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In one key sense, at least, there is no denying that the merger is all about real estate. For years, Sears has claimed to be the prisoner of its once pioneering shopping-mall locations, where, in fact, Americans do less and less of their shopping, especially on big-ticket items. By transforming several hundred of Kmart's 1,500 freestanding and strip-mall outposts into New Age Sears stores, at an estimated price of about $3 million apiece, the company hopes it can finally reach its best potential customers. That assumes, of course, that those customers want to reach Sears. For even if Sears and Kmart can assemble a compelling assortment of exclusive product lines to sell, they are still, in a sense, "going to have to transcend their own [weak store] brands," says Kevin Keller, professor of marketing at Dartmouth's Tuck School of Business.
Whether Sears and Kmart can do that by incorporating the best elements of much stronger brands in the industry remains unclear. "It could be more like a Bed Bath & Beyond meets Best Buy meets Target," says Marshal Cohen, chief fashion analyst at industry researcher NPD Group. "They've got a second chance here." But if Eddie Lampert can't make it work this time, it's likely to be their last.--With reporting by Jeffrey Ressner/Rancho Cucamonga and Jyoti Thottam and Dody Tsiantar/New York City