Photo: LG Electronics
Why is Bloomingdale’s selling major appliances?
In a partnership with LG Electronics, Bloomingdale’s plans to sell major appliances and TVs for the first time.
The department store retailer will open an LG store-within-a-store concept at its 59th Street flagship store today and an LG section on bloomingdales.com. Bloomingdale’s may add appliances to other stores if the LG holiday test proves successful.
In a statement, LG said the Bloomingdale’s alliance will support the selling of its LG Signature premium collection that is as much about how the design fits a consumer’s lifestyle as it is about functionality. The line includes a $7,000 TV, a $3,200 washer/dryer as well as a refrigerator, dishwasher, air purifier and oven range.
Bloomingdale’s, owned by Macy’s, Inc., sees the LG shop complementing existing housewares offerings.
“We continually seek ways to improve the lives of our customers through our product offering,” said Dan Leppo, Bloomingdale’s EVP and GMM of men’s and home. “The addition of LG Signature products alongside our robust home assortment allows our customers to explore how these items could work in their homes and enhance their lifestyle.”
Sears, once the dominant appliance retailer, filed for Chapter 11 bankruptcy in March and is closing about 100 doors before the end of the year. In 2016, J.C. Penney re-entered the major appliance category after a 33-year hiatus, not only to fill a void left by Sears’ stores closings, but to attract first-time Millennial homebuyers and lessen exposure in apparel.
The overall appliance category is said to be expanding with innovation being driven by advances in the IoT (internet of things) technology.
Neil Saunders, managing director of GlobalData Retail, sees no issues for Bloomingdale’s including major appliances in its mix.
“Other luxury departments stores like Harrods and Selfridges have successfully sold electronics for a long time, and it is an integral part of their offer,” said Mr. Saunders. “Moreover, Bloomingdale’s shoppers already buy electronics, so it makes sense for the retailer to try and get a slice of this spend.”
Bloomingdale’s will face competition from Home Depot, Lowe’s, Costco and Amazon, as well. Retail Dive said appliance boutiques such as Pirch, which carry more upscale European brands than Bloomingdale’s, may be better suited to work with the interior designers that support the high-end appliance decision for homeowners.
- LG Electronics USA Partners with Bloomingdale’s to Offer High-End Appliances and TVs in Store and Online – LG Electronics
- Coming soon to Bloomingdale’s: LG TVs, washing machines and refrigerators – USA Today
- Bloomingdale’s to start selling high-end appliances ahead of the holidays as Sears struggles – CNBC
- Bloomingdale’s to sell major appliances – Retail Dive
Discussion Questions
DISCUSSION QUESTIONS: Will Bloomingdale’s find success with its test of the LG Signature store-within-a-store concept? Which retailers will ultimately do best in selling appliances, as the category evolves?
Poll
BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
Despite what I have read in certain places, this has nothing to do with Sears. There is virtually no overlap between the two chains. Rather this is Bloomingdale’s doing its own thing and trying to grab a greater share of its customers’ wallets. Executing with LG and focusing on the premium ranges are both sensible. This is not going to be a major generator of revenue, but it will generate some sales and will help Bloomingdale’s to round out its proposition.
High-end electronics could work where less expensive electronics or furniture didn’t and most department stores did away with those departments. If Bloomingdale’s is going to dedicate floor space to this category, it might as well be in the higher-end products. Wait and see.
Bloomingdale’s will do well selling LG Signature appliances since like the rest of the store, it will be selling premium items. The only issue I see is the lack of brand choice for the consumer, its LG or nothing right now. Home Depot and Lowe’s are doing very well selling appliances, mostly for their kitchen and laundry remodels. I would also think that Walmart and Target are looking at the category too!
This move might have been a head scratcher 10 to 20 years ago. But this makes sense in order to cultivate younger, tech-savvy, affluent customers. It adds to the Experience (Explore + Experiment.) It is certainly test-worthy. The key will be product knowledge and customer service. I have come to appreciate shopping at Best Buy. The associates really know their stuff and the service is always great. I have to believe that Bloomies and LG know this.
