J.C. Penney Targets Hospitality Industry for New Revenue
Struggling department store chain J.C. Penney is taking aim at a potential new set of customers: other businesses. J.C. Penney, which last week reported a dismal first quarter and whose shares are trading near all-time lows, said on Thursday it planned to leverage its new home services business to try to win more sales from hotels and other lodging companies. The retailer will use an outside sales force to line up new businesses, which will also include residential property managers, and says its private brands of home items like towels and sheets will give it an edge on cost. The U.S. hospitality industry is a $200 billion sector that offers significant opportunity for J.C. Penney, according to CEO Marvin Ellison.
Total Retail's Take: This move continues Penney's shift away from a reliance on apparel, a sector that's seen steadily declining sales. Since he took over as CEO in July 2015, Ellison has sought to diversify Penney's business, including introducing new product categories (e.g., appliances), extending its relationship with in-store partner Sephora, and investing in its private label brands. While Penney's saw some immediate returns on this approach, growth has stalled. In fact, the retailer's latest earnings report caused its stock to close at a historic low. Entering the B-to-B marketplace is another attempt by J.C. Penney to get itself out of the sales rut it's in, as well as an opportunity to gain new customers — both necessities for the struggling retailer.