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Two-for-one sale

From Mary Snow

Wolf Blitzer Reports

NEW YORK (CNN) -- Two of the country's oldest retailers are combining their roughly 35,000 stores. Kmart is buying Sears Roebuck in a surprise $11 billion deal to create the nation's third largest retailer.

Wall Street applauded the move as good business. But is it a good deal for consumers?

"I think when you put the two of them together, stores like Target are going to have a lot of competition," one shopper told CNN.

"I think it might help consumers ..." said another.

And a third said, "I think it would be a good idea if it slows down Wal-Mart because Wal-Mart is getting more and more of the share."

Stealing market share from Wal-Mart and Target is the stiffest challenge.

Just two years ago, fierce competition helped land Kmart in bankruptcy.

Now, it will not only have to jockey for better prices, industry watchers say the new stores, which will bear both the Sears and Kmart names, will also have to compete for identity.

"I think the consumer is going to be a little confused," says branding expert Linda Kaplan Thaler. She says shoppers will ask themselves, "Am I going to Kmart to get tires? Am I now going to go to Sears to get white satin sheets? Is there going to be a name change?"

Some expect the merger to result in better prices for consumers. Others point out that independently, Sears and Kmart have both seen a drop in sales and will have a lot of difficulty just to survive.

Retail analyst Howard Davidowitz says, "The only way to compete with Wal-Mart is not to try to out-Wal-Mart Wal-Mart, but to differentiate yourself, and so far these folks have been unsuccessful at doing it."

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