Sears Holdings is testing a new initiative to reverse its fortunes by putting small, Kmart-branded convenience stores inside Sears locations, according to CNBC. The new layout will let customers purchase items such as groceries, health and beauty products and cleaning supplies while shopping for traditional department store merchandise.
The debut store is a 10,000-square-foot Kmart inside a Sears store in Brooklyn, N.Y. With this move, the retailer seeks to build on the strengths of each brand, making Sears a one-stop shop similar to Target or Walmart. The company believes its loyal base of shoppers will welcome the changes.
"There are common things that everyday customers came into the Sears store looking for and unfortunately we had to turn them away," said Pearl Thompson, Manager of the new Kmart convenience store told CNBC in an interview. "Our existing customers have been asking for these products, and we are also seeing new customers as part of the [grand opening].”
The store-within-a-store concept has proven successful at other retailers, such as Nordstrom’s partnership with Sugarfina. Both retailers share a similar customer base, and Nordstrom draws additional traffic from customers curious about goods it might not otherwise stock.
Sears has been working with Amazon as well. Shoppers can order tires from the e-Commerce giant and have them installed at 118 Sears Auto Centers in 21 states for a small fee, and Alexa-powered Kenmore products have been available at Sears stores since summer 2017.
The retailer also is looking at other initiatives, including the addition of appliance shops with higher-end merchandise at some Kmart locations, and small-format Sears stores that sell only mattresses and appliances. A company spokesperson told CNBC that the immediate goal is to test the new concepts to see what works.
However, it remains to be seen if these efforts will be enough to give Sears the boost it needs. The retailer’s total revenues were approximately $2.9 billion during Q1 2018, down from $4.2 billion in Q1 2017, with store closures accounting for nearly two-thirds of the decline. Overall same-store sales declined 11.9% during the quarter, with a 9.5% decline at Kmart and a 13.4% decline at Sears.
The company has continued divesting stores and brands to raise capital, most recently putting 16 profitable stores up for sale via an online auction platform. CEO Eddie Lampert’s hedge fund, ESL Investments, has offered to purchase the Sears Home Improvement and PartsDirect businesses for $500 million, and to make a bid for Kenmore.