Challenged by dismal retail sales and store closures, JC Penney embarks on a B2B initiative with hotel and hospitality industry

JC Penney

As the struggling department store JC Penney has been seeking ways to boost its retail business, the company announced on Thursday (May 18) that it is embarking on a B2B approach to its bedding, appliance and home offerings and will direct its sales and marketing efforts towards hotels and other lodging companies.

The retail chain reported a much worse than expected drop in sales for the first quarter the day after its announcement with Penney shares, already near 40-year lows, plummeting 8% below $5 to hit a new all-time record.

Penney said on Friday (May 19) that comparable sales, which include e-commerce but exclude recently closed or opened stores, fell 3.5% in the three months ending on April 29, a much deeper drop than the 0.7% decline Wall Street analysts had been forecasting, according to Consensus Metrix. It was also Penney's biggest quarterly drop in years.

The company notes that the idea of marketing to hotels came from those businesses themselves, who traditionally place big orders of bedding, bath and window treatments from its website.

According to a recent survey, there are roughly five million hotel rooms in more than 52,000 properties in the US today. Hotel rooms have one or two beds requiring multiple sets of sheets, blankets, pillows, towels and window treatments.

"Our entry into the B2B program reinforces our home refresh initiative, while providing new and innovative ways to achieve sustainable growth and profitability. The idea first stemmed from hotel operators who were already ordering large volume purchases of bedding, bath and window treatments from JCPenney.com," said JC Penney chief executive Marvin Ellison said in a statement. "We are staffing an outside sales force with experience and expertise to engage targeted businesses. Our broad assortment of private brands in soft home give us a unique cost and value advantage in this new and exciting space."

Ellison estimated the US hospitality industry is a $200bn sector that offers significant opportunity for JC Penney to gain market share" and get more business out of each customer. Should this strategy prove successful, it could be a way for Penney to be less reliant on clothing and less exposed to malls' dwindling shopper traffic. It would allow Penney to offer something different from competitors Macy's and Kohl's.

JC Penney will use an outside sales force to line up new businesses, which will also include residential property managers, and says its private brands of home items like towels and sheets will give it an edge on cost.

The company also said it will be expanding its mattress showrooms to an additional 300 stores by early fall.

"With over five million hotel rooms in the U.S., JCPenney sees a great opportunity to grow our B2B business and provide new ways to reach sustainable growth and profitability," said JC Penney spokesperson Sarah A. Holland. "We have a long history of designing and sourcing high-quality home textiles, and the hospitality industry represents a new and innovative market for our luxurious, yet durable linens from JCPenney Home or Royal Velvet."

Get The Drum Newsletter

Build your marketing knowledge by choosing from daily news bulletins or a weekly special.