Will being more like Home Depot work for J.C. Penney?
Photo: J.C.Penney

J.C. Penney is looking more like a home improvement store with every passing day. That’s not such as stretch given that Marvin Ellison, CEO of J.C. Penney, is drawing on his experience as an executive at Home Depot in his effort to turn around the department store chain.

Penney recently announced plans to expand the sale of major appliances to 100 more stores while adding home improvement categories, including ceiling fans, home safes, power tools and wallpaper, to its merchandising mix. Management also announced a pilot program to test a bathroom remodeling service in addition to an existing deal it has with Trane to install heating and air conditioning equipment.

“Roughly 70 percent of our customers are female and over 70 percent of those customers own homes. So, what they have said to us is we will buy appliances from you if you sell them. So we sold them,” Mr. Ellison recently told CNBC’s Courtney Reagan. “We set up 500 showrooms. It’s exceeded expectations so far, so we’re very pleased.”

Mr. Ellison said Penney’s push into new home product categories and services is made possible because the chain’s customers “trust the brand.” In many cases, Penney is returning to services it once offered years ago but later dropped to concentrate on soft goods.

As it has done with appliances, Penney plans to roll out home services using a “multimarket test-and-learn approach,” Mr. Ellison said in a press release issued yesterday. The department store chain plans to debut in-store displays promoting its home services this spring. It has also launched a digital storefront — jcpenneyhomeservices.com — where customers can shop for services and schedule in-home consultations.

While not naming Sears outright, Mr. Ellison clearly believes Penney can pick off sales from its rival. “We have one competitor with more than $13 billion a year in the appliance business that’s giving away market share,” he said.

Yesterday, Penney also announced plans to pilot smart home technology in an unspecified store this spring. The chain said it will partner with leading brands such as Samsung “to provide simple home automation.”

BrainTrust

“Maybe there is an opportunity for someone to do ‘Sears’ right again. There were always parts of it that worked.”

Ben Ball

Senior Vice President, Dechert-Hampe (retired)


“Hard and soft goods do not always work well together. Lowe’s has been more successful with female shoppers than Home Depot for a number of reasons.”

W. Frank Dell II

President, Dellmart & Company


“It looks like J.C. Penney is trying to be everything to everyone in a market calling for specialty stores and whittling down inventory.”

Jasmine Glasheen

Content Marketing Manager, Surefront

Discussion Questions

DISCUSSION QUESTIONS: Do you see a significant upside for J.C. Penney as it adds home improvement product categories and services? Should stakeholders be concerned that Penney will neglect soft goods and other important categories as it homes in on new opportunities?

Poll

How would you quantify the long-term sales potential for J.C. Penney as it focuses more on home improvement product categories and services?

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27 responses to “Will being more like Home Depot work for J.C. Penney?”

  1. Paula Rosenblum Avatar
    Paula Rosenblum

    I think it’s a smart move. Clothing department stores are really hurting and Sears is the 1,000 pound, shrinking gorilla in the space. I don’t worry about J.C. Penney neglecting apparel and I would hope they’ll keep going forward with soft home. There are simply too many apparel stores anyway, while Millennials should be starting to buy home improvement products. I think it’s a good thing.

  2. Max Goldberg Avatar
    Max Goldberg

    I don’t see the upside for J.C. Penney. Home improvement products are commodities and subject to very competitive pricing. And J.C. Penney is the last store I would consider for a home improvement service.

  3. Phil Masiello Avatar
    Phil Masiello

    J.C.Penney could be successful at this strategy if they market and execute the category correctly. If the whole company gets focused on hard goods because of a glimmer of success or the weakness of Sears, then this will be a short-term win. If they treat the category as an extension of fashion and beauty for the home, then I think they have a chance to gain market share.

    There are plenty of places to shop online and offline to buy home improvement products. But J.C. Penney needs to integrate them carefully into the brand, which primarily sells soft goods. Make it more of a total home design approach rather than selling and installing water heaters.

