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JCPenney Expands Appliances Offerings to More Stores

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Expansion of appliance availability

On May 9, JCPenney (JCP) announced that it will be adding appliance showrooms in nearly 500 of its stores. The department store chain plans to introduce major appliances to new stores starting early July through the fall. JCPenney will be offering leading kitchen and laundry appliances from Samsung (SSNLF), LG, GE (GE) Appliances, and Hotpoint. JCPenney’s customers will also be able to purchase major appliances from the company’s online channel, jcp.com, later this summer.

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Successful pilot run

In its latest press release, JCPenney stated that its pilot project of offering appliances in 22 stores received an outstanding response. In January 2016, JCPenney had initially announced its plans to offer major appliances in 22 pilot stores effective February 1, 2016. JCPenney brought back appliances to its stores after over three decades. In January 2016, the company stated that its decision to offer appliances in its stores was backed by customer data indicating that a vast majority of shoppers often look for major appliance options on the company’s website. JCPenney’s research reflected that female consumers, who account for ~70% of the company’s shoppers, are key decision makers in the appliance purchase process.

The company aims to increase the sales productivity of its home department by re-entering the appliance market. JCPenney constitutes 0.9% of the SPDR S&P Retail ETF (XRT).

The home category

In fiscal 2015 ended January 30, 2016, the home and women accessories categories accounted for 12% of JCPenney’s net sales each. The women apparel category and the men apparel and accessories category accounted for 25% and 22% of the company’s net sales, respectively, in fiscal 2015. Peers Macy’s (M), Kohl’s (KSS), and Dillard’s (DDS) derived about 16%, 18%, and 4% of their fiscal 2015 sales, respectively, from home and related merchandise.

The improvement in the US housing market is likely to drive more demand for home appliances as well as other home-related merchandise like furnishings. On May 9, JCPenney also announced other additions to its home merchandise. We’ll discuss this in the next part of this series.

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