Wednesday, October 05, 2016
Other Tool Companies Interested In Buying Craftsman
Consumerist: The legend says that 89 years ago, the head of hardware at Sears Roebuck really liked the name Craftsman, and bought the trademark from an existing tool company for $500 ($6,921 in 2016 dollars). Today, parent company Sears Holdings is troubled and in need of a cash infusion, and has quietly solicited bids for Craftsman. It’s reportedly worth around $2 billion.
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4 comments:
I never would have imagined that a store like Sears has money issues, but I guess over the years other stores have been capitalizing on the sort of things Sears sells – I honestly couldn’t tell you exactly what Sears is for (maybe furniture, or appliances?). I feel that the name Craftsman should be in the highly desired category, since it is very recognizable in the general public as an easy-access tooling company. Even if the move would be to buy it and then completely overhaul the production and make it your own, you still have the name Craftsman and people would know what you’re selling. I don’t really understand the financial advantages of buying a company that you manufacture, in this example Apex, because I feel that not a lot of gain can be made by a manufacturer in ownership of a company whose tools they produce. This will definitely be an interesting sell for us, but I don’t know that the general public will notice.
I wonder if Craftsman goes through a change of ownership how the brand will change. Craftsman was once a really well regarded tool company for home owners and professionals in both construction and woodworking. Over the past decade or two it has turned into a fairly low quality tool company primarily aimed at home owners. I see Stanley Black and Decker is one of the companies who may buy the name. My thought is that Porter Cable (a Stanley Black and Decker subsidiary) has had a very similar path as Craftsman and I would wonder how the two brands would function together under Stanley Black and Decker. Black and Decker is another subsidiary of Stanley Black and Decker which is marketed toward home owners so I really don’t see a place for Craftsman under Stanley Black and Decker unless it is developed into a higher quality company or is taken back to its roots as purely a woodworking company (in other words: bring me back the radial arm saw!!!) One of the other companies listed as a potential buyer is Husqvarna, a forest and gardening tool company. Craftsman has lawn mowers and chain saws but it is comparatively a small component of their company. I am curious to see if Craftsman would be reduced ot Husqvarna would expand if they were to buy the name.
This is a good example of the impact of a name on a product. The reason I say this is due to the fact that one of the main companies being discussed in the sale of the the Craftsman brand is that of Apex whom already is responsible for making Craftman tools. In a market such as the tool market there is a good example of monopolistic competition where the name and differentiation of ones product is highly important. While some companies in the toll market do produce suppior goods many of them produce goods that have easy substations available in the market. This availablitty of other products in the market make this a possible interesting case study in monopolistic competition. I am curious to see the business models the other companies wish to apply to the Craftsman name.
I wouldn’t say that Craftsman is a bad tool company but I can say it is not my tool of choice. Ever since I came to this school I have been spoiled with top notch equipment and my dad’s classic craftsman’s shed tools just don’t cut it anymore. That being said I think that many DIY advocates would recommend any craftsman’s tool for your quick fix or dads Christmas present. The price is pretty reasonable and to put it plainly my basements filled with Craftsman tools that my grandfather passed down to me. Although you will get what you pay for I don’t think the company will get their estimated 2 billion dollars for the name. Acquiring this brand would open up a world of new problems with distribution. Sears is one of the only distributer for the tools. Let’s say Apex buys the name they now have to compete with all these other companies that the sears name never had to go up against. Overall I think it will sell and the legendary craftsman tool will live on, but not in the same capacity as it did.
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