Brand Central hits the big time; Sears goes head-to-head with specialty CE chains - Sears renovates its consumer electronics departments

Brand Central Hits the Big Time

Sears Goes Head-to-Head With Specialty CE Chains

INDIANAPOLIS -- Surrounded by its major competitors in this Midwestern market, Sears has made a CE statement with its Brand Central store-within-a-store concept. Brand Central represents the first test of Sears' new merchandising strategy to create "power departments" in key categories within the store.

At 13,500 square feet, Brand Central is the size of a freestanding super store. It has its own entrance and door signage. It competes head-to-head with tough, sharply-priced operations like Circuit City, Silo and Highland.

While the CE chains have proven to be very effective in competing against other mass merchandisers and discount stores, they may be in for stiff competition from the new Sears entry.

Brand Central is simply much more formidable than any other mass merchandise CE department. It will match any advertised price from competitors. It offers at least as wide a selection of top brand names. And, it has the built-in weapons of the Sears name, service level and credit card, as well as its own dominant Kenmore brand, which leads the nation in several product categories.

Key brands are Sony, Panasonic, AR, Tappan, Sharp, Jennair, GE, Whirlpool, Xerox, Brother, Amstrad, Okidata, Fuji, Murata, AT&T Magnavox, Cerwin Vega, Bose, Marantz, Technics, Pioneer, Soundesign, Yamaha, RCA, Zenith, Hitachi, Goldstar, Hoover, Eureka, Black & Decker and Toshiba.

Virtually no national retailer can say that it has a better selection.

Although area stores are generally a bit sharper on price (and often significantly so), Sears blunts these discounters' best weapon--ad promotions--by matching ad prices on identical models. Apart from that, Brand Central will stick mainly with its everyday low price strategy.

The most important single area is probably major appliances, where Sears has always been a major player. With the addition of important national brands like Whirlpool (in which Sears owns an interest), Tappan and Jennair enhancing its already strong Kenmore brand, Sears presents what is arguably the most complete line of major appliances in the country.

"We're not favoring Kenmore either," said Larry Hasler, store manager of Sears' Castleton, Ind., store. "We're giving the consumer a choice, and we're just as happy to sell a Whirlpool as we would a Kenmore."

That marks a major departure from past strategy, in which Sears either specified products to vendors dependent on the company's monstrous selling capability or made them itself through joint ventures. In either case, the Sears product line was totally dominant, and national brands received little exposure.

In-store merchandising seems to support the new philosophy. Although Kenmore has a slight advantage in display terms due to its presence across product categories, the overall impression is that Kenmore is just one of many good brand names. For instance, endcaps and island displays may or may not include Sears product, but at least one other brand is included.

According to a Sears spokesman, the new approach is doing well, with sales increases running at about 30 percent since Brand Central debuted last summer.

Apart from major appliance dominance, Brand Central offers extensive selections of televisions (over 70 different models), audio equipment, VCRs, telephones and small electronics. Other product areas like personal and portable stereos, computers and camcorders are represented by a moderate selection of top-selling brand names.

Because of the competitiveness of the Indianapolis market, Brand Central here offers free delivery and set-up on major appliances and large items like 27-inch televisions. This policy will be rolled out to Brand Central stores in markets where competitors' practices make it necessary.

Most competitors in Indianapolis also offer some form of this service, although many include a small charge for setup. Sears will also remove old appliances at no charge, and offers evening and Saturday delivery hours.

Further, emergency refrigeration delivery service is available on selected models, with delivery within 24 hours guaranteed.

"Service is everything here," said Brand Central manager Buddy Jones. "If we carry it, we'll fix it, no matter where it was bought. This is what distinguishes us from our competition."

Sears plays heavily on its national presence in assuring customers that no matter how long they keep a product bought at Sears, they can get it serviced anywhere in the United States.

Home Office Powerhouse

The company has identified office products as a growth area. Along with computers, Brand Central makes a strong statement in personal word processors, printers, compact copiers, fax machines, dual-line telephones and paper supplies. Additionally, the store has added a selection of Sentry and Vanguard office safes and a modest offering of file cabinets, desks and office chairs.

It is probably the largest overall home office collection short of an office supply mega-store. A Sears spokesman noted that small businesses might be one of the market segments most open to Brand Central's reliability message.

"If he spends a lot for a fax machine, he wants to be sure that it works, and that if it doesn't, something will be done right away," Jones said. He added that upper-end versions of products like fax machines and personal copiers were "doing very well."

Audio Upgraded

At the audio end, Sears has greatly upgraded its selection. With a full line of Bose, Cerwin Vega and AR (Acoustic Research) loudspeakers, Brand Central compares enviably with any other national CE specialty chain.

The same holds true, to a slightly lesser extent, with its selection of Pioneer, Marantz, Sony, Sharp, Technics and Magnavox components. In this area, Sears own LXI brand is generally positioned as a value brand, offering added features at roughly the same price as an equivalent brand name piece.

The exceptions to that rule are rack systems and small electronics, where the LXI and Sears brand goods are bargain brands, aimed at the price-conscious consumer.

What is distinctive about the audio area is Sears' high-end statement. The company carries top-of-the-line Bose and Cerwin Vega speakers as attention-getters. In video, a $3,300 Hitachi projection TV serves the same function.

Whether all this will be enough to put Sears back in the game is open to question. The market has changed in the last few years, and its major competitors have had those years of experience to build up a national presence, as well as relationships with many leading suppliers.

With lower margins and increased costs (associated with wholesale prices from suppliers Sears doesn't own a piece of, staffing levels and price-matching), Brand Central will need a big increase in traffic to show a profit.

PHOTO : Sears' 13,000-square-foot Brand Central department in Indianapolis matches the low prices

PHOTO : and the wide assortments of top brand names typically found in CE specialty stores.

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