dispatches from the new world of work

Dance of the Dinosaurs!

Was in Chicago yesterday, speaking to several thousand execs. Boom. Sears-Kmart! Or: THUD! I was asked to comment: "I can't. My Mom taught me to be polite in other people's houses. Let me just say, hypothetically, that I consider mergers between Dinosaurs, aiming to deal with hot competition ... from, say, small Southeastern states ... to be the height of stupidity. Sure, the new Kmart CEO is a shrewd ... maybe even genius ... financial Engineer ... and he'll make a killing. No prob. But will true value be created? Will the American Economy be better off? Will Lee Scott [Wal*Mart CEO] lose sleep in Bentonville? I think Lee will think he mistakenly tuned into Comedy Central!"

Sad footnote: I said to a very prominent exec, "I can't believe we had no inkling of this at all, that there were no leaks." He responded: "You're right. We didn't. Maybe nobody really cares." Whoops!

Tom Peters posted this on 11/18/04.

Comments

Have to agree with you there. Two retailers who can't seem to get their act together getting together just seems... Lame.

Posted by Henry at November 18, 2004 12:22 PM

My prediction: Sears + Kmart = Montgomery Ward.

And we won't miss them. We're too busy spending our money at Nordstrom, Home Depot, and Wal-Mart.

Posted by Ron at November 18, 2004 12:38 PM

This is a good read-"Not everyone sees the wisdom of the deal, however. "Here you have two retailers who are doing badly right now and who don't really see a clear way to pull themselves out of the downward spiral," says Wharton marketing professor..."It's hard to fathom how combining them is suddenly going to produce a new entity that will do better. That's tough to do, especially because the competition, including Wal-Mart and Target, isn't exactly standing still."

"Will the American Economy be better off?" Guess again...!! read this from Nobel prize-winning economist Joseph Stiglitz and Pete Peterson, chairman of The Blackstone Group. They are lamenting the state of American Economy !! -"Trickle-down economics said that all you had to do was worry about growth, and everybody would benefit. We now have a situation that we might call trickle-up economics."

Posted by /pd at November 18, 2004 12:42 PM

Love the way though that Martha Stewart stock jumped up a lot on the Sears/KMart news!

Sears has Lands End - and they are pretty cool - never been in a KMart though! Like Ron I'm loyal to Nordstrom [@ Tysons Corner]!

Posted by Freeman at November 18, 2004 1:22 PM

Freeman, I'd suggest that a Nordstrom/Tyson's Corner devotee take a portable defibrilator on your first Kmart trip ... or it might be your last.

Posted by tom peters at November 18, 2004 1:32 PM

Dr. "!" - I must be loyal to WalMart vs. KMart - somehow Cheryl & I are in there every week - just bought 2 $39 heavy winter parkas and $18 Earth Shoes office slip ons [Chinese of course] - 1 parka in the Infinity in case of whatever!!!

Posted by Free at November 18, 2004 2:06 PM

Wal-Mart claims that they do what they do to provide value for the American consumer. Please.

Wal-Mart and every other wannabe acts on their own behalf, and the behalf of their investors. Given that Kmart's stock has gone from a dismal $20 something prior to Lampert's take over, and is now over $100, Id have to say, yes, this guy is a genius.

Additionally, the value of Kmart is not inside the stores, but the stores themselves. Before this merger went down Sears paid over a billion dollars for 50 Kmart locations.

This whole thing is a real estate deal. It has nothing to do with two second-run retailers being able to compete in Wal-Mart's sphere.

Posted by David Burn at November 18, 2004 4:15 PM

David - interesting stock and real estate news!!!

WalMart is a mixed bag - they leave old Dinosaur vacant shells of stores as they march on!!!

Posted by Freeman at November 19, 2004 9:05 AM

To quote Tom: "But will true value be created? Will the American Economy be better off? Will Lee Scott [Wal*Mart CEO] lose sleep in Bentonville?"
What would it take to create true value, to improve the American Economy? It would certainly be an improvement over two dinosaurs dancing the turkey trot.
But what would it take to keep Lee sleepless in Bentonville? Now that would be innovative genius!

Posted by Pam Brill at November 20, 2004 11:52 AM

Among the vendor community, there was actually a fair amount of speculation about this merger given Eddie Lampert's positions in both companies. The "maybe nobody really cares" statement sums up the sentiment well enough among most of the business world. This merger is not about retailing excellence. It's about ROI and asset management. Will the answer be value for consumers? Clearly it's not the highest priority, but it would be an interesting byproduct.

Posted by Rob MacKay at November 28, 2004 1:10 AM