J.C. Penney largely got out of the appliance business more than 30 years ago. But now, in a bold strategic shift the clothing and home goods retailer is planning to add sizable appliance sections to 500 of its stores this year, as the Wall Street Journal reports:
J.C. Penney has pushed to turn itself around, adding back categories as it tries to make its giant stores more productive. After getting out of the appliance business in 1983, J.C. Penney began a trial of large home appliances, including washers and stoves, in 22 stores in February. Now it is expanding appliance availability to nearly 500 stores and its website.
“The response has been outstanding,” Chief Executive Marvin R. Ellison said. “The pilot confirmed that we should not limit our business to apparel and soft home in order to achieve significant revenue growth.”
The company also said the stores getting the new appliances will feature new floor spaces devoted to window coverings such as ready-made curtains, blinds and shades.
J.C. Penney will start introducing the appliances in July to new stores nearly every week. Customers also will be able to shop and buy major appliances on its website later this summer.
Despite the bullishness of Ellison's remarks, J.C. Penney will be going up against the likes of Sears—which still holds most market share among appliance sellers—Home Depot and Lowe's.
J.C. Penney is also planning to broaden its offerings for furniture, window treatments and flooring in the stores with appliances. Overall, the strategy marks a renewed focus on the chain's physical store offerings. Ellison told the WSJ earlier this year that the company's online business was "totally broken" due to neglect by former CEO Ron Johnson, who led a failed turnaround effort geared largely around revamping the chain's stores.
Analysis: Penney's Foray Into Appliance Sales Will Be Anything But Simple
"I dont want to say it's inconceivable, but it is counterintuitive that they start selling appliances and see an uptick in business," says Constellation Research VP and principal analyst Guy-Frederic Courtin. "The question begs, is this beginner's luck or is this sustainable?"
While desperate times call for desperate measures, as the saying goes, moving into appliance sales isn't simply a change in marketing and direction. "You want to talk about a supply chain issue?" Courtin says. "You're going from stores selling and stocking very manageable items like shirts and jeans to white goods."
Penney's tasks begin at the showroom floor level, with decisions to make on how to display appliance stock appeallingly and in the right level of abundance. Then there's the matter of how appliances will be stored and received, Courtin adds.
There's also a labor issue to contend with, since J.C. Penney's current staffing model largely sees workers ringing up sales and stocking shelves and racks. Its workforce will have to be augmented or retrained to provide staffers who can help guide customers through the selection and purchase process for appliances, Courtin notes.
It's not clear whether J.C. Penney will be using a vendor-managed inventory model for its appliance sales, which could take much of the strain off its own supply chain infrastructure. But in either case, its decision to devote ample amounts of floor space to appliances speaks to a bigger truth for brick-and-mortar retailers of all stripes.
"Your physical store location is your biggest asset," Courtin said. While stores-within-a-store have been around for a long time, the future could see retailers saddled with large networks of underperforming physical stores find unconventional ways to shake up their product mix for revenue growth, particularly on a seasonal basis, Courtin says.
For example, what if J.C. Penney formed partnerships with the likes of John Deere or Toro, and stocked lawnmowers during the growing season? That may seem like a stretch, but a larger point stands, Courtin says: "Retailers have to figure out how to maximize the asset of having a store, and it's about who or what can monetize the space better."
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