  4. William Hogben Avatar
    William Hogben

    Widening lines of business is going to be the trend not just at J.C. Penney but overall. Traditional retailers’ greatest asset is their customer traffic — if those customers want to buy five categories why not sell all five? For retailers who aren’t predominantly selling own-branded goods this only makes sense. We see the prototype in hypermarkets.

  5. David Livingston Avatar
    David Livingston

    There is no upside. J.C. Penney is looking more Sears-esque every day. Trying to copy and take sales from a failed competitor is futile.

  6. Ben Ball Avatar
    Ben Ball

    “It’s beginning to look a lot like a Sears store — everywhere I go … ”

    OK, bad Christmas jingle pun. It’s snowing in Chicago for the first time since December and I’m feeling a little giddy this morning.

    But seriously, maybe there is an opportunity for someone to do “Sears” right again. There were always parts of it that worked — mostly Craftsman and Kenmore.

  7. Lyle Bunn (Ph.D. Hon) Avatar
    Lyle Bunn (Ph.D. Hon)

    Serving more family interests and even entertaining the co-shopper are worthy pursuits for generating store traffic. Home improvement product purchases are based on the product, so why not at J.C. Penney?

  8. Camille P. Schuster, PhD. Avatar
    Camille P. Schuster, PhD.

    Sears is their only competitor for appliances? If that is how they see the market, this is not a road to success. Where has the test been conducted? Is that representative of the rest of the country? J.C. Penney had appliances in the past, then eliminated them, now they are trying again. How many consumers will trust that J.C. Penney will be selling appliances long enough to service anything purchased now?

  9. Steve Montgomery Avatar
    Steve Montgomery

    Hard goods are purchased based on brand, features and price. I can see consumers being willing to at least consider J.C. Penny as an alternative source. Their store environment may be more conducive for their customer base to take the time to look at these goods rather than some of the alternatives. However, I think the trust factor would be far less for home services.

  10. Dick Seesel Avatar
    Dick Seesel

    It may be an opportunity vs. Sears (and in Ellison’s sweet spot) but I’m not convinced it addresses the ongoing challenges to J.C. Penney’s soft line businesses.

  11. W. Frank Dell II Avatar
    W. Frank Dell II

    Hard and soft goods do not always work well together. Lowe’s has been more successful with female shoppers than Home Depot for a number of reasons. For example the Home Depot decor is lumber yard and Lowe’s is mass market. J.C. Penney should not trade hard for soft goods or soft for hard goods. They need a balanced approach for the same customer. Someone who needs a skirt does not want to walk past rows of refrigerators. With the demise of Sears, the door is open and there is no reason J.C. Penney should not enter. J.C. Penney was a middle-class department store that survived the discounters. Still, an issue for them is their reason for being.

  12. Doug Fleener Avatar
    Doug Fleener

    I think it is extremely smart of them. Although with the high female customer base I see them as more like Lowe’s than Home Depot.

    They’ve got a product that’s not usually bought online, and they can create a sales experience that caters to their core customer.

    I don’t see them neglecting clothing. You only need a new appliance every few years, if that. There’s no reason they can’t balance multiple categories. Remember, Sears failed because of their leadership, not because they sold appliances, tools and clothing.

  13. Tom Dougherty Avatar
    Tom Dougherty

    If you go see a surgeon they recommend surgery. Hire a home improvement guy and … surprise! They suggest selling hardware and appliances.

    I’m hesitant to criticize any department store that is trying a new model. God knows they need a redefinition and a vision for the future. But selling major appliances is not the solution. These are destination purchases and are NOT something you discover you need while shopping.

    Sears hemorrhages market share because no one wants to shop for those things in malls. They want to buy them not look at them. It’s a category that is driven by price, selection and installation. The convenience is in not having to go to a mall to buy them.

  14. Anna Tolmach Avatar
    Anna Tolmach

    I’m skeptical. In particular, this is the second time we see a J.C. Penney CEO trying to transform the brand along the lines of his own experience. Ron Johnson did this by incorporating more high-end goods into the assortment which clearly didn’t work. Who’s to say this time around a CEO pulling from his own experience will work? In general there doesn’t seem to be a need for so many department stores, and we might have to accept that J.C. Penney’s time has come and gone.

