JCPenney recently announced a regional test of re-entry into the major appliance business, which they exited at least two decades ago. RetailWire panelists had a chance to weigh in on the merits of the strategy; here’s my take:
I’m not sure whether the JCP appliance test is intended to take share from Sears right away. However, it’s useful for Penney to take advantage of Sears’ accelerating decline and its increased pace of store closures. It’s worth finding out now (instead of after the demise of Sears) whether this is a viable category in terms of driving sales and profits, and in terms of the unique logistical challenges of the business.
Meanwhile, even without the Sears factor, many JCP stores have productivity issues today, especially with too much space in the home store. This presents Penney with an opportunity to fix the problem, provided that the appliance business can deliver incremental margins in a competitive category.