After covering the extended warranty operations of Lowe's Companies Inc. in-depth in the January 6 newsletter, the inevitable question asked is what about everyone else?

Everyone, it seems -- even the corner drug store chain -- sells small kitchen and personal appliances such as blenders, coffee makers, and hair dryers. Fortunately, though, not everyone else sells major appliances such as refrigerators and washing machines. So as we continue our tour of the appliance extended warranty marketplace, we thought it would be a good time to begin filling in the details for some other major retail chains.

As was mentioned in the Lowe's article, none of the other chains have much to say in their financial statements about extended warranty sales or deferred revenue. Most don't have to, because they're selling service contracts for which they hold none of the risk and for which they get just a sales commission. But we still have to create an estimate for their annual sales of service contracts.

So this week, we'll begin that process by doing a little shopping. Which chains sell major appliances, and which of them also sell service contracts? It's not so simple a question. Some, such as Target Corp., sell small appliances but not full-size. Others, such as Costco Wholesale Corp., sell major appliances but not service contracts.

Besides Lowe's, we found seven national or regional chains that sell both major appliances and service contracts. But there are an additional group of so-called independent appliance dealers and retailers that also sell a fair share of the units, and most of them also sell service contracts. So let's take a brief tour of those seven chains this week, and we'll return to the rest of them in future weeks.

Online Shopping Spree

Not being able to traverse the country between newsletters, we did most of our shopping online. And to keep things as simple as possible, at each chain we picked a mid-priced refrigerator with a freezer on top, and a mid-priced top load washing machine.

What we found was that in general, when it comes to pricing an extended warranty, the brand or the features don't seem to matter as much as the type of unit being covered. In other words, all washing machines get one price, and all refrigerators get another. Or even more crudely, everything with list prices between $200 and $400 gets these service contracts, and everything $400 and above gets those.

We suspect that given the typically high claims rates for major appliances, this has created some bargains for educated consumers. Without mentioning any names, there are some appliances that have very poor reputations when it comes to reliability. Yet their extended warranty premiums are usually priced the same as for high-reliability brands.

So the possibility exists that there could be a new type of "adverse selection" in the minds of buyers: purchase the worst junk and the best and longest service contract, and sit back and wait for the repairs to begin. No spare parts? Manufacturer goes under? That would be delightful. It would be the exact opposite of the Consumer Reports way of life: buy the best and don't bother with an extended warranty.

We don't advocate shopping this way, but keep it in mind as we take you on this brief tour of some of the top major appliance retail chains. Most of these extended warranties cost between 10% and 20% of the price of the unit they cover. How many are profitable at those levels?

Abt Electronics

The company name isn't an acronym. Rather, it's the surname of the founders, David and Jewel Abt, who opened their first storefront in Chicago in 1936.

As its name implies, Abt sells consumer electronics. But it also sells plenty of cooking, cleaning, and cooling appliances. How much, we don't know. Abt remains family-owned and does not publish any sales or income figures. But independent rating agencies such as Consumer Reports have given the company very high marks for their customer service, as in last year's Appliance Shopper Satisfaction Survey.

The Chicago-area Abt storefronts were augmented beginning in 1998 by an online sales effort. Abt is an authorized online dealer for numerous appliance brands, including Whirlpool, Maytag, KitchenAid, Weber, Frigidaire, and others.

Abt's extended warranties are sold in two flavors. For local customers in Illinois, Indiana, Wisconsin and other areas near the company's Glenview IL home base, Abt sells its own four-year Extended Protection Plans. Repairs are provided by its own technicians, and administration is provided by its own staff as well.

For online customers, Abt resells SquareTrade extended warranties. For a $431 GE top load washing machine, a four-year extended warranty was $80 (19% of purchase price) while a five-year plan was $100 (23%). For an $868 Frigidaire top freezer refrigerator, a four-year extended warranty was $80 (9.2% of purchase price) while a five-year plan was $100 (12%).

A $927 Panasonic commercial microwave oven was covered by only a three-year SquareTrade protection plan. But it was available either with or without accidental damage protection. With ADP, it was priced at $170 (18%). Without, the plan was priced at $110 (12%).

Amazon.com Inc.

You would think that Amazon.com sells mainly books, and maybe some CDs and DVDs. You wouldn't normally think of the online retailer as a top seller of major appliances. But you'd be wrong.

