J C Penney Company Inc (NYSE:JCP) announced on Monday that the company was unveiling a unit to offer home services which will focus on selling cooling systems, heating systems and other products. It will also involve providing services such as installed blinds, home water solutions, smart home technology and bathroom remodelling. Initially, there will be a test program rolled out in some select markets in about 100 stores.
“There is a tremendous opportunity to capture additional revenue and minimize our dependence on apparel by catering our services to female homeowners who represent over 70 percent of our loyal customer base,” said the chief executive officer of J.C. Penney, Marvin Ellison.
Home department
In the recent past, Ellison has said that enhancing the home department of the retailer was key to turning around the fortunes of the company. Other home services that have previously been piloted include Trane HVAC and Empire Flooring. In 2016, Ashley Furniture was rolled out online and in some stores. The Plano, Texas-based retailer intends to increase the number of appliance brands it sells and also increase the number of appliance showrooms by another 100. Having quit the appliance business over three decades ago, J.C. Penney re-entered the segment a little over a year ago by stocking appliances from industry leaders.
Revenue growth per customer
J.C. Penney’s chief executive has revealed that the strategy is paying off as sales of appliances online and in physical stores has resulted in the growth of revenues per customer. The retailer is also looking to take advantage of plans by other retailers to shut down stores by attracting customers such retailers will be leaving behind with home services and home appliances. J.C. Penney is also banking on the fact that 70% of the retailer’s customers are homeowners.
As a strategy, offering home services presents low risk since the retailer will not be required to invest heavily in inventory or set aside huge capital resources. This is because the firm will seek partnerships with installation and other service providers.
On Monday shares of J C Penney Company Inc fell by 5.82% to close the day at $5.99 a share.
