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From Home Furnishing Business
J.C. Penney Rethinking How It Sells Furniture With Ashley
May 10,
2016 by in Business Strategy, Industry 
J.C. Penney (NASDAQ: JCP) has two department tests in the works: It will sell flooring with national carpet and flooring company Empire Today. And it’s rethinking how it sells furniture with Ashley Furniture, the largest maker and retailer of home furnishings in the U.S.
The Plano, Texas based department store retailer also announced it’s moving forward into the major home appliance business and will go head-to-head with Best Buy, Home Depot, Lowe’s, Sears and Amazon.com after testing kitchen and laundry appliances in three markets since February.
To make room, Penney will be cutting back less productive space in furniture including mattresses. Some stores will be out of the furniture and mattress business entirely.
Making home a more productive department is a key piece of Penney’s turnaround. Penney fixed its bedding and bath area, but it’s lacked some of the relevant home merchandise that today’s homeowners are buying, said CEO Marvin Ellison.
Twenty Penney stores will be part of the furniture test, in which merchandise will be sold and then shipped directly to the customer from Ashley. This test could end up taking Penney out of the furniture business, turning over that space in its stores to Ashley-branded furniture.
“I can’t overemphasize how efficient Ashley’s backroom operation is. It’s the best supply chain and delivery system. And it’s the best-in-class furniture for our price points, the sweet spot for our consumer,” Ellison said.
The partnership with Ashley will also double Penney’s assortment of furniture online to 4,000 pieces, said David Plummer, senior vice president over home. “And it will be shipped directly from their factory.”
The flooring test with Empire will be in seven stores in Tampa and Washington, D.C., starting in July and will include carpet, hardwood, laminate, vinyl and tile samples. Empire Today staff will run the 750- to 1,000-square-foot shops inside Penney’s home departments.
The test with Empire is a revenue-sharing model, Ellison said. “We think there will be cross selling.”
A large percentage of Penney’s customers are homeowners, Ellison said, and “when we ask them what they’re buying for their home, we realized they are buying much more than we sell.”
That’s why Penney pursued the appliance test and knows it has to do better with furniture, he said. Window coverings and flooring purchases piggyback on those categories.