Amazon.com did indeed open in July 1995 as an online bookstore founded by Jeff Bezos. But it has long since formed sales partnerships with other online retailers that have helped it diversify into numerous additional categories, including white goods. So while the actual appliances portrayed on the Amazon.com web site may be sold by retailers such as Abt Electronics, AJ Madison, AppliancesConnection.com, and HomeEverything.com, to the consumer it looks like Amazon.com is the gateway to everything they need.

As mentioned above, Abt sells SquareTrade service contracts. And the appliances it sells though the Amazon.com web site are also covered by SquareTrade plans. AJ Madison and AppliancesConnection.com sell Warrantech service contracts. For an $891 Maytag top freezer refrigerator, Warrantech charged $60 (6.7%) for a three-year plan and $120 (13%) for a five-year plan. For a $370 Frigidaire top load washer, Warrantech wanted $138 (37%) for a three-year plan and $275 (74%) for a five-year plan.

HomeEverything.com sells service contracts administered by the Buyers Protection Group, a New York City-based extended warranty company. And that's not to be confused with the Buyers Protection Group Inc., an Atlanta-based real estate services firm that has lately diversified into home warranty and home inspection services.

HomeEverything.com sells a Frigidaire top freezer refrigerator for $504, and for that product it also sells BPG protection plans with durations that range from two to five years and prices that go from $45 (8.9%) for two years to $90 (18%) for five years. A $948 Maytag top load washer features BPG protection plans with the same range of durations, but with higher premiums that range from $90 (9.5%) for two years to $170 (18%) for five years of coverage.

Best Buy Co. Inc.

Best Buy is a major retail chain, but only about four to five percent of its U.S. sales arise from the appliance category. Still, that's 4%-to-5% of $35-to-$37.3 billion in domestic segment sales revenue, or something on the order of $1.5-to-$1.75 billion in appliance sales per year.

The company opened 45 years ago as the Sound of Music, an audio shop founded by Dick Schulze, in his hometown of St. Paul MN. The company changed its name to Best Buy and began selling appliances in 1983. It acquired the Geek Squad in 2002, and gradually migrated the branding of all of its extended warranties to reflect that pedigree.

Everything about the Geek Squad, including its logo, revolves around the odd geek-like wardrobe of its workers. Called Agents, the staff dresses in black slacks, white shirts, and black clip-on ties.

They patrol the streets in black-and-white Volkswagens rebranded as "GeekMobiles," carry police-like "Special Agent" badges, and according to their self-written history, allegedly "keep the streets safe from technological evil." Agents have been known to congregate at a Waffle House located near their Geek Squad City repair and service facility in Louisville KY.

Best Buy's Geek Squad Black Tie Protection Plans are sold both online and in-store. For an LG top freezer refrigerator priced at $850, a two-year service contract was priced at $100 (12%), while a four-year plan was $160 (19%). For a Maytag top load washing machine priced at $500, the two-year plan was $60 (12%) and the four-year plan was $110 (22%). A $280 Panasonic microwave was eligible for either a two-year, $35 protection plan (12% of purchase price) or a four-year, $70 protection plan (25%).

hhgregg Inc.

hhgregg Inc., the trade name now used by what used to be called Gregg Appliances Inc., is a chain of electronics and appliance shops founded in 1955 by Henry Harold Gregg and Fansy Gregg. It operates 169 storefronts in 15 states, in addition to an online site.

Sales in the half-year ended September 30, 2010 were up 49% to nearly $917 million. Appliances comprised roughly 41%-42% of that mix, or about $376 million in the latest half-year. The appliance sector's share of total sales, by the way, is up significantly from the 35%-to-39% ratios seen in years past.

hhgregg sells what it calls "Premium Service Plans" for its appliances. For a $602 Frigidaire top freezer refrigerator, a three-year plan was priced at $100 (17%), while a five-year plan was $140 (23%). There was also a ten-year "major component only" plan priced at $70 (12%).

An $800 Whirlpool top load washing machine had three- and five-year plans priced at $100 and $130, respectively (12% and 16% of the purchase price). And there was also a 10-year "major component only" plan priced at $70 (8.7%).

A $220 GE microwave was eligible for a three year plan priced at $25 (11%) or a five-year plan priced at $40 (18%). There was also a ten-year "major component only" plan priced at $20 (9.1%).

Home Depot Inc.

