Apparently pleased with the results of a 22-store test of major appliances, JCPenney said it will begin rolling out white-goods departments to an additional 500 or so stores beginning in early July.
The move represents the chain’s first full-bore return to the category since exiting the business 30 years ago.
According to CEO Marvin Ellison, the customer response to the three-month, three-market appliance pilot has been “outstanding,” and confirmed that “we should not limit our business to apparel and soft home in order to achieve significant revenue growth,” he said.
The Penney appliance assortment includes upwards of 150 kitchen and laundry products from Samsung, LG, GE and Hotpoint. The pilot departments, located in the San Antonio, San Diego and Tampa, Fla., markets, are staffed with specially trained sales associates and merchandise select products within lifestyle vignettes.
At the time of the launch, the company said the decision to re-enter white-goods following a 30-year absence was driven by research showing that the vast majority of Penney customers are homeowners and frequently search for majaps on the retailer’s website.
No doubt the retailer also saw an opportunity in the white-goods market share that Sears and hhgregg are ceding.
Starting in July, Penney plans to add appliance departments to new stores every week through the fall, reaching about half its store base, and will launch the category on its JCP.com e-commerce site later this summer.
To further mine the resurging real estate market, the department store chain will also begin testing 750-1,000-square-foot flooring sections in Tampa and Washington stores this summer through a partnership with Empire Today, which will market, service and maintain the in-store shops.
“The current housing market presents a lucrative opportunity to diversify our Home assortment and strategically align with consumer spending patterns,” Ellison said. “By combining our soft home and window coverings merchandise with the industry’s leading brands for appliances, furniture and flooring, JCPenney will become a destination for home design and redecorating, allowing us to weather-proof our business during seasonal periods of the year.”
Ellison expects the expansions to drive increased sales that will help the company reach its stated goal of $1.2 billion in EBITDA (earnings before interest, taxes, depreciation and amortization) by the end of 2017.
The chain is already on track to achieve EBITDA of $1 billion for the current fiscal year, although a report in the New York Post suggests that it has temporarily introduced emergency cost-cutting measures like reduced employee hours and a ban on markdowns in order to hit that goal.
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