Wednesday, November 17, 2004

Mergers: Good or Bad?

The Times has this article on the K-mart/Sears merger. So what will the effects be on the average consumer?

Well, the two companies have said that brand names will remain the same and each chain will retain its original identity. But, there are clearly economies of scale to be exploited here. Wal-Mart, as the largest retailer, is able to offer the same goods at far cheaper prices. K-mart and Sears will now be that much closer to competing with Wal-Mart. Arguably, Sears provides a different retail product that Wal-Mart does. But K-mart provides virtually the same product, and will now be able to provide it at lower cost (assuming that the economies of scale actually come through.) This is a good thing, and, if anything, actually increases competition in the retail market.


Anonymous Anonymous said...

Agree... economies of scale have helped many business mergers.. Kenmore and other Sears products will probably be found in Kmarts henceforth. Marth Stewart line and J. Smith line, and others, may be soon found in Sears.. Administrative and managerial costs will be cut considerably.

11:54 AM  

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