  15. Tony Orlando Avatar
    Tony Orlando

    J.C. Penney is looking for something to grow sales and I believe it could happen if and only if they can follow through on the service after the sale. They must provide top-notch delivery and installation or it will not work. Plus they must aggressively price the product, as online appliance giants are taking more sales every year. Throughout retail everyone is trying to find a profitable niche that will draw people into their stores, and we’ll see how this goes. I’m not sold on this but, again, if the service and sales employees are outstanding then it could be a gold mine, as great service always wins out if the price is comparable.

  16. Ed Rosenbaum Avatar
    Ed Rosenbaum

    J.C. Penney has had a difficult enough time getting to where they are, so making a move to include more than clothing is going to help. It can’t hurt. But I do not think they are in any way going to compete with the bigger players in the field until their financial ship is righted. Maybe they will take some of what used to be Sears customers away. But haven’t they already moved somewhere else? I do not think of J.C. Penney when/if I need new appliances. I am seeing a lot of fog before the light shines for them in this field.

  17. Jasmine Glasheen Avatar
    Jasmine Glasheen

    I fail to see how J.C. Penney going into home improvement jibes with including Sephoras in their stores to market themselves to Generation Z. Are they trying to be cool again or not? Do they want Generation Z to shop at their stores, or learn to avoid them (like how I avoid Payless like the plague because I remember waiting for my mom to shop when I was a toddler)? It looks like J.C. Penney is trying to be everything to everyone in a market calling for specialty stores and whittling down inventory. It will be interesting to see how this pans out.

  18. Adrian Weidmann Avatar
    Adrian Weidmann

    With Sears shrinking, there is an opportunity for someone to carve out some of the appliance and home improvement business for Millennials who may be intimidated by the DIY shopping experience. Retailers need to try new strategies. Simply suggesting that you’ll further squeeze your suppliers for price reductions and enhance the experience doesn’t (and will NOT) work! Having done in-store digital merchandising projects for both Lowe’s and The Home Depot, I believe it will be very important for J.C. Penney to design a strategy and implement its tactile activation very carefully. Learn from what others have done wrong and ineffectively!

  19. Larry Negrich Avatar
    Larry Negrich

    I salute this company for trying new things and looking to pivot in the omnichannel retail environment. Here’s the thing: toe-dipping into DIY/services may be a confusing signal to the consumer. The end-game for this strategy needs to be fleshed out fast, or else it will just serve to confuse the shopper about the experience they will receive at J.C. Penney.

  20. Scott Magids Avatar
    Scott Magids

    J.C. Penney is absolutely on the right track in asking its customers what they want, and giving it to them. But appliances alone would not do much for the retailer — their strategy of adding a robust service department with in-home consultations transforms the appliance strategy from a commodity sales tactic, to something with more of an emotional appeal that will resonate with its customer base. They do need to ensure they do not neglect other categories, and they are paying attention, for example, with its new in-store Sephora locations. They will also need to continue putting energy and resources into its online channel. J.C. Penney showed signs of a good emerging online strategy last Cyber Monday, when they transformed the single day into “Cyber Week.”

  21. Brian Kelly Avatar
    Brian Kelly

    Who is JCP’s target audience? Therein lies the rub. The CMO just left, and it seems mutual based upon the Q4 remarks: “…brand may not have communicated its sales and coupons enough to customers in the crucial fourth quarter. During that holiday period, same-store sales fell 0.7%, while net sales dropped 0.9% to $3.96 billion.”

    Seems to me, the brand has a relevance issue. Both the message (sales/coupons) and distribution (media) are not informed by a clearly defined target audience. Without that, appliances and “home services” are just a tactic in search of a strategy.

    The Peter Principle is “we do what we know,” and Ellison is doing that. And as in Sears’s case, a disproportionate emphasis on hardlines can undermine the credibility of the outlet brand in those softer/fashion categories. Further, the current appliance assortment is limited to a few brands and it is led by Samsung, not a good thing at this time.

