Retail

Why Others Abandoning The Mall Is Good For JCPenney

In a world where retail tailspins are becoming rather common, successful turnaround tales are few and far between. But on that increasingly short list lives JCPenney, which has managed to reverse what looked like a full-tilt tailspin a few years ago. Though gains have been modest in absolute terms, comparatively, JCPenney is having a great year.

And it is looking like it might strategically benefit from the wave of retail weakness that has left its competitors in the department store business closing stores and abandoning malls. In recent earnings calls, both Macy’s and Sears have confirmed an additional wave of store closures as their unprofitable chaff is continuing to be separated from the more profitable wheat.

Macy’s will close 100 stores nationwide, and Sears has been closing stores for years.

This has put pressure on mall owners that are suddenly finding themselves with a dearth of tenants in the anchor store department — and JCPenney in an unique position when it comes to negotiating rent. Though JCPenney’s turnaround is ongoing and far from complete, according to CEO Marvin Ellison, there are only about 10 stores that aren’t making money.

And Ellison recently noted that Sears’ recent trip of a cliff has been a boon to Penney, particularly in the area of appliance sales.

“Sears is donating share in appliances,” Ellison said.”We have no aspirations to be number one in market share for appliances. To do that, we have to own the inventory. But we think we can be disruptive and can be convenient to our customers.”

JCPenney is embracing the mall — a strategy many are a bit dubious on, given the fact that “malls are doomed to extinction” is pretty much accepted conventional wisdom at this point.

But JCPenney boosters have noted that the chain’s embrace of store-within-a-store designs with Sephora and an upped focus on “retail-tainment” could be a picture of how some retailers are going to carve out a niche in the post-eCommerce world.

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