JCPenney Goes Whole-Hog Into Appliances

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JC Penney, which announced back in January that it was re-entering the appliance business, has just unveiled how big its ambitions to conquer the home market really are. Besides selling appliances in 500 stores and online, it’s also adding a major curtain initiative, and testing new furniture and flooring partnerships. The moves potentially make it as much a competitor of the Home Depot and Lowe’s as it already is of Sears, Macy’s and Kohl’s.

The Plano, Tex.-based retailer says the appliance rollout follows a three-market test, involving 22 stores. Calling the results of the pilot “outstanding,” CEO Marvin R. Ellison says in the announcement that the pilot “confirmed that we should not limit our business to apparel and soft home in order to achieve significant revenue growth.”

Observers say JCPenney’s play will shake up the market. The move “will likely target customers from fellow mall retailer Sears, which had long dominated retail sales of consumer appliances,” says Ryan Tuttle, a research analyst at Euromonitor, who follows appliance sales. “And Ellison’s experience at Home Depot, one of the largest retailers of major appliances in the U.S., is likely to be invaluable.”

At the same time, JC Penney announced that earnings, which it expects to announce later this week, have again exceeded expectations. “Financing of big ticket appliances could be a major driver for sales on store credit cards, helping to drive loyalty to the retailer as it continues its recent sales turnaround,” Tuttle tells Marketing Daily in an email.

Appliance sales, closely tied to the ups and downs of the housing market, have been gaining, with Best Buy, for example, citing them as a growth category. But the gains are small, with Euromonitor reporting a 2% volume increase in 2015, with major appliances up 4%. Tuttle says more than 60 million major appliances were sold in the U.S in 2015 at retail, accounting for $38.4 billion.

JC Penney has been out of the appliance business since the early 1980s.

Sales have been slipping away from department stores, with the once-dominant Sears losing ground to Lowe’s, the Home Depot and the Internet. But Sears, despite its well-publicized struggles, hasn’t gone away. In its latest results, it claims to still be the leader in home appliances, and last year launched an expanded suite of Kenmore appliances. It has also reassured investors, in the face of ongoing speculation about its future, that it has negotiated contracts for Kenmore “across all major suppliers through the end of 2018.”

In addition to its plan to sell America more stoves and washers, Penney says it is increasing the space it gives to window coverings by 25%, adding an open-selling design that offers curtains, blinds, shades and decorative hardware.

The chain also says it is testing two new concepts, including an initiative with Ashley Furniture, called Signature Design by Ashley, and a flooring partnership with Empire Today, testing flooring solutions in Tampa, Fla., and Washington, D.C. this summer. (Empire Today will act as an independent operator in the 750-square foot units.)

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