J.C. Penney Co. Inc. got back into the consumer major appliances business last year. And now it plans to offer washers and dryers, along with linens, towels, mattresses, and window treatments, to other businesses online and via a sales force.
The retail chain yesterday launched a B2B initiative aimed at hotel and lodging and multi-unit residential industries. It’s an extension of bedding, bath and window treatment products orders the company was already receiving from hotel operators on its retail website, JCPenney.com CEO Marvin Ellison says.
Penney did not indicate if it would establish a dedicated B2B website, but to augment e-commerce fulfillment, the company plans to expand its ship-from-store capabilities from 250 to all 875 stores in the second quarter, “which will nearly quadruple the available inventory for sale online,” Ellison told analysts on the company’s May 12 Q1 earnings call. “Our investments and our focus on omnichannel are working,” he said. “Throughout 2016 approximately 77% of all online orders touched the physical store and this number continued to grow in the first quarter.”
Penney’s entry into B2B sales “reinforces our home refresh initiative, while providing new and innovative ways to achieve sustainable growth and profitability,” Ellison says. “We are staffing an outside sales force with experience and expertise to engage targeted businesses,” he adds, noting the company’s assortment of private brands in soft home goods provides Penney “a unique cost and value advantage in this new and exciting space.”
The company’s home refresh sales strategy rolled out in August. Its goal was to reboot its J.C. Penney Home store concept to attract consumers with new appliance showrooms in about 500 stores, and new flooring and furniture brands in select stores and online.
Ellison says the U.S. hospitality industry represents approximately $200 billion annually, according to STR Inc., a hotel industry research firm, “and a significant opportunity for J.C. Penney to gain market share and drive increased revenue per customer.”
Penney is targeting small business owners and will fulfill online B2B orders from its 875 stores and 13 distribution facilities, and cites its retail sourcing experience in working with a supplier base in more than 30 countries as a competitive advantage in reaching business customers.
Penney’s move into B2B sales probably won’t be the last for major retail chains, although they will need to develop new tactics, says Andy Hoar, principal analyst for B2B e-business at Forrester Research Inc. “B2B represents incremental growth opportunity for retailers, which is especially critical in today’s challenging and uncertain business-to-consumer environment,” he says. “But B2B is not just B2C with customers that happen to buy at higher volumes. J.C. Penney will see new and different competitors in B2B, will need new and different go-to-market strategies, and will need to optimize for new and different buyer journeys, including offering more services than in B2C.”
Yet opportunities exist for retailers in B2B if they can take advantage of e-commerce and stores. “Given the consumerization of B2B, better margins and higher lifetime values in B2B, and the existence of dual-use infrastructure, I expect to see more retailers cross over into B2B in the next few years,” Hoar says.
Penney says it will offer small businesses and non-profit organizations discounts, bulk pricing, commercial credit offers and tax exemptions for eligible businesses. The company will provide a dedicated team of B2B consultants to help business customers customize orders.
A spring sales uptick postponed the scheduled closing of 138 Penney stores by a month, with liquidation sales set to begin May 22, a company spokeswoman said. The stores will now close on July 31, compared with an earlier goal of mid-June. “Since we announced the stores that were closing, those stores have seen better-than-expected sales and traffic,” she said. “This is not an unusual response when you announce store closings. Customers will come out to shop–whether it’s for nostalgia or they’re looking for a great deal.”
Penney announced its intention to scale back its store count in February, and that it would take a charge of about $225 million related to the moves in the first half of this year. The cutbacks, which also include shutting two distribution centers, are meant to save about $200 million a year. The stores targeted for closure are mostly in rural areas, and a handful of them may stay open until later in the year, the company said.
Penney did not break out online sales for the fiscal first quarter ended April 29, but did report:
- Total sales of $2.706 billion, down 3.7% from $2.811 billion in the same quarter last year.
- Comparable-store sales, including online, declined 3.5%.
- Net loss of $180 million, compared with a net loss of $68 million last year.
Sign up for a free subscription to B2BecNews, a twice-weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly business magazine Internet Retailer. Follow Bill Briggs, senior editor, on Twitter @BBriggsB2B.
Follow us on LinkedIn and be the first to know when new B2BecNews content is published.
Bloomberg News contributed to this report.Favorite