J.C. Penney is pulling the plug on major appliances and limiting the furniture availability to further its focus on fashion and soft home furnishings.
“Optimizing the allocation of store space will enable us to prioritize and focus on the company’s legacy strengths in apparel and soft home furnishings, which represent higher margin opportunities,” the company said Wednesday.
Furniture will only be available at jcp.com and select Puerto Rico stores, though mattresses will still be sold at 450 stores and on jcp.com.
“While configurations vary by store, we are finalizing new layout options, including the reduction of store space previously dedicated to appliance and furniture showrooms to maximize efficiencies, reduce inventory and create an enhanced shopping experience that inspires repeat shopping trips,” J.C. Penney said in a statement.
Customers can purchase major appliances in stores and online through Feb. 28 and receive free basic delivery and installation on new model purchases over $299. All protection plans and manufacturer’s warranty agreements will remain in effect for the applicable warranty period.
Changes to the retailer’s selling floors, which for years have yielded anemic sales results, are being orchestrated by chief executive officer Jill Soltau, who joined the Plano, Tex.-based retailer last October. She succeeded Marvin Ellison, currently ceo of Lowe’s, whose idea it was to bring back big appliances. They had been absent from J.C. Penney since the late Eighties.
The appliances looked good but did little for the retailer’s bottom line since major appliances carry narrow margins. They were rolled out into several hundred stores. Further complicating the matter, J.C. Penney showroomed the products, rather than actually buying them and keeping them in stock. That meant the store couldn’t deliver appliances as fast as competitors.
Ellison’s program did involve bids to bolster the fashion business. Efforts were made to update dresses, contemporary and casual sportswear while pulling back on the historic emphasis on traditional styling and career looks. Activewear got beefed up, particularly with Adidas and Nike, and special sizes in women’s, men’s and kids across all categories received a lot of attention.
With Wednesday’s disclosure, Soltau seems to be keeping her promise to take quick action to turn around business.
Among other changes expected are store closures on a large scale, with some reports estimating as many as 100 to 200 units could be shuttered. J.C. Penney currently operates 860 stores in the U.S. and Puerto Rico.
In addition, Soltau needs to fill some key senior-level positions. The company is searching for a chief merchant, a chief financial officer, a chief customer officer, a senior vice president of planning and allocation and a principal accounting officer. While searches are in progress, for the time being at least, the extent of the changes to the business would be limited until talent is recruited. Recently, Mike Robbins, executive vice president of private brands and supply chain, became executive vice president, chief stores and supply chain officer, and Truett Horne, formerly with McKinsey & Co., joined as chief transformation officer.
Soltau has merchandising experience. Before J.C. Penney, she was president and ceo of Joann Fabric and Crafts Stores, and earlier she spent eight years at Shopko Stores, serving as president after serving as executive vice president and chief merchandising officer and before that, general merchandising officer for apparel and accessories. Prior to joining Shopko, she held several senior positions in merchandising, planning and private brand management at Sears and Kohl’s.
“The company is struggling to survive so it has to reduce the square footage applied to underperforming categories,” said Craig Johnson, president of Customer Growth Partners. “Major appliances is a category that Marvin knew from his experience at Home Depot but he isn’t a merchant. If you had an appliance that conked out, Penney’s would be the last place that would come to mind for most people.” More likely, they’d head to Lowe’s or Home Depot, or even Sears, Johnson noted.
Aside from reducing the store count, J.C. Penney will be trimming its selling space in remaining stores and could lease space to formats currently not in the stores, such as a café, Johnson suggested.
“The core problem is still women’s. Penney’s needs to strengthen that business,” Johnson said. On the positive side, “Penney’s still has good appeal in the Heartland.”