Name: J.C. Penney Is Bringing Back Appliances
Uploaded: 2016-01-18
Duration: 2 min 19 s
Description: It’s trying to compete with Sears.

JCPenney is on the comeback trail clocking in some pretty good results in the last few quarters. But it has a new tactic it thinks is going to keep it on the growth trajectory. It is going back to selling home appliances for the first time in 33 years starting on February 1st. JC Penney will be selling things like dryers, washers, refrigerators at 22 of its stores, and if the pilot goes well, you can expect to see that at hundreds of stores by October. So, what's the rationale behind all this? One of its main rivals in the mall, Sears, with which it co- anchors 456 malls, It's bleeding sales, but Sears is still the top seller of appliances despite all its problems. And so JC Penney sees a big opportunity in there. So when I went to spend some time with JC Penney CEO Marvin Ellison in Plano, Texas, where they're headquartered, recently, he told me that the strategy really comes. Down to one thing, JC Penny is a mall retailer, and at the other end of the mall is a certain retailer. He didn't name it, but we know he meant Sears, which has really been struggling. And Sears is the number one seller of appliances in the country. So that gives Ellison the feeling that there's an opening for JC Penny in this market. He also told me that Roughly of one third of his customers buy appliances at the mall, just not at JC Penney's. So, that's where he sees an opportunity. [ MUSIC ] Even though these are big ticket items, they're not really going to move the needle all that much, considering how much it sells, but Wall Street will be paying attention to it because there really is a first initiative by Ellison, major initiative since he became CEO in August and it will be instructive to see how he's turning JCPenney around. He has made it clear that he is not planning any kind of big, revolutionary reinvention. We saw what happened four years ago when they tried. It almost put the company out of business. What he really wants JC Penney's to do is to be the best version of itself, and that means getting more money out of the existing customers that JC Penney's already has. They have 87 million customers, same as they did four years ago, those customers are just spending a lot less than they used to. And so it's really about being the best version of yourself, rather than trying to be something that you're not.