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Kmart and Sears begin to dance
Report: Retailers aim to get the interest of new customers with cross-merchandising and new format.
June 2, 2005: 8:36 AM EDT

NEW YORK (CNN/Money) - Kmart and Sears are stepping into the synergy waltz.

Testing is underway on ways to combine the strengths of the two struggling retailers, according to USA Today.

Two months after Sears and Kmart merged, some Kmart stores have started carrying various assortments of well-known Sears brands, including Craftsman tools, Kenmore appliances, Sears' lawn and garden equipment and computer- and phone-equipped service kiosks for ordering home-improvement products.

"The best thing that Kmart can do today to influence the shopping patterns of customers is to bring in products that Wal-Mart and Target can't sell," Gary Ruffing, head of the Retail Services Group at management consulting firm BBK, told the paper. "They have differentiated themselves almost overnight by having the Sears products and services."

Some Kmart inventory has been reduced or phased out to make room for the Sears inventory. For example, stores adding Craftsman tools have cut back offerings of Kmart's private label tool line, BenchTop, the paper said.

"Craftsman and Kenmore are strong Sears brands, and we knew our customer would recognize those immediately," spokesman Stephen Pagnani, told the paper.

"It is a great way to prop up Kmart," George Whalin, president of Retail Management Consultants, told the paper. "It's been beat up for so long that more name brand and that's Sears' private label will give it better positioning."

The merged Sears Holdings (Research) has a combined 3,800 stores, projected annual sales of $55 billion and ranks as the No. 3 retailer behind Wal-Mart Stores (Research) and Home Depot (Research), the paper said.

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