It’s only a rumor, to be clear, however hardly an outrageous one. Fashion website Women’s Wear Daily reported on Tuesday that e-commerce giant Amazon.com( NASDAQ: AMZN) may be interested in getting having a hard time department store chain J.C. Penney( NYSE: JCP) Without calling the source, Women’s Wear Daily priced quote a source knowledgeable about the matter as saying: “There is an Amazon group in Plano [Texas] as we speak. There is a dialogue and I’m told it has a lot to do with Amazon excited to expand its apparel organisation– for sure.”
Amazon was also supposedly interested in an acquisition of competing brick-and-mortar name Kohl’s( NYSE: KSS) after striking an offer that allowed the merchant to deal with Amazon’s merchandise returns. There are likewise a dozen physical book shops in the Amazon household, although they offer much more than simply books. Wading into the apparel and device arena would not be an unusual stretch for Amazon.
Image source: Getty Images.
Still, the possibility raises concerns.
1. Bid farewell to the Penney’s name
It’s actually a bit unfortunate. For the much better part of its 118- year presence, the J.C. Penney name was a well-respected one. If nothing else, the company was valuable to a suitor simply for the name alone.
That might not be the case any longer. Things have never ever quite been the exact same given that 2011, when ex- Apple executive Ron Johnson guided the old J.C. Penney into an Apple-like presence by doing away with coupons and mailed ads and after that reorganizing stores into brand- and category-focused stores. The relocation even more alienated its already-fragile consumer base, and inadequate beginners had an interest in the paradigm shift.
To that end, the now-unsalvageable Penney’s name now needs to die, if only to send a message to the world that these retailers– if that’s the strategy– are absolutely nothing like the shops that formerly occupied the space.
2. Great deals of tactile experiences and engagement
Anybody who’s ever been in one of Amazon’s four-star shops will know it’s not just a book shop. The stores are complete of discussion tables with unboxed product for buyers to touch and even play with, consisting of Amazon’s home-grown gadgets like its Echo smart assistants and Kindle tablets.
It’s not just a more tactile experience four-star shoppers will enjoy. Several of Amazon’s four-star places held a “New Year New You” occasion that coached shoppers on how to adhere to their New Year’s resolutions.
Other merchants have actually hosted similarly luring events and let buyers touch the merchandise as well, but Amazon has actually already proven it wants to take the concept to the next level.
3. Personal labels galore
The Women’s Use Daily report clearly noted that Amazon’s ownership of physical retail space would mostly be about its budding personal label apparel lines, and the concept makes plenty of sense.
Many investors (and consumers for that matter) might not realize it, but Amazon is thought to be among the United States’ most-shopped apparel retailers, if not the outright biggest clothing shopping place. The information differs slightly from one research outfit to another. The e-commerce company ended up being a serious competitor on the clothes front, nevertheless, by making (well, contracting out the production of) its own clothes and producing brand-new labels for that garments. Lark & Ro, Core 10, Excellent Threads, and around 80 more brands round out the business’s own clothes empire.
The effort has actually been … fine. While Amazon itself doesn’t offer much in the method of information about its income mix, industry insiders have said in the past that an absence of a physical retail existence is limiting Amazon’s clothing potential. Coresight Research study just recently echoed this idea with a report posted last month, which stated: “Amazon could be experiencing a plateau in shopper numbers for fashion.” Access to a couple of hundred real stores could reduce this issue.
4. A complete omnichannel experience
Lastly, if Amazon does wind up getting J.C. Penney out of bankruptcy, don’t be amazed to see a significant effort to meld the online merchant’s existing web presence with the in-store experience. This consists of in-store pickup of products acquired online as well as the approval of returns of products acquired at Amazon.com. These are services the majority of its shops in addition to a number of non-Amazon merchants like Kohl’s already deal, one way or another. Offered the success so many other sellers such as Walmart and Target have likewise discovered with curbside pickup of online orders, it’s most likely Amazon would do the very same.
Physical stores are eventually an opportunity to make Amazon Prime an even more helpful subscription-based offering. How a Prime membership would be incorporated within a brick-and-mortar setting is up to Amazon, but discount coupons and value-added services like gift wrap are a couple of possibilities.
Of course, all of it is eventually suggested to provide Amazon with more information about customers.
They’re just possibilities, mind you, like Amazon’s rumored interest in J.C. Penney Amazon may not do all or any of these things should it obtain Penney’s, and it may do some things not gone over above. Offered the business’s past efforts, nevertheless, these four possibilities are not just likely but the most likely of Amazon’s options.
Possibly more than anything though, it stands to factor that an Amazon-branded brick-and-mortar presence will have the ability to get the traction that Penney’s and the majority of its department store rivals have struggled to discover for years now. Too much of the industry continues to try to adapt the old organisation design to the brand-new environment. It does not work. Retailing needs to be a lifestyle experience instead of just a discussion now, and gathering consumer information is just as crucial as driving sales. If absolutely nothing else, Amazon knows that much.
James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Apple and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, belongs to The Motley Fool’s board of directors. James Brumley has no position in any of the stocks pointed out. The Motley Fool owns shares of and suggests Amazon and Apple and suggests the following alternatives: short January2022 $1940 gets in touch with Amazon and long January2022 $1920 gets in touch with Amazon.
The Motley Fool has a disclosure policy