Dive Brief:
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J.C. Penney has opened a new store in the Willowbrook Mall in Wayne, New Jersey, in the space formerly occupied by Lord & Taylor, which closed it in 2020 after that department store filed for bankruptcy.
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The new Penney location has been open since March 15, but its grand opening was Friday, according to a company spokesperson. Store upgrades are a major component of a $1 billion turnaround strategy announced in August last year.
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At the same time, the department store has shuttered its location across the street, where it had anchored the Wayne Towne Center since 1974, when it was known as West Belt Mall, according to The Record newspaper.
Dive Insight:
In moving across the street, this J.C. Penney location is getting not only a fresh start, but also a new landlord. The Wayne Towne Center is now owned by Vornado Realty Trust, while the Willowbrook Mall is owned by Brookfield Properties — which also happens to own J.C. Penney itself.
Brookfield and Simon Property Group bought the department store chain out of bankruptcy a little over three years ago. The acquisition was widely seen as enabling the mall owners to keep their spaces filled, in an era when many retailers, even anchors, are leaving. Simon Property Group in recent years pushed for changes to federal tax laws that would allow a real estate investment trust to own a 50% stake in a tenant, up from 10% now, and allow a REIT to accept equity in a tenant’s business as rent in lieu of cash.
Brookfield didn't immediately respond to questions about whether its Willowbrook empty space factored into J.C. Penney's decision to move.
In 2022, Simon Property Group CEO David Simon touted the investments in Penney and other retailers as “a great thing for us to do” despite the volatility of the retail business. More recently, however, the REIT has trimmed its stakes in retailers that it owns or part-owns, including Forever 21 and Eddie Bauer, and in Authentic Brands Group, which licenses those and other brands. Last year David Simon said the REIT may divest of its retail holdings within five or 10 years.
Penney itself has struggled since its bankruptcy, with steady sales declines and losses widening in its most recently reported quarter. Neither its turnaround investments nor the shiny new store are likely enough to prevent what Nick Egelanian, president of retail development firm SiteWorks, sees as the retailer’s inevitable downfall. The mall-based location of the new store isn’t conducive to the motivations of the vast majority of U.S. consumers, who want some combination of price and convenience, he said by email.
“Apparel and housewares, J.C. Penney’s two primary businesses, have become incredibly competitive and really don’t need another competitor,” Egelanian also said.
“J.C. Penney is a bread-and-butter retailer, and no matter how good a job they do with the new store prototype, they have an uphill battle against far more nimble and better located national competitors like T.J. Maxx, Ross and now even Burlington,” he said.
