Sear's CE outlet not a discounter - consumer electronics departments - column

Sears' CE Outlet Not a Discounter

Is the new Sears a discounter? That seems to be a popular question these days. Elsewhere in this issue are some four or five individual answers to that question (or at least opinions about that issue). As regards Brand Central, the consumer electronics store-within-a-store, I'll add mine to the pile by stating forthrightly and unequivocally--maybe.

With policies like everyday low pricing, reduced margins, and strong national brand selections, Brand Central resembles nothing so much as a national chain discount super store.

Also, the company has identified chains like Silo, Highland and Circuit City as its major competitors in CE, and storewide, competitors are expected to be discounters like K mart and Wal-Mart.

Despite all this, I'm inclined to sympathize with Sears' discomfort at being referred to as a discounter. Everyday low pricing or not, Brand Central is not and will not be the lowest-price provider in a market. Where it has to, it will match competitors' prices, but it is doing its best--through smart product selection--to make sure it doesn't match products too often.

On the whole, the company is selling a package--service, selection, top brand names, extensive repair and delivery services, the Sears credit card and a bit more ambience than is the rule with discounters.

In test-market Indianapolis, Brand Central is virtually surrounded by major competitors, including Luskins, Highland and local dominant retailer H.H. Gregg. With this wealth of promotional discounters within easy driving (and in some cases, walking) distance, it is likely that a solely price-driven consumer can find a better deal than that offered by Sears, which will not run the kind (or level) of promotional sales its competitors consider a mainstay of their business.

Sears has made a conscious decision to go after a customer that is willing to pay a little (and sometimes a lot) more for added convenience, wider selection and a bit of added buying security. Since the company offers brands not normally available to its competitors (Xerox and company brand Kenmore, for instance), as well as full selections of brands with limited availability at the discount level (like AR, Pioneer and Bose), Sears will find itself competing head-to-head less often than some observers seem to think.

Whether this strategy will pay off is still open to question, but the company reports sales increases of some 30 percent since the debut of Brand Central last summer.

So, is Brand Central a discounter? In technical terms, probably. The company is, after all, discounting from list price every day, not just during sales. But when I walk into a K mart or a Crazy Eddie, I'm sure I'm in a discount store. When I walk into Brand Central, I'm not sure of that at all.

Which is a good indication that Brand Central may be in a category of its own. Just don't ask me what that category is.

COPYRIGHT 1989 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2004 Gale Group