Costco Gains One Craftsman, Loses Another


The Standard Operating Procedure with an in-house brand is that it’s sold, well, in-house, but Sears Holdings Corp. is about to break a new barrier for the company. According to the Chicago Tribune, Sears “has agreed to sell its Craftsman tool line through Costco clubs nationwide.”

And the two retailers aren’t wasting any time. The “hand tools, power tools and tool storage units will start appearing on Costco shelves as early as Saturday” over Labor Day weekend. Since Costco members don’t tend to shop at Sears or Kmart, the company has its hopes pinned on gaining new customers for the Craftsman brand via Costco’s wholesale store.[more]

“As we externalize the brand, we’re trying to be thoughtful about reaching shoppers we aren’t reaching at Sears today,” commented Kris Malkoski, vice president and general manager of the Craftsman brand, to the Chicago Tribune. “It’s an opportunity to bring the equity of this product to households that aren’t going to Sears.”

The Tribune reports that Sears execs have been discussing the idea of selling internal brands at other retailers for decades but it was Sears chairman and majority shareholder Edward Lampert who made it happen. Selling Craftsman at Kmart was actually one of the first things he implemented when the two entities merged in 2005. In the spring of 2010, Craftsman began to be distributed at 100 Ace Hardware stores. That number is now nearly up to 1,000 Ace stores with Craftsman on their shelves.

Other in-house brands that Lampert has been trying to untangle from the Sears name are Kenmore and DieHard, figuring that a sale is a sale no matter what retailer’s shelves the item once called home.

The Tribune notes that some other retailers, such as Home Depot and Macy’s, are going completely in the other direction: building up their in-house brands and keeping them close in order to try and attract more consumers into the stores.

The partnership with Sears comes as Costco is losing its own master craftsman: CEO Jim Sinegal, who is preparing to step down on Jan. 1st. Don’t miss Washington Post blogger Jena McGregor’s profile (“The Costco King Checks Out”) on the humble exec, which notes:

Sinegal holds fast to a mantra that nothing in the warehouse should be marked up more than 14 to 15 percent from cost. Even if the market would bear more, Sinegal believes pricing goods higher would prompt customers to lose trust. His discipline is legendary. “People have always asked historically, who’s your toughest competitor?” the company’s chief financial officer, Richard Galanti, told me back in 2008. “And I say it’s Jim.”

Craftsman this summer made its first foray into branded entertainment with a series, Screw’d, and celebrated the first anniversary of The Craftsman Experience, a venue at its hometown in Chicago, with a Facebook event with Ty Pennington on September 1st.