Amazon Reportedly Explores Acquisition of J.C. Penney
Amazon.com could be interested in buying all or part of the J.C. Penney chain, according to a report Monday from Women’s Wear Daily (WWD). "There's an Amazon team in Plano as we speak,” one source told WWD. “There is a dialogue, and I’m told it has a lot to do with Amazon eager to expand its apparel business.” J.C. Penney, which has 846 department stores and 85,000 employees, filed for bankruptcy last week. It said then that it would explore a sale of the company as part of its reorganization and that it would close stores in phases during the Chapter 11 process.
Total Retail's Take: The rumors of Amazon acquiring J.C. Penney is creating quite a stir in the retail industry. Is the online behemoth looking to its expand its physical store footprint? Further bolster its supply chain network by converting Penney stores into distribution centers? In a statement emailed to Total Retail, Brett Rose, founder and CEO of United National Consumer Suppliers, offered his perspective on this potential transaction:
"Walmart and Target are Amazon's biggest direct competitors. Amazon needs a differentiating factor. It used to have an edge with its Marketplace, but then Walmart opened its website to third-party resellers and started leveling the playing field.
"Walmart has nearly 4,800 stores throughout the United States, and Target has nearly 1,900. This is a massive competitive advantage — especially now when online ordering and curbside pickup are dominating sales during the pandemic.
"Amazon has already shown its thirst for a physical presence when it bought around 500 Whole Food stores and began opening smaller footprint pop-up stores. By taking advantage of J.C. Penney's bankruptcy, Amazon will be able to grab an asset at a much-discounted price. J.C. Penney would give Amazon over 1,100 stores overnight. It would also give Amazon an additional customer base. Bankrupt or not, J.C. Penney still generated over $11 billion in sales last year.
"With Amazon at the helm, improved operations, and its massive purchasing and negotiation ability, it could flip this 118-year-old piece of Americana back to its glory in no time."