Thursday, August 4, 2016

Reinventing JC Penney -- Again

Yet again, JC Penney is reinventing itself.

Back in the 1960s, JC Penney was battling archrival Sears and decided to stock household appliances as a way of attracting customers seeking a wide range of merchandise.

That strategy lasted for about 20 years. Early in the 1980s, JC Penney pivoted to get out of appliances and focus on soft goods, which have higher margins, faster turns, and lower inventory investment.

Fast-forward 30 years, and JC Penney was fighting to keep customers as department stores launched one price promotion after another. Penney tried "fair and square" everyday low pricing, and bulked up on higher-margin fashion items.

However, customers really liked promotional pricing, having grown accustomed to endless price cuts or coupons or both during the long recession. "Fair and square" wasn't an effective competitive strategy as the recession ended. So JC Penney had to reinvent itself, again.

Today, it's back to the future--with appliances. After a pilot project early this year, JC Penney now is rolling out appliances to hundreds of its stores.

This gives shoppers more options for where to buy a dishwasher or stove, as well as other items for the home. And it expands JC Penney's merchandise and brand mix in a way that invites "one stop" shopping in its stores. But it also is an expensive merchandise move that may or may not pay off, IMHO.

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