Local retailers face chainsaw massacre

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					                                                                                         face chainsawmassacre
                                                                            Localretailers
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@,csm n\t\{rti                                                                                      MathewCarr

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             facechainsaw
Localretailers           massacre
MathewCarr
The Australian       Review 13 Dec 1997| Page:13 | Companies Markets
             Financial     |                               and


US retailgiantSearsRoebuck                                  marketnext monthand plansto
                          and Co Inc will enterthe Australian
open 80 storesin threeyearsand unleash pricewar in the hardware
                                      a                       and whitegoods
                                                                           sectors.


                                                  in       west,with the group initially
The first Searsstorewill open nextmonthat Prospect, Sydney's
focusingon the $3 billionpowertoolsmarket.


It wouldsell underSears'Craftsman                       and           builders an
                                 brandnameto tradespeople do-it-yourself      in
                                                     retailers, managing
attemptto consolidate marketdominated smallindependent
                    a               by                        the       director
                   in        Mr             said.
of the Searsventure Australia, Tim Brachmanis,


The stores  willtakeon Mitre10,Howard                       Bunnings HomeHardware
                                      SmithLtd'sBBC Hardware,      and
- as well as departmentstoressuch as ColesMyer Ltd'sKmart.


              has sold its Australian
The US retailer                                rightsto Mr Brachmanis's
                                    distribution                                 private
                                                                      Sydney-based
firm Brac Enterprises Ltd,whichis seekinga majorretailer a partner help pay for the $50
                    Pty                                as        to
millionstore rollout.


"We noticedthe hugedifference                and US retailsector- the levelsof service,
                            between Australian
                                   the
                                                          said."Twoyearsago we applied
the quality the productand its competitiveness," Brachmanis
           of                                 Mr
                                sincethen. In May,we secured[the distribution]
to Searsand have been negotiating                                           rights.


"Searshas neverdone this anwhere else in the world."


                                         StockExchange abouttwo years- will beginwith 12
Brac - which plansto liston the Australian            in
storesin the firstyear,rangingin sizefrom 200 sq m to 1,000sq m, with the initial       to
                                                                                expansion
                   areasbeforemovingon to rurallocations.
focuson metropolitan


The group hopesto secure1-2 per cent of the tool marketin the firstyear beforemovingon to
whitegoods.




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                                                                                                         face chainsawmassacre
                                                                                            Localretailers

@.ccm il\ t\{ t'u til.\It.!t                                                                                        MathewCarr

      to                    information the end of this artrcle.
Sublect CopyrightSee Copynght         at



Afterabouta year,Searswill beginto rollout larger,        storesunderits Kenmorebrand,
                                                 whitegoods
        againstthe likesof HarveyNormanHoldings,
competing                                      Bing Lee, Retravision Chandlers.
                                                                   and


Also, Searswill introduce the Australian
                        to                                                    image-
                                                          clean"family-friendly"
                                       retailscenea bright,
something                    grimyworldof power{oolretailing, Mr Brachmanis
         rare in the sometimes                              as            puts it.


             storeswouldimportgoodsdirectfrom the US, takingadvantage Sears'enormous
The Australian                                                      of
buyingpower,whichwouldallowit to undercut
                                        domesticpricesby about30 per cent.


"We want to releasegoodsto the marketat least'15per cent belowcurrentprices," Brachmanis
                                                                            Mr
said.
          pricereductions
Substantial             were possible,
                                     despitedutyand shippingcosts,he maintained.


SearsRoebuck
           turnedover$US3B.2     ($57billion) the 1996calendar
                           billion          in               year.Thisyear,
revenues the firstninemonths
       for                  reached      billion, 6 9 per centincrease the same
                                  $US32.16      a                    on
period 1996.Profits the firstninemonths
      in          for                 were$US791million, 12 percent increase the
                                                       a                   on
       year.
prevrous


Sears'move intoAustralia sure to placesubstantial
                        is                      pressure Australian
                                                        on        whitegoods
manufacturers
            EmailLtd'sWestinghouse Kelvinator
                                 and        brandsand Southcorp
                                                              HoldingsLtd's
Hoover    as
     brand, wellas NewZealand's
                              Fisher Pavkel.
                                   &


It followsintensecompetition the $4 billion
                           in              Australian
                                                    whitegoods
                                                             market,with SouthKorean
manufacturer                        that it wouldpushfor a substantial
           Daewooannouncing September
                          in                                         shareof the
Australian
         market.


Sears'pressreleasesrevealthe companyhas had mixedsuccessso far internationally,
                                                                             sellingits
       stake in SearsMexicoearlierthisyearfor an after-tax
majority                                                 lossof $US36million.



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