Sears dealers rebel against Kmart marketing plan

In a smalltown-America version of David and Goliath, several hundred Sears

dealerships across the nation today have taken Sears Roebuck & Co. to court, charging breach

of contract. At issue is the ever-increasing sale of Sears products at Kmart stores. The

lawsuit seeks to challenge and put a stop to this action.

In a smalltown-America version of David and Goliath, several hundred Sears dealerships across the nation today have taken Sears Roebuck & Co. to court, charging breach of contract. At issue is the ever-increasing sale of Sears products at Kmart stores. The lawsuit seeks to challenge and put a stop to this action.

Since Kmart bought Sears in November 2004, local Sears dealerships - mostly in small towns and rural areas - have been experiencing the rise of unanticipated competition right down the block from them at local Kmart stores.

"We have received no direction from Sears as to which products of ours they will be selling at Kmart," said Hans Mizee, a Kalispell Sears dealer since 1993. Mizee started his career with Sears 43 years ago and said that of late, useful communication on the Kmart matter has been meager.

According to a Sears corporate spokesman, Larry Costello, the contract currently in effect between Sears and its 818 dealer stores states that Sears cannot sell Kenmore brand products or appliances in any store in the same zip code in which there is already a dealer store.

But Steve Granger, president of the board of the Dealer Store Owners Association, which filed today's lawsuit, said the existing agreement does not cover all Kenmore appliances and also does not cover Craftsman - Sears' other major brand.

"We want to protect our dealers from unfair encroachment on their markets," Granger said. "This has been happening for years, but has never reached the level it eventually is moving toward. If this plan seriously comes into our markets, it will destroy us."

Product price does not appear to be the issue here. It is rather the case of one business pulling sales away from another. Granger points out that a typical dealer store has 6,000 square feet of showroom, while the average Kmart store might have up to 100,000 square feet.

"Obviously they can offer a customer a lot more than the rest of us can," he said. "If you take the typical small-town resident and give them the option of doing one-stop shopping, that's probably exactly the option they'll take."

Mizee has had his store on the selling block since before the November sale. This is not the best environment in which to attract a strong sale, he said.

"I'm willing to take on the competition," Mizee said. "But not within my own company.

"What I think will happen is they [Sears] will continue to incrementally take products we sell and move them into a test mode at Kmart. Then why do you need a separate dealer store when you have a big box store so easily available?"

Costello denies that communication has been difficult of late between Sears and the dealer stores. He said that for the initial months following the sale, there was little information to communicate and that it would have been premature to share any details. Now he feels channels are once again open.

"Our goal is to help grow our sales and market share," he said. "And we're agnostic as to how we deliver those products and services - whether through a Sears mall store, catalog, a Kmart store or a dealer store."

Sears said it does not believe the dealers' lawsuit has merit and that it pertains to issues totally outside the current contract between Sears and its dealer-owners.

"The culture has changed," Mizee said, shaking his head. "There used to be a Sears tradition, but with this new company structure, there are no longer any traditions."

Reporter George Kingson may be reached at 758-4438 or by e-mail at gkingson@dailyinterlake.com