    So if I were a shareholder, I’d ask Mr. Ellison to provide a clearly defined target and prove how the selling model will be adjusted to ensure she is surprised and delighted when engaging brand JCP.

  22. Craig Sundstrom Avatar
    Craig Sundstrom

    While I’m not going to say “no,” I’m usually dubious when I see “returning to services it once offered years ago but later dropped.” There’s usually a reason why it (they) was (were) dropped — like they weren’t doing very well in it — and I would have to think in this case the competition has only gotten tougher over the years.

  23. Doug Garnett Avatar
    Doug Garnett

    Home Depot evolved into greater home goods like bathtubs and installation services from one direction — the hardware big box store. There’s no reason J.C. Penney can’t do the same from the department store direction. Either is a valid starting point in extending brand within the consumer context.

    J.C. Penney’s can succeed if they stay focused on those elements nearest their customer vision of the brand so they have a unique and distinctive position with those products/services. They should avoid a jump to full competition across hardware. They wouldn’t win a head-to-head battle against Home Depot and I can’t imagine their executives are even imagining such a thing.

  24. Tom Redd Avatar
    Tom Redd

    I am with Max … lots of competition and last place I would look is JCP for a new stove.

    Home improvement is a cutthroat business (as are all retail areas today) and you really need the right people in the stores to make the sale. Home Depot is addressing the staff issue and in most cases, if you are looking for a new fridge or door, they have top-level people there to help shoppers.

  25. Ken Morris Avatar
    Ken Morris

    While it might seem like a stretch or a desperate move for J.C. Penney to expand appliances and home improvement products, it really has some sound logic behind the strategy. They have heritage in appliances and there are some market dynamics that are making the move more appealing now. With Sears struggling and HHGregg filing for Chapter 11 bankruptcy, there may be an opportunity for J.C. Penney to capture some of the market share left by these voids.

    The other thing that department stores have learned over the years is that big ticket items like appliances are prime transactions to charge to the retailer’s branded credit card. The interest income on credit card debt can oftentimes be more profitable than selling the merchandise.

    I wouldn’t worry about losing focus on apparel, as shareholders are only concerned with one thing — overall profitability! Good luck Mr. Ellison.

  26. Mark Price Avatar
    Mark Price

    A signifiant upside exists for Penney’s in home improvement driven by the fact that the home improvement category is relatively stable, while the soft goods market is being ravaged by online and fast fashion alternatives. Every day, it seems, someone in clothing is shutting their doors. You may not need a new dress, but when your washer and dryer break, you NEED a replacement. More stability and expanded revenue will be a significant benefit to this up-and-down chain.

  27. gordon arnold Avatar
    gordon arnold

    Many of us recall how J.C. Penney left these and other markets decades ago to focus on and pursue the clothier side of this ancient retailer’s business offering. Time, evolution and market acceptance march hand in hand. More simply J.C. Penney has been out of the game and re-tooled away from these products for some time. I might add that there were those that felt they left because the return on on invested dollars was far less than the continuing efforts needed for staying in the market(s).

    Ellison is very aware of the large amount of support he can and will get from vendors and service companies. I suspect he is not in tune with the liabilities he is exposing the company to. This might include markdown from dinged inventory, bad installs and very low management experience at the store level, to mention a few. Sometimes it is best to do what you are prepared to do and explore changes in that direction. Have no doubt that we will see Home Depot and Lowe’s face this new kid on the block and its support, as in suppliers and installers, very soon and with a prejudicial vengeance.

27 Comments
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Paula Rosenblum
Paula Rosenblum
Active Member
6 years ago

I think it’s a smart move. Clothing department stores are really hurting and Sears is the 1,000 pound, shrinking gorilla in the space. I don’t worry about J.C. Penney neglecting apparel and I would hope they’ll keep going forward with soft home. There are simply too many apparel stores anyway, while Millennials should be starting to buy home improvement products. I think it’s a good thing.

4
Max Goldberg
Max Goldberg
6 years ago

I don’t see the upside for J.C. Penney. Home improvement products are commodities and subject to very competitive pricing. And J.C. Penney is the last store I would consider for a home improvement service.

