Sears Spinoff Building Relationships With Independents

Sears Holdings Corp. may be struggling financially, but its spinoff, Sears Hometown and Outlet Stores, is growing with the help of independent retailers.

In fact, James Cabirac, owner of Kief Hardware in Cut Off, Louisiana, opened a Sears store-within-a-store this month.

Here’s how the model works: An independent retailer agrees to dedicate at least 2,000 square feet of prime space in an existing store to Sears appliances. The retailer pays for fixtures and salaries for some employees who are dedicated to working in the Sears area.

Sears Hometown provides exterior and interior store signage and retains ownership of the inventory, displaying models of major appliances from top brands, including Kenmore, Whirlpool and KitchenAid, at no cost to the retailer. Store employees ring up appliance purchases through a Sears point-of-sale system, and the independent retailer earns a commission on every sale.

The Sears name may be associated with big-box store closures and other drastic changes, but Sears Hometown and Outlet Stores has been a separate business from Sears Holdings since 2012 and is unaffected by those challenges, says Fred Riffle, director of market development for Sears Hometown.

By Jan. 31, the company will have 23 stores within independently owned businesses. Sears Hometown plans to add 10 or more locations within the next fiscal year, Riffle says.

“It’s very, very controlled growth,” he says. “It’s managing growth by also managing the type of businesses you go into.”

The model allows Sears to get into markets where it doesn’t have a presence, and sell to the customers of already successful businesses.

“The independent operator has really been at the core of our business since our inception,” Riffle says. “They have a highly vested interest in their business being successful.”

The appeal of Sears Hometown for Cabirac is that his hardware store can now offer a full selection of appliances without investing in any inventory.

“It was a way to get really heavily into appliances that we wouldn’t have been able to do otherwise,” Cabirac says.

That model is succeeding for Skylar Stevenson, owner of Brownsburg Ace Hardware in Brownsburg, Indiana. Stevenson helped his father, owner of Stevenson’s Ace Hardware in Crawfordsville, Indiana, to open a Sears store-within-a-store in 2014.

The year the Sears part of the store opened, Stevenson’s Ace saw sales go up 17 percent, Stevenson says.

“It allowed us to do things that we hadn’t been doing. It helped us strengthen our staff. It helped us put inventory in other areas,” he says. “When it boosts the bottom line, it helps everywhere.”

The appliance business worked so well in Crawfordsville that when Stevenson started his Brownsburg store in 2015, he made sure he was ready to launch the Sears store-within-in-a-store shortly after opening.

Brownsburg Ace attracts a varied customer base because it is a traditional hardware store but also sells big-ticket appliances. An average transaction for the hardware store might be $20, but customers who are buying appliances typically spend $600, Stevenson says.

“It is a whole different demographic than your typical hardware customer,” he says. “It’s a higher-end clientele.”