JCPenney moves into new territory
Retailer to sell linens, appliances and more to hotels, rental units
As the U.S. retail industry struggles to regain ground amid dismal sales, store closures and bankruptcies, chains are trying to think outside the mall.
JCPenney is looking to the hospitality industry. The chain, known most for its apparel and home furnishings, says it’s moving into the business-to-business world by selling linens, window treatments, major appliances and mattresses to hotels, vacation rental and multi-unit properties. The segue could mean more bulk commercial orders.
Marvin Ellison, CEO of the Plano, Texas-based company, called the move “a significant opportunity for JCPenney to gain market share “and a strategy to provide “new and innovative ways to achieve sustainable growth and profitability.”
The idea came from hotel operators who were buying large volumes of bedding, bathroom items and window treatments from the chain’s website, he added.
Amid declining mall traffic and online’s growing piece of the pie, this expansion doesn’t surprise Christian Boni, a senior analyst at Moody’s who covers department stores.
“All department stores are thinking about business more holistically, about how they leverage the existing infrastructure they have,” she explained. “Yes, it’s a change from B2C ( business to consumer) to B2B. Nonetheless, all companies are thinking how to utilize all their assets more productively.”
The pain in retail has been on display during this most recent corporate earnings season. Ascena, which owns Ann Taylor, Lane Bryant and Justice, announced that it expected its annual sales to drop 6% to 7%; Dick’s Sporting Goods posted lower-than-expected revenue at stores open at least a year; Macy’s reported a 38% decline in its quarterly profit.
“We have five times as much retail space per customers as countries like France, England, Japan and Canada,” said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and banking firm. “We, as a country, are dramatically over-stored and dramatically over-malled. And while that is going on, the fastest part of our business is online. Just those two facts explain why we have a bankruptcy every week.”