JC Penney Moves Back Into Appliances; What Does It Mean For CRE?

 

There is still that old adage, “kitchens and baths sell homes,” which may be a bit trite, however it still resonates a truth in commercial real estate today. Homes are being transformed, democratized, and enhanced by green developments which improve the quality of life for consumers. Retailer J C Penney Company Inc (NYSE:JCP) announced it will be selling appliances once again after 30 years in efforts to attract female consumers. With an increase in millennials entering the real estate market and the rise of homeowners looking to invest in updating their homes, JCPenney will be introducing an assortment of major appliances in 22 pilot stores which began February 1 of this year.

The decision reinforces the Company’s decision to enter the appliance market. The National Kitchen & Bath Association (KNBA) reported that according to its 2016 Design Trends Survey, traditional style kitchens were still the most popular. JC Penney’s strategic framework in 2015 focused on opportunities in private brands, increasing revenue per customer, and omnichannel, all of which its re-introduction of appliance sales will be a key component.

“Our research shows that the female consumer is the key decision maker in the appliance purchase process. Recognizing that over 70 percent of our shoppers are women, we’re going to improve the way customers shop for appliances by building an emotional connection with the female shopper who already trusts JCPenney to furnish her home and wardrobe,” said Marvin Ellison, chief executive officer for JCPenney.

KNBA says that remodeling of American kitchens and baths represents a $31 billion annual industry, or 25 percent of the country’s remodeling budget. That’s 1.8 million kitchens and 2.5 million bathrooms that are remodeled in existing homes each year. New construction adds about 1.2 million kitchens and 2.8 million bathrooms a year.

According to the report, the rates of new home construction and renovation are anticipated to grow between 5-7 percent annually through 2019. • The non-residential new construction and remodeling market continues to outpace its residential counterpart in sheer dollar volume. However, the residential market is showing stronger year over year growth than the commercial sector, as well as the residential repair market. Year-over-year growth in the multifamily housing construction market is expected to be surpassed by single family construction in 2017 and continue through 2019.

The global smart home M2M market, which was at $19.5 billion in 2015, is set to grow to $96.5 billion by 2020, at a CAGR of nearly 35 percent, according to a recent study from global research firm Technavio. Security Systems News reported that the smart home M2M market in the Americas, valued at $10.1 billion in 2015, is expected to reach $41.3 billion by 2020, growing at a CAGR of 32.43 percent. “Presence of enhanced global connectivity (LTE) across the world is one of the major reasons driving the global smart home M2M market during the forecast period,” Technavio lead analyst Abhishek Sharma told Security Systems News. “As of January 2016, there were almost 480 LTE commercial and 116 LTE-A commercial networks globally to support higher data services requirement.”

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Jennifer Lynn

Jennifer is a business journalist and has over 15+ years of professional experience working in technology, financial, hospitality, real estate, healthcare, manufacturing, not for profit and retail sectors. Specializations in the field of analytics, management consulting serving global clients from medium & large scale organizations. She is a proficient and passionate business executive; manager utilizing analytics data to drive smart business decisions. Technology, Finance, Investments, Retail, Management, Consulting, Strategy. Have published on Forbes.com, Investing.com, and many others. Currently the Commercial Real Estate Contributor for Retail Solutions Advisors.