Analysis of KMART and SEARS Merger

ears-Kmart Merger: Is It a Tough Sell?

According to the CEOs of Sears, Roebuck and Kmart Holding, their plan to merge into a giant $55 billion retail company will produce stronger brands, greater efficiencies in operations and higher returns than either company could achieve standing alone.

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 Stephen J. Hoch, who heads the school's Jay H. Baker Retailing Initiative. "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."

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