4
Phil Masiello
Phil Masiello
Member
6 years ago

J.C.Penney could be successful at this strategy if they market and execute the category correctly. If the whole company gets focused on hard goods because of a glimmer of success or the weakness of Sears, then this will be a short-term win. If they treat the category as an extension of fashion and beauty for the home, then I think they have a chance to gain market share.

There are plenty of places to shop online and offline to buy home improvement products. But J.C. Penney needs to integrate them carefully into the brand, which primarily sells soft goods. Make it more of a total home design approach rather than selling and installing water heaters.

8
William Hogben
William Hogben
6 years ago

Widening lines of business is going to be the trend not just at J.C. Penney but overall. Traditional retailers’ greatest asset is their customer traffic — if those customers want to buy five categories why not sell all five? For retailers who aren’t predominantly selling own-branded goods this only makes sense. We see the prototype in hypermarkets.

5
David Livingston
David Livingston
6 years ago

There is no upside. J.C. Penney is looking more Sears-esque every day. Trying to copy and take sales from a failed competitor is futile.

5
Ben Ball
Ben Ball
Member
6 years ago

“It’s beginning to look a lot like a Sears store — everywhere I go … ”

OK, bad Christmas jingle pun. It’s snowing in Chicago for the first time since December and I’m feeling a little giddy this morning.

But seriously, maybe there is an opportunity for someone to do “Sears” right again. There were always parts of it that worked — mostly Craftsman and Kenmore.

6
Lyle Bunn (Ph.D. Hon)
Lyle Bunn (Ph.D. Hon)
6 years ago

Serving more family interests and even entertaining the co-shopper are worthy pursuits for generating store traffic. Home improvement product purchases are based on the product, so why not at J.C. Penney?

1
Camille P. Schuster, PhD.
Camille P. Schuster, PhD.
Member
6 years ago

Sears is their only competitor for appliances? If that is how they see the market, this is not a road to success. Where has the test been conducted? Is that representative of the rest of the country? J.C. Penney had appliances in the past, then eliminated them, now they are trying again. How many consumers will trust that J.C. Penney will be selling appliances long enough to service anything purchased now?

0
Steve Montgomery
Steve Montgomery
Member
6 years ago

Hard goods are purchased based on brand, features and price. I can see consumers being willing to at least consider J.C. Penny as an alternative source. Their store environment may be more conducive for their customer base to take the time to look at these goods rather than some of the alternatives. However, I think the trust factor would be far less for home services.

2
Dick Seesel
Dick Seesel
Active Member
6 years ago

It may be an opportunity vs. Sears (and in Ellison’s sweet spot) but I’m not convinced it addresses the ongoing challenges to J.C. Penney’s soft line businesses.

7
W. Frank Dell II
W. Frank Dell II
6 years ago

Hard and soft goods do not always work well together. Lowe’s has been more successful with female shoppers than Home Depot for a number of reasons. For example the Home Depot decor is lumber yard and Lowe’s is mass market. J.C. Penney should not trade hard for soft goods or soft for hard goods. They need a balanced approach for the same customer. Someone who needs a skirt does not want to walk past rows of refrigerators. With the demise of Sears, the door is open and there is no reason J.C. Penney should not enter. J.C. Penney was a middle-class department store that survived the discounters. Still, an issue for them is their reason for being.

5
Doug Fleener
Doug Fleener
6 years ago

I think it is extremely smart of them. Although with the high female customer base I see them as more like Lowe’s than Home Depot.

They’ve got a product that’s not usually bought online, and they can create a sales experience that caters to their core customer.

I don’t see them neglecting clothing. You only need a new appliance every few years, if that. There’s no reason they can’t balance multiple categories. Remember, Sears failed because of their leadership, not because they sold appliances, tools and clothing.

1
Tom Dougherty
Tom Dougherty
Member
6 years ago

If you go see a surgeon they recommend surgery. Hire a home improvement guy and … surprise! They suggest selling hardware and appliances.

I’m hesitant to criticize any department store that is trying a new model. God knows they need a redefinition and a vision for the future. But selling major appliances is not the solution. These are destination purchases and are NOT something you discover you need while shopping.

