As Sears continues to limp along, competitors such as J.C. Penney are nipping at its heels. Penney is the latest to try to steal market share from Sears by opening major appliance showrooms.
"Our customers are saying to us that they are spending a lot on home beautification. And we understand that we can do a lot better at that," Penney Chief Executive Marvin Ellison said when the program launched earlier this year.
Stores in Burnsville, Coon Rapids, Minnetonka and Roseville, as well as St. Cloud and Rochester, will begin selling major appliances Friday. Showrooms in Edina and Eden Prairie opened last week. Each location will display between 100 and 215 appliances, including ranges, dishwashers, refrigerators, washers and dryers from major appliance manufacturers such as LG and GE. Customers can find more than 1,000 additional models online.
Selling major appliances is not new for Penney, which sold them more than 30 years ago, but some analysts consider it a necessary move.
"The good thing about selling appliances is that the sales are less likely to be eaten away by online," said George John, professor of marketing at the University of Minnesota's Carlson School of Management. The profit margin is thought to be slightly higher than on electronics, which explains Best Buy's expansion of the category. Lowe's, Home Depot and Menards have also gotten into the mix.
Penney is offering no-interest financing, free delivery and price-match guarantees in the new departments. John said price matching tends to prop up prices among competitors. "If they both offer it, they can stop beating each other up and hold up prices," he said.
By the end of the year, the retailer will have an appliance department in half of its 1,000 stores. It will also team with Ashley Furniture and Empire flooring.