Will J.C. Penney find success with its new B2B venture?
Marvin Ellison is letting his Home Depot roots show once again. J.C. Penney’s CEO is behind the department store chain’s latest venture, which involves selling items such as linens, towels, mattresses, towels and appliances directly to hotel operators, property management companies and other businesses placing bulk orders.
“The U.S. hospitality industry represents approximately $200 billion annually and a significant opportunity for J.C. Penney to gain market share and drive increased revenue per customer with major appliances and a renewed focus on soft home goods,” said Mr. Ellison, in a statement released last week. “Our entry into the B2B program reinforces our home refresh initiative, while providing new and innovative ways to achieve sustainable growth and profitability.”
Mr. Ellison said the idea for the new venture came from the business the chain was already doing with hotel operators who were placing large orders on Penney’s website for bedding, bath and window treatments.
Business customers working with Penney will receive bulk pricing, commercial credit offers and tax exemptions, as eligible. Penney will also enable business clients to customize orders working with its team of dedicated, outside B2B consultants.
This is not the first time that Mr. Ellison has taken a page from his time at Home Depot. That chain has succeeded, in part, by catering to the needs of contractors and other construction business professionals. It also offers a wide variety of installation and remodeling services directly to consumers while becoming a significant competitor in the major appliance category.
Since joining Penney, Mr. Ellison has been behind its test and subsequent rollout of major appliances to 500 stores. In March, the chain announced the launch of a pilot program to test a bathroom remodeling service. This was in addition to a previous deal signed with Trane to install heating and air conditioning equipment.
Penney, Mr. Ellison has said, will succeed in its new ventures because consumers “trust the brand.”
- JCPenney Emerges Into B2B With Solutions That Cater To The Hospitality and Property Management Industries – J.C. Penney Company, Inc.
- Will being more like Home Depot work for J.C. Penney? – RetailWire
- Own some rental properties, maybe a hotel franchise? J.C. Penney wants to make you a customer – The Dallas Morning News
DISCUSSION QUESTIONS: Do you see B2B sales as a category in which J.C. Penney can achieve significant success? Are you encouraged or concerned that many of J.C. Penney’s initiatives developed to drive its business seem to be copycat moves borrowed from Home Depot?
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15 Comments on "Will J.C. Penney find success with its new B2B venture?"
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Founder, CEO & Author, HeadCount Corporation
It’s an interesting move by J.C. Penney to create new sales opportunities. Whether this turns out to be a big win or not only time will tell, however Ellison and team get points for effort. Imitation is a high form of praise and borrowing inspiration from Home Depot, or anyone else for that matter, is irrelevant.
Managing Director, StoreStream Metrics, LLC
J.C. Penney has been struggling with its identity and formula for years. Home Depot is doing very well. Not leveraging his Home Depot experience and tapping into what is working would be a mistake. The challenge will be to carefully select what will complement and enhance the J.C. Penney brand and its customers. Appliances and soft goods exploitation seems like a perfect extension for J.C. Penney.
Principal, Retailing In Focus LLC
I’d be less concerned about the borrowings from Home Depot if I didn’t see improvements on the softlines side happening at the same time. There’s evidence (at least to these eyes) that the new merchant team at J.C. Penney is making some headway especially in women’s apparel, where the assortments and brand identity look crisper than they have for awhile.
That being said, the B2B initiative is a puzzle to me. J.C. Penney may see it as a volume opportunity — and a branding opportunity to place its private-label home goods inside hotel rooms, etc. But will hotel operators and franchisees be interested in dealing with a middleman if they already source their linens and towels through the buying power of brands like Hilton, Marriott, etc.?
Advisor, MyAlerts
Watch for appliances to be the next category for innovation in B2B. With the imminent demise of Sears, the closing of hhgregg and the aggressive moves by Lowe’s, especially in consumer appliance sales, J.C. Penney can easily add appliances like in-room refrigerators for hotels to this initiative.
Chief Executive Officer, The TSi Company
This venture is a smart move for J.C. Penney. It will provide additional revenue and help their brand with more exposure. It also lends itself to marketing opportunities with the hotels and their guests should J.C. Penny wish to pursue that option. Today, so much competition comes from companies who have expanded into other industries’ space. So this is just another expansion, with J.C. Penney now getting into the hospitality space, but I see many benefits for J.C. Penney and this should prove to be successful.
President/CEO, The Retail Doctor
It’s a home goods chain not a commercial enterprise. What exactly does the value chain look like for a hotelier to buy from J.C. Penney? Hoteliers use commercial grade linens, not whatever is cheapest to manufacture. Count me on the concerned side as this is another distraction from the work they need to do by closing stores and training employees. If Walmart can do it, why not J.C. Penney?
Principal, Cathy Hotka & Associates
Staples is moving in the same direction, away from coupons and toward relationship marketing with businesses. If the pricing is on point, this will be a great idea for smaller chains who don’t have the purchasing power of the giants. Congratulations to J.C. Penney for having vision — it’s quite a contrast from the tragic Sears story.
Principal, Frank Riso Associates, LLC
The fact that J.C. Penney is even looking at different ways to increase business is good — very good. However, this venture seems like it may be the wrong one. Many customers have other alternatives besides using non-commercial products that would be the only items from J.C. Penney. I think that copycat moves are just fine for anyone if they works. Whether this one will work remains to be seen.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
I don’t know if it will work, but I praise J.C. Penney for trying. The most successful companies are those that try many different things and often fail (Amazon is a wonderful example). The current J.C. Penney business model is outdated and just plain doesn’t work. What is wrong with looking in other directions? Consider how we would be reacting today if Sears had turned their Craftsman business into Home Depot.
As a company, J.C. Penney will either be something very different in the future or be out of business.
CEO, The Customer Service Rainmaker, Rainmaker Solutions
One thing is for sure, you have to give him credit for trying new ideas and expanding the limits of the box. Whether it works or not is another question to be answered in the future. This will require new salespeople not accustomed to J.C. Penney and their brand. The typical in-house sales clerk will not have the product knowledge to be able to do anything more than take the order. This is more of a relationship-building opportunity before it becomes a sales opportunity. The J.C. Penney name alone will not be enough to make this successful.
sales management consultant
CFO, Weisner Steel
While I certainly don’t want to discourage innovation, I’d feel a lot more confident if it didn’t seem like JCP’s strategy(ies) was a series of “let’s try this” experiments. Home Depot cloning being but the latest example.
As for this specifically, cynics might say it’s perfect, ‘cuz JCP sells the kind of durable, practical (but not really fashionable) décor one finds in a hotel rather than a house, but I’m not sure how true that actually is. I’m sure institutional buyers have specific and rigorous demands, and I don’t know how well they will be able to satisfy them; and many — if not most — B2B relationships are ongoing … existing suppliers will fight like the dickens to keep them.
But of course I wish them well.
If one doesn’t try, one is bound to fail.
Principal, Your Retail Authority, LLC
As we say in the south, “I think this dog can hunt.” Good move Ellison’s part. My fingers are crossed. And that is my 2 cents….
Diversification is the key in this day and age, such that when a customer comes in to buy a dress, they may buy those items, but hopefully do additional purchases and leave with curtains and windows treatment appointment. Additionally it doesn’t matter what category one sells to — B2C or B2B — as long as the sale happens, and that is what ultimately matters, that they are selling, whether in bulk or a single piece, the sale is happening. They don’t have to be #1 in anything, as long as they are selling and making money overall.