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Would You Buy a Kenmore Branded TV?

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Kemnore-Elite-TV-thumb.jpgConsumer electronics products have, over the years, been no different from clothing, washing machines, and breakfast cereal when it comes to the use of private-label brands. Typically, retailers have used private labels to give budget-conscious customers another low-cost alternative to big-name products they're selling in a particular category.

When it comes to electronics, we've seen not one but two private-label brands from Best Buy in recent years: Dynex and Insignia. We've also seen Durabrand TVs and iLo-branded electronics from Walmart. Amazon has its own private-label brand for electronics, called AmazonBasics. The latest private-label electronics brand to enter the crowded TV market, however, represents a somewhat different strategy, in that it's a brand that many consumers are already familiar with: the Sears in-house brand Kenmore.

Of course, consumers who know the Kenmore name probably equate it with air conditioners, microwave ovens, washing machines, and other appliances. The new Kenmore TVs--a lineup that includes six models in all, with three HD sets and three Kenmore Elite-branded 4K models--are clearly designed to offer Sears customers who are familiar with the Kenmore brand another TV option.

The big question is this: are consumers willing, or even eager, to buy a TV with the Kenmore name on it over one from the likes of Samsung, LG, or Sony? Or other recognizable names like Vizio, RCA, and TCL? Or even existing lower-priced but lesser-known options like Seiki and Upstar?

Before even attempting to answer that question, let's first consider the rationale behind private-label electronics brands and how successful they've been over the years.

AmazonBasics-logo.jpgThe AmazonBasics brand launched in September 2009 as a "private label collection of consumer electronic 'basics' created for customers who want exceptional value," said Amazon PR Manager Lori Richter. AmazonBasics is "centered around customer trust," she said, adding, "We work hard to fulfill customer needs across a wide range of product categories based on where we identify gaps in selection of high-quality yet high-value everyday products." Products in the line are targeted at "customers who want exceptional value," and Amazon has been "very pleased with the response from customers," she said. Amazon's goal is "to offer as wide of a selection of products as possible, so this is an addition to the brands we already carry."

Best Buy was mum on specifics about its private-label brands. "Since 2005, Best Buy has offered value-conscious customers quality and performance with our Insignia products, which span from soundbars to tablets to TVs, to name just a few," the retail chain said in a statement. It declined to say how the items have done or comment on why it stopped using the Dynex brand for its TVs. The Dynex brand is still apparently being used for smaller electronics and accessories.

Insignia-TV.jpgInsignia has "clearly been a positive" for Best Buy, said NPD analyst Stephen Baker. After all, he pointed out, "They've had them for a long time. I think if it wasn't a positive for them and they weren't ... making extra money by filling a niche that they didn't feel the market could fill for them, then they would stop doing it. They've had private labels in other categories that they've stopped doing clearly because they didn't feel like they had a way to monetize that product in their stores," he said.

Baker speculated that Best Buy stopped using the Dynex brand on its TVs because the retailer didn't need two private-label TV brands. "I don't have specific knowledge of why or why not, but clearly when you stop selling a brand, it's because it doesn't add the appropriate amount of value and volume to the category," he explained.

Clearly there's a pretty good case to be made for the kind of basic commodities--cables, stands, certain entry-level products--being made available by retailers via private labels, said Baker, pointing to Amazon and Best Buy. The private labels give the retailers a degree of "quality control" over the products they sell, and the items can be built to their specifications. There's also "extra money to be made" by "doing it yourself," he said of the commodity items.

We could argue that, these days, TVs have become a commodity, as well. What a private-label TV achieves for the retailers is that it gives them "a more price-focused brand that they can control both the features and the pricing for," Baker said. "You need to have some very price-focused products on retail shelves, but I'll point out that even Best Buy doesn't just have Insignia as an entry-level product." The retailer "will bring in other brands that are considered more entry-level or not top-tier brands, as well." Baker named Emerson and Sanyo as two examples of other entry-level brands. "It's all part of trying to build a mix in the store and trying to match up the features and price with what the consumer is looking for," he said.

Baker guessed that Sears chose to offer the Kenmore TVs for pretty much the same reasons that every other retailer introduces private-label brands. What Sears executives likely asked was, "How do we find a way to get products at the right price that we have some incremental level of control over and that we can manage the margins and manage what we're spending on them? ... I'm sure there's more complicated reasons" for the Sears decision, he said, agreeing that Kenmore is a brand that resonates with at least some consumers.

The Kenmore TVs were officially announced by Sears on June 21, but they started trickling into Sears stores a few weeks earlier than that. "The reason why we launched this brand" for TVs is that the Kenmore brand is "a 100-year-old, trusted brand just loved by our members at Sears, so it was a natural brand extension for us to launch a line of television sets" explained Tom Park, president of the Kenmore, Craftsman and DieHard (KCD) brands at Sears.

