J.C. Penney swooping in on Sears' home services, appliance turf

Dive Brief:

J.C. Penney is accelerating its return to appliance sales, with plans for a home installation service and expansions to its appliance showrooms, CEO Marvin Ellison told analysts last week, according to a conference call transcript from Seeking Alpha.
Providing home services, as with appliance sales, is a move to take advantage of both a booming home improvement segment and the downfall of rival Sears, Ellison said. “J.C. Penney is in an interesting position: Over 70% of our customers are female and 70% of our customers are also homeowners,” he said.
Appliance sales in stores and online are driving sales and productivity in Penney’s home segment, Ellison added, noting the retailer will open about 100 new appliance showrooms early this year and will add new brands throughout the months ahead.

Dive Insight:

Ellison for months has talked of Sears “donating share” in appliances. Sears gave up some $1 billion in appliance sales in 2015, according to research from TWICE and The Stevenson Co. cited by CNBC. The ailing retailer also is said to be mulling a sale of its Sears Home Services unit, one of its few remaining strong suits, which generates some 7 million home visits each year.

Under Ellison, Penney has capitalized on Sears’ receding place in consumers’ minds and pocketbooks and taken share for itself. “Many years ago J.C. Penney was a strong player in the home install space,” Ellison told analysts. “Now that we have a large mall competitor donating market share in this category, we feel the timing is right for us to test a series of home install initiatives. One of the test programs include an HVAC install program through our partnership with Trane, as well as several other programs.”

Ellison isn’t necessarily aiming to topple Sears from its perch, so much as taking market share as it falls off. “We have no aspirations to be No. 1 in market share for appliances,” he told analysts last year. “To do that, we have to own the inventory. But we think we can be disruptive and can be convenient to our customers."

The moves also help balance Penney’s merchandise and service assortment as it continues to struggle in apparel. J.C. Penney has recently boosted the number of Sephora cosmetics operations in stores, and beauty, home, salon and fine jewelry were the retailer's top performing divisions during the fourth quarter.

“These category developments are positive inasmuch as they make JCP far less reliant on apparel,” Neil Saunders, CEO of retail research agency and consulting firm Conlumino, told Retail Dive last year. “This offsets some of the vagaries and fluctuations of the fashion business and helps transform JCP into a proper department store destination, which gives consumers many reasons to visit.”