In 1990s, TTI saw a boom in OEM business
thanks to orders of Craftman, an arm of Sears Roebuck & Co. It is now an
electric tool giant with annual sales of USD 6 billion.
Sears Department Store, however, was
declining all the time, ending up with successive store shutdowns to minimize
the loss. Seen from the 2017 annual report, its total sales have fallen from
USD 25.1 billion in 2015 to USD 16.7 billion in 2017.
The following graph displays its stock
price trend in the past five years and comparison with the peers (excerpts of Sears’
2017 Annual Report). It is clear that it always came last respectively compared
to the Standard & Poor’s average index and its counterparts.
Apparently, how to boost revenue is the
most crucial issue that Sears CEO Eddie Lampert has to think about.
In January 2017, Sears Department Store
announced selling Craftsman, a long-established noted tool brand, to Stanley
Black & Deck for USD 900 million.
Its next move is to cash in Kenmore,
another strategic home appliance brand of Sears, to the fullest.
First it changed the status quo that
Kenmore was merely sold in Sears and Kmart. In August 2017, Sears Department
Store announced availability of its fist brand Kenmore in third-party stores
such as Amazon.
It also launched Kenmore brand licensing
and authorized Kenmore and Kenmore to Cleva North America.
Cleva North America, a branch of Cleva Group
established in the United States in 2007, specializes in the overseas sales of
commercial barrel vacuum cleaners and garden tools. Now it mainly has
Lawnmaster brand in garden tools, Vacmaster, Dura Vac and Armor All brands in barrel
vacuum cleaners that work wet or dry, and Cleva brand in vacuum cleaners.
Cleva was founded in 2003 by former employees
of electric tool maker Positec Group. It has centered on its own Vacmaster
brand since the beginning, instead of following the OEM mode as others do,
establishing solid ties with most mainstream retailers overseas.
Over time, Cleva has been
China’s largest producer of barrel vacuum cleaners that work wet or dry, with an
annual output of 4 to 5 million units. Its featured Vacmaster brand can even play
against foreign giants such as Shopvac, Karcher and Nilfisk, counting as one of
the best in this segment worldwide.
In 2016, Panasonic announced
shutdown of its plant in Mexico, a base for Sears’s Kenmore branded products. To
the end, Cleva took over Panasonic’s production lines and product moulds and
transferred them from Mexico to Suzhou factory for Kenmore OEM.
Sears initiated Kenmore brand
licensing in August 2017. Cleva won its Kenmore product licensing, allowed to make
putters, hand-held and robot vacuum cleaners and sell them to other retailers.
According to Sears’ annual report, the licensing is based on an one-time basic
rate plus a percentage of sales without the specific amount unveiled.
Cordless pusher and hand-held
vacuum cleaners have been displayed on Kenmore’s official website. It appears
robots are coming soon.
Click to see the specifications of Kenmore
Elite 10441:
Its styling and function are mediocre, temporarily
showcasing no stunning points.
With authorization of US-based Kenmore, a high-end
centurial brand, and solid retail ties, Cleva has found its own way.
The timing for Cleva to enter the electric
home appliances sector is subtle:
1. Cleva’s original businesses of barrel
vacuums and garden tools are not affected at all by its purchase of Sears
-authorized Kenmore, an access to the household vacuum cleaner business. Midea,
in comparison, saw its North America clients transfer orders to other factories
after acquisition of Eureka.
2. Unlike other players in China, Cleva has
established a firm foothold with years of cultivation in overseas brand
promotion and channel development. Kenmore brand sees no obstacles to fit new
channels.
3. Kenmore brand itself is highly
recognized and received. Limited by products and Sears’ own channel in the
past, it will proliferate quickly upon development of new products and
channels.
4. The traditional vacuum cleaners are
shifting to the cordless era. The North American market now rarely sees other
influential brands such as Dyson, Shark, Hoover. It is the best time for Cleva
to march in this field with the Kenmore brand.
Sears’ Craftmans brand fostered the
electric tool giant TTI 30 years ago. Will Sears’ Kenmore prop up another
giant?
