Sears, AOL team up in marketing and product development

Tuesday, March 14th 2000, 12:00 am

By: News On 6

NEW YORK (AP) -- In the latest linkup between companies representing the "old" economy and the new, Sears and America Online are forming an alliance to use the Internet to expand their businesses on and off the Web.

For now, the partnership announced Tuesday will focus on marketing each company's products and services, but it will also involve creating Web-linked home appliances like refrigerators that remind you when the milk's running low.

"This is a critical step for both companies to serve the growing Internet needs of our combined and growing customer bases," Sears' chief executive and chairman, Arthur Martinez, said in a statement.

The alliance is the latest in a spate of deals between giant Internet companies and retail chains.

Through such alignments, traditional retailers look to gain respected technology partners that can help them build their Internet businesses. Web companies, meantime, gain a valuable new avenue to advertise their sites and expand their customer base to people who are just thinking about going online.

In recent months, Wal-Mart, Circuit City and Blockbuster teamed up with AOL; Best Buy and Radio Shack partnered with Microsoft and Kmart joined forces with Yahoo!.

"These deals help both sides gain deep penetration into each other's markets," said Ken Cassar, an analyst at the New York-based Internet research firm Jupiter Communications. "It helps both Sears and AOL reach new customers that they didn't get or know about before."

Sears, Roebuck & Co., the nation's second-biggest retailer behind Wal-Mart Stores Inc., will promote AOL in its 858 large department stores. America Online Inc., in turn, will feature Sears on its Web sites and market the giant retail chain to its more than 21 million subscribers.

AOL will be Sears' preferred Internet service provider. The companies also plan to develop a special co-branded edition of AOL, which will offer special Sears promotions and links to Sears' Web sites. That service is expected to be launched later this year, but a subscription price was not disclosed.

Ironically, Sears used to be a co-owner of Prodigy Services Co., an AOL rival that IBM and Sears sold in 1996 to a group of investors.

The Sears-AOL alliance will include the development of products for the Internet "connected home."

Sears declined to give specific details of those goods, but did say that the lineup could include kitchen appliances and Web-enabled phones. Such products are expected to hit stores sometime next year.

Sears is also working with Sun Microsystems Inc. and a number of consumer electronics manufacturers -- including Whirlpool, GTE and Sony -- to develop high-tech products that people can use around their homes.

Besides developing and selling such products, Sears wants to help people install them in their homes. Through the AOL deal, the companies will market and sell high-speed broadband access, which sends data over cable lines and provides connection speeds dozens of times faster than today's dial-up telephone modems.

Sears will also train some of the 15,000 technicians in its home services division -- who now fix everything from air conditioners to washing machines in customers' homes -- to install broadband services.

"With this deal, you have AOL, a technology company with a consumer mindset, and Sears, a giant retailer with a consumer mindset," said David Cooperstein, an analyst at Forrester Research Inc. in Cambridge, Mass. "That is a very strong combination."

Sears' stock was up 68 3/4 cents, or 2.5 percent, at $28.121/2 in late trading Tuesday on the New York Stock Exchange, where AOL shares gained 871/2 cents, or 1.4 percent, to $62.183/4.
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On the Net: http://www.Sears.com, http://www.aol.com