Can toys raise J.C. Penney’s game?

Discussion
Photo: JCPenney
Jul 17, 2017
Tom Ryan

Following a successful return of the category last holiday season, J.C. Penney will be opening toy shops in all of its stores while significantly expanding toy assortments on JCPenney.com.

“JCPenney has a nostalgic history of selling sought-after toys in our early Christmas catalogs, so we brought toys back last holiday season to see if they would resonate once again,” John Tighe, chief merchant for the retailer, said in a statement. “We were extremely pleased by customer response.”

Penney stopped showing toys in catalogs in 2004. Sarah Holland, a Penney spokesperson, told The Dallas Morning News that company research shows toy customers spent more, shopped more frequently and were more ethnically diverse.

The toy shops will be adjacent to Penney’s successful Disney Collection areas and will feature everything from dolls and action figures to board games by leading brands such as Hasbro, Mattel, Playmobil and Fisher Price. The retailer is also adding plays areas where kids can to try out the toys. Online selections have already been doubled over the last year and a further online expansion is planned for holiday selling.

Said Mr. Tighe, “Toys are an exciting product category for JCPenney and an in-store attraction that will drive traffic and sales as we continue to focus on increasing revenue per customer.”

Based on customer feedback, Penney has added other new product categories including bicycles, video games, outdoor trampolines, costumes and science kits, while sorting the product by age group. The toy shops will also build on the success of the retailer’s Sephora in-store shops and other specialized departments. Penney recently opened Nike shops and, last year, brought appliances back to stores.

The biggest toy sellers are Walmart, Target, Amazon.com and Toys “R” Us. Barnes & Noble has recently found some success diversifying into toys; Kohl’s brought in the American Girl doll line last holiday selling season; and Macy’s featured toys for Christmas at its Backstage concept.

DISCUSSION QUESTIONS: Are toys too competitive or the type of category that can elevate the in-store experience for J.C. Penney? How might Penney avoid competing on price against the bigger boxes?

Braintrust
"I'm not seeing a single brand here nor a common customer which makes marketing tricky."
"It all depends on how they define success. J.C. Penney is NOT going to become a meaningful player in the toy category..."
"J.C. Penney is getting to be like Target — take every idea management can come up with, throw it against the wall and see what sticks."

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15 Comments on "Can toys raise J.C. Penney’s game?"

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Max Goldberg
BrainTrust

J.C. Penney is getting to be like Target — take every idea management can come up with, throw it against the wall and see what sticks. Toys are a low-margin item. To be successful in this category, J.C. Penney will have to compete on price with the bigger boxes. The question J.C. Penney’s management should be asking is, what is the J.C. Penney brand and why does it matter to consumers?

Steve Montgomery
BrainTrust

Define success. If success means toys resulting in a complete turnaround of J.C. Penney then the answer is no. If success means J.C. Penney might be able to generate more sales and profits with the space devoted to toys than what it is currently generating — the answer is possibly.

They should remember there is a big difference between selling toys during toy season (Christmas) and the remainder of the year. That being said, having toys throughout the year may better position them as a source for toys during the next holiday season.

Art Suriano
BrainTrust

I think this is a good move for J. C. Penney. They have been slowly bringing back what was once the traditional department store with many different categories and they’re doing it wisely in a modern way. The best attraction here will be the “play areas” allowing kids to try the toys. Interaction is the best way for the child to experience the toy. Parents already shopping in J. C. Penney will no doubt want their children to enjoy the opportunity which will make their time spent shopping longer and should increase their spend while in the store. Even if the toy department only adds incremental dollars to J. C. Penney’s revenue, it may help the overall store business and customer satisfaction.

Dick Seesel
BrainTrust

Toys are a double-edged sword for softlines retailers like J.C. Penney and Kohl’s who want to strengthen their children’s offerings. It’s hard to avoid carrying toys, but it’s also hard to compete against the dominant space of the discounters and big box stores (not to mention the low margins). Customers have come to expect the best selection and prices from market leaders like Amazon, Walmart and Target.

The broader risk to J.C. Penney is that it becomes a “bunch of stuff” with the addition of new categories (from appliances to toys, from bikes to electronics). Just because the store has square footage to burn doesn’t mean that over-assortment is a winning long-term play.

