J.C. Penney pulls appliances, furniture from US stores
J.C. Penney announced Wednesday it would discontinue the sale of appliances and furniture items in its U.S. stores effective Feb. 28. The company noted that the products would remain available on its website and in select Puerto Rico stores.
Removing showrooms from stores and freeing up in-store real estate will "enable us to prioritize and focus on the Company's legacy strengths in apparel and soft home furnishings, which represent higher margin opportunities," according to a J.C. Penney blog post.
The company noted that customers will receive free, basic delivery and installations on orders over $299, and ensured manufacturers' warranty agreements and protection plans will remain effective through the period specified on each item.
J.C. Penney first discontinued its sale of appliances and non-apparel items back in 1983 to focus on apparel, which at the time looked promising. However, in 2016 when then-CEO Marvin Ellison was at the helm and apparel sales were tanking, the retailer announced appliances and furniture would return to its stores. With an eye on the success Best Buy and Sears were having with appliance sales, and especially with Sears shuttering so many stores, it was a move Ellison thought would steer J.C. Penney back on track after two years of heavy losses under the direction of former CEO Ron Johnson.
And, for a while, Ellison was right. In May, he told analysts on a conference call that the retailer "had great performance in our home refresh initiatives specifically appliances, furniture and mattress" in the first quarter of 2018, according to a transcript on Seeking Alpha.
However, just a few months later, when Joann's Jill Soltau took over as J.C. Penney's CEO in October after Ellison's departure for Lowe's, it appeared to be a different story. In November when the company reported its third quarter results, Trent Kruse, SVP of finance and investor relations, told analysts on a conference call that "categories that underperform the company comp included big ticket areas and home such as appliances, women's accessories, and handbags," according to a transcript on Seeking Alpha.
Ellison's idea of adding back a department doesn't work in light of today's consumer behavior, which has shifted in the age of e-commerce: No longer are people interested in this idea of a one-stop shop department store model, according to Allen Adamson, a professor at New York University's Stern School of Business and co-author of "Shift Ahead: How the Best Companies Stay Relevant in a Fast-Changing World."
"Consumers' desire to get everything all in one place just isn't as strong anymore," he said in an interview with Retail Dive last month. "If they want makeup or mattresses or appliances they go to [a specialty retailer] or they go online. By definition the challenge they face is that most of these stores, be it Kmart, Macy's, Sears, J.C. Penney and to some extent even Target, if they're in all these categories, they're not going to be best in any of those categories."
After a less-than-stellar holiday season, the move to refocus its attention on areas that performed better than others may be the best thing the distressed retailer can do. But only time will tell if it's enough to keep J.C. Penney afloat.