In recent months, there were shortages on several TV models at Sears stores, ahead of the Kenmore TV announcement. "Part of that" was Sears wanting "to make room" for the Kenmore TVs, said Park, pointing out that the six initial models range in size from 32 inches to 65 inches and are priced at $200 to $1,500. The Kenmore TV plan was decided on in Fall 2015, he said, explaining: "One of our missions at KCD is to create natural brand extensions. Television sets were one of them." Sears was able to sign an agreement with a "global TV manufacturer, went into production in the February time frame, and was able to bring these TVs to market" in June, he said.

Park declined to identify the TV maker "for confidential reasons, but it's a well-known global TV manufacturer" that's making the Kenmore and Kenmore Elite TVs, he said.

How much Sears will cut back on supplies of TVs from other manufacturers (after having already pared down its TV brand selection) isn't clear. But Sears, at least for now, intends to offer customers a choice between its Kenmore TVs and other brands they want, according to Park, who told us: "We obviously honor our other manufacturers that we have on the shelf, but this is a Sears private brand, and the Kenmore brand is very, very strong inside of Sears, so we want to showcase the brand inside of our own retail format." That said, he told us: "If there's a member who wants to see a Samsung product, they'll be able to buy a Samsung product .... We still will carry all the other brands. Our goal as a retailer is to make sure that we satisfy the members and we have the right assortment to offer them."

The Kenmore TVs are "really targeted at our loyal Sears members," said Park, referring to the retailer's Shop Your Way (SYW) rewards program. Kenmore products are "in millions and millions of homes from an appliances perspective," and Sears is now "targeting that consumer the next time it's time to upgrade or buy a new TV," he said, predicting "they're going to get a Kenmore" model.

Whether that actually happens remains to be seen, of course. But there's been "a lot of consumer interest" so far in the Kenmore TVs, said Ed Brann, Kenmore product manager, connected products. Asked if the Kenmore TVs are targeted at consumers who might not be as technically savvy as Best Buy consumers, Park countered: "Our customers are very savvy. These products are as good a product as you're going to find at a Best Buy."

One interesting decision that Sears made was to omit smart/streaming capability from the Kenmore Elite 4K TVs--a feature that is found in other 4K TVs carried at Sears stores. Sears didn't give a reason for that decision, which seems to run counter to the retailer's recent efforts to expand the connected device offerings in its stores. The news release announcing the Kenmore TVs and other new KCD products even said the items were "the next wave of products for the connected home." The new products even included a Kenmore smart thermostat. However, Park did say that "future TV models will be smart."

The lack of smart functionality also seems to potentially make it more challenging for Sears to sell the Kenmore TVs at their current pricing. Most of the models are being sold at prices that are about the same as comparable smart models from LG and Samsung when they are on sale (and many of the LG and Samsung models are often on sale). For example, the top-of-the-line, 65-inch Kenmore Elite 4K TV was introduced at $1,499.99--the same price that a 65-inch Samsung 4K smart TV was selling for as part of a $500-off sale in early July.

"We believe in our brand. It's a high-quality, premium brand, so it can command that kind of price point," Park said of the prices at which the Kenmore sets were introduced. But he added, "Obviously, the television market is very competitive and so, if we need to lower our prices to compete ... we will. But just launching [the] product, it doesn't make a lot of sense to come out and discount it." The 65-inch 4K Kenmore Elite TV was on sale for $1,299.99 at Sears.com on July 5.

It also remains to be seen whether Sears will, at some point, sell Kenmore TVs to other retailers. "We don't have any plans to take the Kenmore TV outside of Sears at this time," Park told us, adding he "can't speculate" on whether Sears will do that in the future.

Such a move, however, wouldn't come as a huge surprise in light of another recent Sears announcement. While reporting a $471 million loss for the first quarter of 2016 that ended April 30, Sears said its board "decided to explore alternatives" for KCD and its Sears Home Services businesses because "we believe that we can realize significant growth by further expanding the presence of these brands outside of" Sears and Kmart.

So, with all of that in mind, we come back to the original question: Would you buy a Kenmore or Kenmore Elite TV? Why/why not? Let us know in the Comment section below.

Additional Resources
What Is "Ultra HD Premium"? at HomeTheaterReview.com.
That Really Cheap Pair of Brand-Name Headphones May Be Too Good to Be True at HomeTheaterReview.com.
High-Performance AV Companies Need to Find New Distribution Pipelines or Face Certain Peril at HomeTheaterReview.com

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