Sears, Roebuck, AOL Announce Retail Alliance
Old-time retailer Sears, Roebuck & Co. took another big step into the new economy Tuesday, announcing a potentially far-reaching deal with America Online Inc. that will put AOL in hundreds of stores and Sears on millions of computer screens.
Sears and AOL also will co-develop programming and products, taking the partnership beyond other “click-and-mortar” alliances.
“This is deeper than just agreeing to co-promote,” said David Cooperstein, director of online retailing for Forrester Research Inc. in Cambridge, Mass. “To get into joint-development deals involving other types of content could put Sears ahead of competitors--even those who have also partnered with AOL.”
That list includes a host of giant national chains such as Wal-Mart Stores Inc. and Circuit City Inc.
AOL and Sears did not disclose financial details, but said AOL will become Sears’ preferred Internet service provider, with access to Sears’ 858 department stores and the retailer’s 50 million credit card holders. Sears customers also will be able to charge their AOL subscriptions on their Sears card, and take advantage of related price breaks and promotions.
For its part, AOL will promote Sears on its Web sites, which claim a subscriber base of more than 21 million and a visitor list of many times that number.
Sears shares rose 69 cents, to $28.13 on the New York Stock Exchange; AOL rose 19 cents to $61.50.
The two companies said that they will introduce a co-branded edition of AOL with special Sears promotions and links later this year. They also plan a new AOL/Sears instant-message system that will give customers access to real-time online chatting--with friends as well as with Sears customer service operators, said executives at the firms.
And in an effort to build upon Sears’ online strategy of a home-improvement focus, Tuesday’s announcement also broadly sketched the two companies’ plans to together create a “smart home” of Web-connected appliances, energy controls and safety features, allowing consumers to turn up the heat before coming home on a cold night and automatically place grocery orders as items are depleted from the refrigerator.
Sears, the nation’s second-largest retailer with $41 billion in sales, joins several other national merchants in an effort to use the Internet for more than just online sales. Some analyst suggested that one of the most noteworthy parts of Tuesday’s deal is who is being left out of a significant alliance--hardware giant Home Depot Inc., which has promised an online site for several months, but still has not introduced one.
Over the past several months, AOL has inked more narrow partnership agreements with Wal-Mart, Circuit City and the Blockbuster video chain. Best Buy and RadioShack partnered with Microsoft Corp., and Kmart Corp. linked up with Yahoo Inc.
Those alliances bring traditional retailers oft-touted new customers and marketing opportunities. What’s more, the partnerships offer bricks-and-mortar retailers a whole range of new business opportunities on the Internet, which not that long ago seemed to have left them in the dust.
The portals are able to push their products to customers who may not yet be connected online--as well as leverage store services and employees to allay the concerns of newer computer users.
But most of those deals stopped at cross promotions. Wal-Mart and Kmart are focusing on giving customers access to the Internet.
Tuesday’s deal follows several other Internet announcements from Sears, including a partnership with home improvement guru Bob Villa, a business-to-business site with international powerhouse Carrefour and Oracle Systems Inc., and plans to work with Sun Microsystems to develop Internet appliances and other products.
With AOL, Sears will try to make the most of consumers’ trust in its home-repair service by offering installation of faster, richer broadband access, which can send far more data, far more quickly, over cable lines.
And as demand for broadband grows, AOL and Sears together will offer special home-improvement content, which could, for instance, let Internet users download pictures of their homes into a computer and see how various projects will look, complete with instructions.
