Martha Stewart is Apple of Penney CEO’s Eye
Ron Johnson, CEO of J.C. Penney, has said publicly that he is out to do no less than transform the department store experience. Now, it appears, Mr. Johnson has taken a step in that direction with the announcement that J.C. Penney will acquire a 16.6 percent stake in Martha Stewart Living and begin opening Martha-branded home good spaces within its stores that sound very similar to Apple’s Genius Bars. The companies also plan to jointly develop a website.
"A store has to be much more than the products that it sells," Mr. Johnson told The Associated Press. "That’s what I learned from Apple. You can really move product and change and enrich people’s lives."
A positive to the move, as The Wall Street Journal pointed out, is that it addresses one of the weaker areas of Penney’s business — home goods.
Under the deal, Martha Stewart Living will establish stores-within-the-store beginning in February 2013. It will be stocked with items selected by Martha Stewart’s group and purchased by Penney’s buyers.
Consumers will be able to go the space to not only buy products but to get advice on a wide range of homemaking subjects.
"For J.C. Penney to be successful, they really need to target a broad audience," Liz Dunn, an analyst at Macquarie Research, told Reuters. "If you’ve got stores that big you really can’t target your audience so narrowly. You need to have offerings for everyone."
"I have been an admirer of Martha Stewart for two decades," Mr. Johnson told the AP. "We’re going to unlock the potential of this partnership."
One potential negative for Martha Stewart in the arrangement is that other companies currently doing business with the company, most notably Macy’s, may look elsewhere now that Penney is involved.
Lisa Gersh, president and chief operating officer at Martha Stewart, told the AP, that working with Penney should not affect current relationships.
"This is a different presentation and a different view," Ms. Gersh said. "We think this is great for the brand and for all our (store) partners."
According to the Journal, Macy’s issued a statement that said it was reviewing its line in light of "the proliferation of Martha Stewart-branded product in the marketplace."
- J.C. Penney to Acquire Martha Stewart Stake – The Wall Street Journal
- Penney adds Martha Stewart brand shops, equity stake – Reuters
- JC Penney Buying Stake In Martha Stewart Living – The Associated Press/NPR
Discussion Questions: What is your reaction to the J.C. Penney/Martha Stewart Living deal? What will it mean for Penney? What will it mean for the Martha Stewart brand?