Archive for January, 2016

J C Penney announces they will be testing Appliances. Say it ain’t so Joe

Thursday, January 21st, 2016

J C Penney announces their latest cry for help, We’re selling Home Appliances

I have been close to the JCP culture since Mr. Johnson had, what I considered, a
well conceived plan to turn the business around. The rollout of the idea was difficult to execute due to funding and a commitment by Vendors to dig in and support the effort.

Johnson was relieved of his duties and the old regime became the new old regime. In their tenor multiple law suits for misleading advertising among others continued to blemish the brand name that for years was gold. JCP was conceived to be the Department store for middle and remote America and was good at servicing that demographics.

Of recent JCP has continued to slip into an abyss due to a lack of creativity and a playing field including online sales which are proving to be too strong for them to ward off. Now out of the blue, the retailer mainly known for Home accessory products and apparel, some branded departments come out with “we are selling appliances” as a test.

Let’s see what is involved with this idea based on my firms experience in this field.
Space, a commodity in retail estimated at 36’ x 30’ (1080 square feet) that once housed soft goods that had a five turn projection, with an average gross profit margin of 45% product which generated $300 per s.f. on a yearly basis is giving up $324,000 in sales. Now replace soft goods with Appliances that have maybe two to three turns a year, with a gpm as low as 15% generates does not come close to meeting the dollar profitability of the prior item. Maybe if the Hair salon is replaced with appliances, there is a chance to beat the prior departments total profit and impact to the bottom line.

Competition, Well Sears has been selling appliances since appliances were invented. They have support, trained sales staff, maintenance, and years of doing it right. With the Kmart acquisition they expanded their dominance in the category. Home Depot and Lowe’s have every piece of the equation well greased and generating vast profit. Zero finance for two years a big plus, comes with Home Depot appliances.
In addition, all the accessories that are required with appliances are found under the same roof. The internet is loaded with price driven, inventory intense, quick delivery and branded offerings which low overhead allows for price to rule the sale.
Unless JCP has a lease department with a group that can provide all of the services that the rest of the retail world provides. What are they doing in this category? Bring in a new demographic?
In my opinion, another concept that will not get past a test unless they have a new concept of selling that will set the world on fire. The handwriting on the wall indicates yet another life preserver designed by Svengali to keep them afloat.

Radio Shack appears to be shorting out due to bad wiring

Wednesday, January 13th, 2016

Radio Shack was a powerhouse at one time for electronics. Over time they allowed their staff training, assortment, inventory on hand to fall into an abyss. This concept needs to grow up and what is apparent, and financially driven is the stores remain same old, same old.
The success of Radio Shack will fall on the public’s perception that this store can provide anything and everything, a category killer, otherwise you can cherry pick Rado Shack on line.
The biggest advantage they can offer the customer is the ability to easily shop the store with informative signing, out posting product to improve the multiple sale and joining this century with mobile device drive sales techniques.
The investment is too great to become innovative, the staff are not knowledgeable about the product, the breath of assortment is too vast to control and area and then conquer others so why surge without the weapons in place?
In all due respect the captain of this ship although coming with great credentials lacks the background of retail savvy. A former vendor cannot direct a retailer when the revitalization for Radio Shack depends on product sold in a manner that it becomes the reason to shop the store, i.e.: Apple.