J.C Penney is planning to shut down up to 140 stores. They will also be offering 6,000 employees a buyout as the department-store business gets hit with online and niche retailers.
Friday, J.C Penney said they would be shutting down 14% of their locations and bringing in new services and products geared towards the changing preferences of their customers.
The cutbacks are affecting many other major department stores such as Sears as Macy’s. Such companies are shutting down stores to save money as shoppers shift to alternative methods.
Recently, Macy’s announced their plans to close down 100 of their 675 locations. Sears also plans to close 150 locations, including 108 K-mart stores, leaving over 1,300 locations still open.
In mid-March J.C Penney will release a list of stores they plan on closing.
Their business has been undermined by online retailers and discount stores such as T.J Maxx. In response, they are overhauling their inventory and adding beauty products, toys, and appliances to appeal to their customers.
70% of J.C Penney customers are women, and 70% also own their homes. Their push on home appliances and installation services is their attempt to target their customer base and compete with Sears.
They will also be shifting their women’s clothing away from just business apparel offering comfortable athletic wear and more plus-size options. They are also changing the shoe department to an open sell environment to reduce the need for sales workers.
In addition to apparel, they plan to expand their toy sales after having a successful holiday season.
The company expects at least a 1% increase in sales after a year of the stores being open. Although it is a small change overall, they hope that matching products to consumer preferences will spark opportunities.
Overall, Penney is expecting to save over $200 million in costs annually with the closure plan, including shutting down two distribution plants. They will also offer 6,000 employees an early voluntary retirement plan. Many employees being affected by the store closures will be re-hired to fill the jobs of those taking the early retirement.