Since 1916, Sears and Whirlpool have been the best of business partners. It all began over 100 years ago when Whirlpool designed two types of wringer washers for Sears, Roebuck and Co., according to Whirlpool's website. Ever since, Whirlpool products have been sold at Sears. However, that relationship seems to have run its course.
This Tuesday, Whirlpool's CEO Marc Bitzer told investors that they would no longer supply branded products to Sears because the companies could not reach terms that were "acceptable to both parties." However, he did say that Whirlpool will continue to supply the Kenmore products it makes for the department store. The
Whirlpool is known for its excellent dishwashers, washing machines, and refrigerators. A note sent to Sears stores last week elaborated on the issue. It seems that Sears said that Whirlpool was making demands that would've made it difficult to sell those Whirlpool appliances at a competitive, reasonable price.
According to both parties, this severing of the Sears-Whirlpool partnership is effective immediately although Sears said that it would sell off the remainder of its Whirlpool inventory.
In addition to Whirlpool-branded products, Sears will be pulling Whirlpool subsidiaries like Maytag, KitchenAid, and Jenn-Air from its floors. Kenmore products will remain in stores as well as other brands like LG, Samsung, GE, Frigidaire, Electrolux, and Bosch.
Encroaching Competition on Sears
For years Sears' market share has suffered from increasing competition. Stores like Home Depot and Amazon.com who sell appliances have been slowly chipping away at the market that Sears dominated for decades.
Currently, Sears comes in fourth for appliance retailers behind Walmart, Amazon, and Target in that order, according to market research firm TraQline.
In his call with investors, Bitzer also said the entire Sears business has declined over time. As a vendor, they now account for only 3 percent of Whirlpool's global business, of which branded products are only a small fraction. So maybe it was only a matter of time before this happened.
As a result of this announcement on Tuesday, both Whirlpool's and Sears' stock tumbled during trading hours.