Newleyweds

Carole Sloan, March 14, 2005

Assuming that all goes according to plan at the end of this month and later this year, the hard part will just begin.

If the Kmart/Sears and Federated/May marriages take place as scheduled, the turmoil within and without each organization will have repercussions for a long while — years probably.

With each of the mergers/acquisitions — call them what you will — there are cultural differences that range from personnel to product to basic ways of doing business. Then there's the basic difference — the businesses themselves.

Looking at Sears and Kmart, you've got Sears — a company that once was king of the hill with diverse interests from catalog retailing to credit cards and a plethora of specialty off-shoots from its main business.

With Kmart, you have one of the pioneers in discount retailing, but one that expanded too quickly in the '60s and '70s without enough infrastructure logistically, and from a personnel perspective.

Logistically, both Sears and Kmart still have a great deal to learn. And logistics, while not as sexy and glamorous as fashion merchandising, is where the pluses and minuses of retailing are happening in this era. Together, they might learn it faster.

But then there's the chasm between the buying groups, a challenge that also will face Federated with its May merchandising group.

Without even attempting to assess the Kmart/Sears buying teams qualitatively, the differences are apparent just in the aftermath of what happened following the Kmart bankruptcy as well as some of the legal problems that faced it before.

Sears in looking to develop its apparel business, still finds that an elusive quest. And that, of course, impacts everything else in the store.

As for Federated and May, the latter's matrix system of sourcing reduced its flexibility in keeping up with market trends while it tried to homogenize its merchandise.

On a different level, Federated's five non-Bloomingdale's divisions each are disparate members of the same family. And the home store corporate approach, with its avowed local distribution needs over and above a common core, will be another challenge.

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