I think this is a smart move for Bloomingdale’s. Two thoughts come to mind: First, department stores were once just that, a store filled with many departments including toys, furniture, consumers electronics, appliances and more. It’s interesting to note that one department store chain that still carries that tradition and who is very successful is Boscov’s. J.C. Penney and Macy’s have continued to bring back departments. Second, I like the fact that Bloomingdale’s will focus on high-end LG products which fit nicely into their customer demographic. Whether the in-store LG department leads to actual sales or merely a place for customers to see and try the appliances is debatable and only time will tell, but for now I think it’s a great way to enhance the overall in-store shopping experience for all Bloomingdale’s customers.
I’m old enough to remember when every city’s local department store chain was the dominant retailer of major appliances and TV’s. (That makes me pretty old.) Over time, stores like Macy’s and its predecessor nameplates exited these businesses because they couldn’t compete against big box stores and found better uses for the square footage. J.C. Penney is the latest retailer to re-enter these categories in a big way, in order to capture market share from Sears — and Penney’s own sales suggest that it’s not working.
Bloomingdale’s has a different motivation, assuming that its LG shops will display the brand’s most advanced (and high-priced) electronics and appliances. Bloomie’s may feel that it enhances the overall home store strategy, but may find that it’s a tough business to operate profitably — unless LG is heavily subsidizing payroll costs. Meanwhile, LG has nothing to lose from this brand-building exercise.
Luxury and lifestyle categories span across many segments of retail, including Bloomingdale’s selling upper-end appliances. This is clearly not a reaction to Sears collapsing, rather it’s Bloomingdale’s taking a more entrepreneurial approach and expanding their luxury and lifestyle assortments into the kitchen. LG is an outstanding luxury-focused appliance brand to partner with, and Bloomingdale’s is wise to establish this partnership.
Lifestyle is right up there with experiential retail as two of the trendier and opportunistic areas for retailers to capitalize on. I’m very intrigued to see how this goes for Bloomingdale’s. Beyond LG, if this partnership takes off, there are expansion opportunities for Bloomingdale’s to offer Wolf, Miele and other luxury brands. Let’s see how this plays out.
I don’t see this as related to Sears’ demise at all. The key here is that it’s an LG Signature series store-within-a-store which is a high-end premium brand series. This isn’t the same as J.C. Penney deciding to add an appliances department. Bloomingdale’s is simply adding another luxury series of items to their assortment with this and why not? It fits the luxury lifestyle of their demographic. I expect they will make some sales, but probably not enough that they’ll decide to put this at all stores in the future, maybe a select set of stores in certain locations with more high-end buyers.
I have very mixed feelings about this move. The customers who stumble upon this store-within-a-store may have fun exploring however, they did not come there to buy appliances. Unless and until Bloomingdale’s can figure out the right marketing strategy, I don’t see this as a big money maker. More so it’s an interesting experience while customers are there. For my 2 cents.
Why just LG? Sure they are an excellent brand in terms of performance, but I don’t necessarily think of them as aimed at the upper end of the upscale market. And do shoppers really need another place to buy LG products? It’s not that I think the products aren’t good or that I’m appalled at the idea of Bloomingdale’s selling appliances, it’s just that I wonder if LG is upscale enough. As to the second question, Best Buy has an interesting approach — range of products at a variety of price points, except for the top, top end, sold by people who have no financial stake in what you buy. And there are all those high-end sellers catering to the top of the market. And at that end, appliances can be as ephemeral as fashion. This year’s “in” refrigerator being next year’s cliched purchase.
Luxury appliances is not a large category but is a niche and this strategy has the potential to be successful for both LG and Bloomingdale’s. It is a good way for LG to showcase state-of-the-art appliances.
Department stores are looking for creative ways to increase shopper visits and profits. Many department stores have added mattresses to their product offerings, as this has been a hot product category (e.g., Target selling Casper mattresses). Appliances may be the next hot product category that is attracting department store. Like mattresses, appliances probably have attractive profit margins, which can help improve store profitability.
If it’s competitive on price and selection and service and … all the hundred-and-one other things one seeks when buying appliances, then why not? But I don’t think it’s going to succeed just because its Bloomingdale’s — unlike, say, a fashion or cosmetics line — if that’s the hope.