J.C. Penney to unveil format for its home department

4/2/2013

NEW YORK — J.C. Penney Co. is homing in on its home department as part of a bigger plan to turn its stores into minimalls of sorts.

The struggling department-store chain is unveiling revamped home areas within its stores that feature 20 boutiques that highlight 50 new brands. The areas will include an eclectic mix of items, from $60 Michael Graves’ stainless steel teakettles to $1,850 Jonathan Adler “Happy Chic” sofas.

The home areas, which Penney will begin to roll out Friday at 500 of its 1,100 stores, will test CEO Ron Johnson's plan to open separate shops-within-stores for popular designers. The format, which gives department stores more of a minimall feel, has been popular at higher-end rivals such as Macy's and Bloomingdale's for years.

Penney, which already has rolled out mini shops-within-stores for popular clothing designers like Joe Fresh, hopes the new home areas will help it woo back shoppers. The chain is struggling to rebound after losing a quarter of its revenue and amassing nearly $1 billion in losses in the year since it began tweaking everything from its pricing to its stores. The revamp of the home areas presents a big opportunity for the retailer to regain its footing.

While home sections typically are among the least profitable for a department store, they help to bring customers into the store. And demand for home furnishings is rebounding along with the U.S. housing market: Sales of furniture and home decor reached $92.9 billion last year, up 7.8 percent from the low of $86.2 billion in 2009 during the recession, according to spending tracker MasterCard Advisors’ SpendingPulse.

“It's going to be a struggle, but the home area could generate some momentum,” says Walter Loeb, a New York-based independent retail consultant.

Penney, based in Plano, Texas, has its work cut out for it. It was planning to anchor its home areas with the Martha Stewart lifestyle brand. But Penney is in court with Macy's, which claims it has exclusive rights to sell certain Martha Stewart products like bedding, cookware, and bath items.

Penney's home business has lost considerable cache from its heyday. The business once accounted for nearly 20 percent of Penney's total store sales, but that number has dropped to 12 percent as the assortments have failed to attract the younger customers who update their homes more often than their older counterparts. In fact, Penney says that its home department, which had attracted an average age of 45, has the oldest shopper compared with rivals like Target Corp. and Macy's.

Penney executives say the new sections will appeal to a broader group of customers. About 70 percent of the merchandise in the new home area will be new or retooled brands. To make room for the new labels, Penney got rid of long-standing names, including traditional home furnishing brand Chris Madden.

Each shop-within-a-store will have its own distinct look and will range in size from 300 to about 800 square feet. Among the new shops within the stores will be Bodum, a Denmark-based kitchenware company. Jonathan Adler, known for his whimsical designs in home decor, also will have a shop. And Michael Graves, the architect turned home designer, will showcase his minimalist style in kitchen and home accessories in mini boutiques.