Photo: J.C. Penney
Do Newton’s laws of motion apply to retailing? An argument can be made when you consider that, as Sears’ business has continued to falter in recent years, J.C. Penney’s has improved. Perhaps not equal and opposite, but related.
Penney has shown modest improvement under CEO Marvin Ellison, earning him kudos for practical thinking, assembling a professional supply chain team and identifying marketplace opportunities such as in the appliance category. The department store chain posted a 2.2 percent increase in comp sales for the second quarter while cutting its net loss.
Without taking anything away from Mr. Ellison, even he has admitted that Sears’ losses have led to Penney’s gains, particularly when it comes to store closings. Sears plans to close 10 stores this summer.
“When a Sears closes in a mall that we’re in, it’s a net positive for J.C. Penney. Our sales increase. In some of the most recent Macy’s closures in malls in which we occupy, it’s been a net positive,” Mr. Ellison told analysts on an earnings call last week (via SeekingAlpha).
“One of the reasons we’re in the appliance business in the first place is because we observe a potential opportunity as Sears continues to redesign their business model,” said Mr. Ellison. “And we believe that there will be appliance market share up for grabs. And because we share over 400 malls with them, we felt that we were in the best position to pick up some of that share.”
Mr. Ellison said that roughly one-third of Penney's appliance customers were new to the chain and about a third of those opened Penney credit card accounts. Seventy percent of the new customers were female. The company now sells more than 1,200 major brand appliances on JCP.com as part of its omnichannel initiative.
Omnichannel success is one of Mr. Ellison’s goals for Penney. The company debuted a new mobile app and launched its buy online, pickup in store (BOPIS) program nationwide during the second quarter. Mr. Ellison said 40 percent of customers who pick up orders in stores have purchased additional items.