There is something about J.C. Penney mall-within-a-mall strategy that I am not able to see but something Macy’s CEO Terry Lundgren can do and he is really wary about the same.
Macy's Inc. and J.C. Penney Co. duke it out in court over the partnership with Martha Stewart Living Omnimedia. The trial, which began Wednesday, focuses on whether Macy's has the exclusive right to sell some of Martha Stewart branded products such as cookware, bedding and bath items.
In the home area, exclusivity is key. Lundgren testified on Monday that Macy's had built the Martha Stewart brand to be the biggest in its home business. Sales last year were up 8 percent, double the rate for the entire company.
Lundgren said Macy's has spent 40 percent of its overall marketing on the Martha Stewart brand and other labels in the home area, even though the home category represents 17 percent of total sales. That's because even though the home area is typically slow turning, it drives shoppers to the store.
"I need the Martha Stewart business to be exclusive," Lundgren said. "I don't have a substitute."
The more I think about it, the more it feels that what Ron is trying to build at JCP is a conglomeration of big, well known brands, something which will drive traffic to the store.