Sears hemorrhages market share because no one wants to shop for those things in malls. They want to buy them not look at them. It’s a category that is driven by price, selection and installation. The convenience is in not having to go to a mall to buy them.

4
Anna Tolmach
Anna Tolmach
6 years ago

I’m skeptical. In particular, this is the second time we see a J.C. Penney CEO trying to transform the brand along the lines of his own experience. Ron Johnson did this by incorporating more high-end goods into the assortment which clearly didn’t work. Who’s to say this time around a CEO pulling from his own experience will work? In general there doesn’t seem to be a need for so many department stores, and we might have to accept that J.C. Penney’s time has come and gone.

3
Tony Orlando
Tony Orlando
Member
6 years ago

J.C. Penney is looking for something to grow sales and I believe it could happen if and only if they can follow through on the service after the sale. They must provide top-notch delivery and installation or it will not work. Plus they must aggressively price the product, as online appliance giants are taking more sales every year. Throughout retail everyone is trying to find a profitable niche that will draw people into their stores, and we’ll see how this goes. I’m not sold on this but, again, if the service and sales employees are outstanding then it could be a gold mine, as great service always wins out if the price is comparable.

4
Ed Rosenbaum
Ed Rosenbaum
Member
6 years ago

J.C. Penney has had a difficult enough time getting to where they are, so making a move to include more than clothing is going to help. It can’t hurt. But I do not think they are in any way going to compete with the bigger players in the field until their financial ship is righted. Maybe they will take some of what used to be Sears customers away. But haven’t they already moved somewhere else? I do not think of J.C. Penney when/if I need new appliances. I am seeing a lot of fog before the light shines for them in this field.

3
Jasmine Glasheen
Jasmine Glasheen
Member
6 years ago

I fail to see how J.C. Penney going into home improvement jibes with including Sephoras in their stores to market themselves to Generation Z. Are they trying to be cool again or not? Do they want Generation Z to shop at their stores, or learn to avoid them (like how I avoid Payless like the plague because I remember waiting for my mom to shop when I was a toddler)? It looks like J.C. Penney is trying to be everything to everyone in a market calling for specialty stores and whittling down inventory. It will be interesting to see how this pans out.

-1
Adrian Weidmann
Adrian Weidmann
Member
6 years ago

With Sears shrinking, there is an opportunity for someone to carve out some of the appliance and home improvement business for Millennials who may be intimidated by the DIY shopping experience. Retailers need to try new strategies. Simply suggesting that you’ll further squeeze your suppliers for price reductions and enhance the experience doesn’t (and will NOT) work! Having done in-store digital merchandising projects for both Lowe’s and The Home Depot, I believe it will be very important for J.C. Penney to design a strategy and implement its tactile activation very carefully. Learn from what others have done wrong and ineffectively!

3
Larry Negrich
Larry Negrich
6 years ago

I salute this company for trying new things and looking to pivot in the omnichannel retail environment. Here’s the thing: toe-dipping into DIY/services may be a confusing signal to the consumer. The end-game for this strategy needs to be fleshed out fast, or else it will just serve to confuse the shopper about the experience they will receive at J.C. Penney.

3
Scott Magids
Scott Magids
6 years ago

J.C. Penney is absolutely on the right track in asking its customers what they want, and giving it to them. But appliances alone would not do much for the retailer — their strategy of adding a robust service department with in-home consultations transforms the appliance strategy from a commodity sales tactic, to something with more of an emotional appeal that will resonate with its customer base. They do need to ensure they do not neglect other categories, and they are paying attention, for example, with its new in-store Sephora locations. They will also need to continue putting energy and resources into its online channel. J.C. Penney showed signs of a good emerging online strategy last Cyber Monday, when they transformed the single day into “Cyber Week.”

2
Brian Kelly
Brian Kelly
6 years ago

Who is JCP’s target audience? Therein lies the rub. The CMO just left, and it seems mutual based upon the Q4 remarks: “…brand may not have communicated its sales and coupons enough to customers in the crucial fourth quarter. During that holiday period, same-store sales fell 0.7%, while net sales dropped 0.9% to $3.96 billion.”