Home Depot is known for its huge warehouse-like outlets, spread across all 50 U.S. states and several other countries. The first of what would eventually total more than 2,200 outlets opened in suburban Atlanta in 1979. The largest outlet, located in northern New Jersey, takes up more than 225,000 square feet.

Home Depot reported total sales for the nine months ended October 31, 2010 of $52.9 billion, up 2.4% from the same period in fiscal 2009. A category described as "plumbing, electrical and kitchen" accounts for 30% to 31% of that total in recent years. But there is no listing for just appliances in the annual reports.

Appliances are, however, eligible for Extended Protection Plans. The two-year plans are $60. The four-year plans are $100. A four-year plan for any two appliances is $179. And a four-year plan for any three appliances is $269.

On a $494 GE top freezer refrigerator, the service contracts were between 12% and 20% of the purchase price. On a $699 Maytag top load washing machine, the service contracts were between 8.6% and 14% of the unit's price. For both together, the service contract was 15% of the combined purchase price.

Sears Holdings Corp.

Sears Holdings is the fourth largest broadline retailer, with approximately 3,900 full-line and specialty retail stores in the United States and Canada. And given the breadth of Wal-Mart's product line combined with the lack of major appliances in Target's, we suspect that Sears may still be the largest retailer of major appliances such as refrigerators, washing machines, clothes dryers, and dishwashers.

Annual revenue has been slowly declining from the $50 billion level to the vicinity of $44 billion in the last few fiscal years, and since Sears estimates that its home appliance business has accounted for approximately 15% of its reported revenues in the last few fiscal years, we're probably talking about something on the order of $6.6 to $7 billion in appliance sales per year.

Sears features its own Kenmore brand (manufactured by Whirlpool) but it also stocks other nameplates such as the high-end Italian brand called SMEG, which is short for Smalterie Metallurgiche Emiliane Guastalla. And yes, Sears also sells Whirlpool and Maytag, as well as GE, Amana and Frigidaire.

We chose a Frigidaire top freezer refrigerator that sells for $830. And we were offered a three-year "In-Home Master Protection Agreement" for $140 (17%), or a five-year plan for $200 (24%). A Kenmore top load washer selling for $497 had a three-year plan priced at $130 (26%) and a five-year plan priced at $200 (40%). A $510 GE microwave oven had a three-year plan priced at $60 (12%) and a five-year plan priced at $90 (18%).

Sears always seems to price its extended warranties towards the high end of the scale. However, its plans are also said to provide more thorough coverage. For instance, they are not automatically canceled after a buy-out. And they might provide better coverage for ancillary losses such as spoiled food.

Wal-Mart Stores Inc.

Last but not least, we visited Wal-Mart Stores, or more properly, the Walmart.com online web site.

Wal-Mart is the largest retailer and remains number one on the Fortune 500 list of American companies. But like Target, it doesn't sell the really big stuff when it comes to major appliances. Still, it does have a few items worth mentioning.

Walmart.com sells an Avanti compact top load washer for $399. It also sells a Sunpentown ice maker for $359, and a Sunpentown freezer for $345. And just for good measure, we also found a Danby dishwasher selling for $359 and a Maytag microwave selling for $307.

A three-year service plan for any major appliance priced between $300 and $500 is priced at $44.33. A two-year plan for units in that price range is $35. So all five of these units would fit into that bracket by virtue of their selling price. And anything priced within that range will therefore have service plans available for them, with premiums that range between 7% and 15% of the unit price.

Major appliances priced over $500 are eligible for two-year plans priced at $65 or three-year plans priced at $88.33. But there are so few units priced above $500 that it's hardly worth mentioning.

Overall Rankings

In its 2010 Appliance Retailer Satisfaction Study, J.D. Power and Associates ranked Lowe's, Best Buy, and hhgregg the highest overall, based on a customer satisfaction survey of 4,500 consumers who purchased a laundry or kitchen appliance within the previous 24 months from a store that sells home appliances.

J.D. Power said Lowe�s achieved a score of 799 on a 1,000-point scale because of high scores for facilities, delivery service and merchandise. Best Buy and hhgregg tied with a score of 792, with Best Buy scoring higher on price, and hhgregg performing well in the sales staff and service factor.

Consumer Reports, meanwhile, relied on 21,000 responses to its 2009 Appliance Shopper Satisfaction Survey to determine that Abt Electronics, Costco Wholesale, and Amazon.com were the top-ranked appliance retailers.