Lee Kent
BrainTrust

Interesting move but I’m getting confused. J.C. Penney decided to start selling direct to hotels in order to create an entry into the hospitality industry. Then they opened store-within-a-store concepts for back-to-college, now toys? I’m not seeing a single brand here nor a common customer which makes marketing tricky. And they all seem to be store-within-a-store. Lots of good ideas, I agree, but not enough focus.

For my 2 cents.

Gene Detroyer
BrainTrust

I am sorry. I laughed out loud on this one.

I can’t imagine my toy shopping experience (for my grandchildren at Christmas and for birthdays) being anything other than going to Amazon, finding what I want and getting it in two days or less while never leaving my desk.

Brian Kelly
Guest
5 days 21 hours ago

Yes and it’s not just a competitive issue. It is a shopper issue: who buys toys and how they buy toys. As Millennials move into the family creation life stage, these digital natives are now toy consumers. Online shopping for commodity products is the norm. J.C. Penney’s assortment will be focused on the basics. Basics = price and convenience.

Like appliances, toys feels like another way J.C. Penney is attempting to fill the big box and not what is the most relevant aspect of the selling model. J.C. Penney should avoid toys if it wants to protect margin.

Laura Davis-Taylor
BrainTrust

To move beyond the commodity play and motivate shoppers to care, J.C. Penney will have to offer something different and valuable. This would have to come from one of two places: offering a better purchase/fulfillment experience or an exclusive line of toys that are highly coveted and hard to get. Will they be able to pull either off? Even if they do, will they be credible enough to bring people back? My gut says that the time to do it was three or four years ago when they had a chance.

Dave Bruno
BrainTrust

I tend to want to applaud retailers that take a long, hard look at their assortments and then make changes as necessary to adapt to changing consumer tastes. And, in theory, I applaud J.C. Penney’s efforts here as well. However, as several others have commented, they need to ensure that their toy assortments — and as importantly their toy store experience — align with the needs and expectations of their target customers. If not, they will fall into the race to the bottom on price with Amazon and Walmart — a race they can not win.

Jason Goldberg
BrainTrust

It all depends on how they define success. J.C. Penney is NOT going to become a meaningful player in the toy category, and they aren’t going to be (price or assortment) competitive enough to drive new trips due to toys.

But they can get their average order value up by adding toys to existing shoppers’ basket.

Camille P. Schuster, PhD.
BrainTrust

Toys are very price-sensitive — unless they are new or novel. Toys at J.C. Penney work as nostalgia for adults who remember toys in the J.C. Penney Christmas catalog, but will not have the same appeal with Millennials.

gordon arnold
Guest

Let’s see now! Toys “R” Us is in a financial nose dive with less hope for future viability. Mr. Ellison and the company see this as a big opportunity and decide to take this challenge on. In the movie “Big” the Tom Hanks character gave us what might be the best comment for this decision when he declared, “I don’t get it!”

Harley Feldman
BrainTrust

Toys are a great category for J.C. Penney. Their demographic tends to be women who would be likely to gravitate to the toy section for their children and grandchildren. Over time, they will settle in on the toys that sell well in their stores and not carry those that don’t. The best ways to not compete on price are offering toys that are somewhat unique in the marketplace and that cater to their demographic. They could also have lines that are exclusive since they will be a major toy purchaser.

Robert DiPietro
BrainTrust

Not the category to elevate the in store experience. It seems like a stretch that this is the category that will drive a trip to JCP. At best, this will be a impulse purchase and drive up the basket size when the customer is in the store.

Min-Jee Hwang
BrainTrust

Toys as an add on — not as a core product — can help elevate the in-store experience for J.C. Penney. Providing more toys and play areas will attract the typical parent who still wants the shopping experience. By providing more toys, parents can feel confident their kids will have incentive to tag along with them on a shopping trip. While this won’t necessarily attract toy shoppers and raise their sales significantly, it’s still a plus for parents who want to continue to shop in-store.

wpDiscuz
Braintrust
"I'm not seeing a single brand here nor a common customer which makes marketing tricky."
"It all depends on how they define success. J.C. Penney is NOT going to become a meaningful player in the toy category..."
"J.C. Penney is getting to be like Target — take every idea management can come up with, throw it against the wall and see what sticks."

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