Seems to me, the brand has a relevance issue. Both the message (sales/coupons) and distribution (media) are not informed by a clearly defined target audience. Without that, appliances and “home services” are just a tactic in search of a strategy.

The Peter Principle is “we do what we know,” and Ellison is doing that. And as in Sears’s case, a disproportionate emphasis on hardlines can undermine the credibility of the outlet brand in those softer/fashion categories. Further, the current appliance assortment is limited to a few brands and it is led by Samsung, not a good thing at this time.

So if I were a shareholder, I’d ask Mr. Ellison to provide a clearly defined target and prove how the selling model will be adjusted to ensure she is surprised and delighted when engaging brand JCP.

3
Craig Sundstrom
Craig Sundstrom
Active Member
6 years ago

While I’m not going to say “no,” I’m usually dubious when I see “returning to services it once offered years ago but later dropped.” There’s usually a reason why it (they) was (were) dropped — like they weren’t doing very well in it — and I would have to think in this case the competition has only gotten tougher over the years.

1
Doug Garnett
Doug Garnett
Member
6 years ago

Home Depot evolved into greater home goods like bathtubs and installation services from one direction — the hardware big box store. There’s no reason J.C. Penney can’t do the same from the department store direction. Either is a valid starting point in extending brand within the consumer context.

J.C. Penney’s can succeed if they stay focused on those elements nearest their customer vision of the brand so they have a unique and distinctive position with those products/services. They should avoid a jump to full competition across hardware. They wouldn’t win a head-to-head battle against Home Depot and I can’t imagine their executives are even imagining such a thing.

1
Tom Redd
Tom Redd
6 years ago

I am with Max … lots of competition and last place I would look is JCP for a new stove.

Home improvement is a cutthroat business (as are all retail areas today) and you really need the right people in the stores to make the sale. Home Depot is addressing the staff issue and in most cases, if you are looking for a new fridge or door, they have top-level people there to help shoppers.

0
Ken Morris
Ken Morris
Active Member
6 years ago

While it might seem like a stretch or a desperate move for J.C. Penney to expand appliances and home improvement products, it really has some sound logic behind the strategy. They have heritage in appliances and there are some market dynamics that are making the move more appealing now. With Sears struggling and HHGregg filing for Chapter 11 bankruptcy, there may be an opportunity for J.C. Penney to capture some of the market share left by these voids.

The other thing that department stores have learned over the years is that big ticket items like appliances are prime transactions to charge to the retailer’s branded credit card. The interest income on credit card debt can oftentimes be more profitable than selling the merchandise.

I wouldn’t worry about losing focus on apparel, as shareholders are only concerned with one thing — overall profitability! Good luck Mr. Ellison.

2
Mark Price
Mark Price
Member
6 years ago

A signifiant upside exists for Penney’s in home improvement driven by the fact that the home improvement category is relatively stable, while the soft goods market is being ravaged by online and fast fashion alternatives. Every day, it seems, someone in clothing is shutting their doors. You may not need a new dress, but when your washer and dryer break, you NEED a replacement. More stability and expanded revenue will be a significant benefit to this up-and-down chain.

1
gordon arnold
gordon arnold
6 years ago

Many of us recall how J.C. Penney left these and other markets decades ago to focus on and pursue the clothier side of this ancient retailer’s business offering. Time, evolution and market acceptance march hand in hand. More simply J.C. Penney has been out of the game and re-tooled away from these products for some time. I might add that there were those that felt they left because the return on on invested dollars was far less than the continuing efforts needed for staying in the market(s).

Ellison is very aware of the large amount of support he can and will get from vendors and service companies. I suspect he is not in tune with the liabilities he is exposing the company to. This might include markdown from dinged inventory, bad installs and very low management experience at the store level, to mention a few. Sometimes it is best to do what you are prepared to do and explore changes in that direction. Have no doubt that we will see Home Depot and Lowe’s face this new kid on the block and its support, as in suppliers and installers, very soon and with a prejudicial vengeance.

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