Will Martha Stewart's pricey taste hurt JC Penney?
The domestic diva is reportedly insisting on high-end materials for her line of home products, raising profit concerns for the struggling retailer.
Martha Stewart is known for her high-end tastes, blogging to her fans about the pleasures of "thick and fluffy Turkish towels" and "finely ironed linens."
But her passions are on a collision course with retailer J.C. Penney's (JCP) need to turn a profit, reports The New York Post.
At issue is a deal Penney struck with Martha Stewart Living Omnimedia (MSO) to sell household products branded with Stewart's name, as part of the retailer's strategy to lure new shoppers.
Stewart is insisting that her products for J.C. Penney incorporate high-end materials -- such as top-quality fabrics and packaging components -- leading to concerns among its executives that the retailer will lose money on the goods, the Post notes.
Despite those fears, J.C. Penney CEO Ron Johnson is backing Stewart, according to the report. As a result, the new products' costs have jumped as much as 30% above their replacements.
The report comes at a delicate time for Penney: A lawsuit brought by Macy's (M) against Martha Stewart Living Omnimedia over its deal with J.C. Penney is set to go to trial on Wednesday, according to Reuters.
At J.C. Penney, Stewart's name will appear on rugs, window coverings, as well as Martha Stewart Pantry, a line of food mixes, and Martha Stewart Celebration, which are paper party products, according to The Dallas Morning News. The retailer will also sell a private label called Everyday, ranging from linens to furniture, that will be designed by Stewart's company.
While Penney originally hoped to sell Stewart's products on March 1, that's been delayed until Mother's Day, or May 12, Home Textiles Today notes.
According to the Post, Stewart insisted her cutlery include high-grade stainless steel, and demanded that the glassware come from Europe instead of China. J.C. Penney's won one battle, when executives vetoed fabric from a supplier to Frette, whose Egyptian cotton bedsheet sets can cost over $1,000.
With most U.S. consumers struggling with smaller paychecks as higher payroll taxes took effect in January, the big question for J.C. Penney is whether its customers will pay up for Martha Stewart quality.
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Wow what next will JCP come up with next to lure back customers. I don't think adding Martha Stewart's name on anything will help JCP's image and will not bring back former customers. It is sad that JCP has lost their appeal and redesigning their stores did nothing to help their down hill slide.
I realize that times change and businesses need to be proactive in regards to those changes. But I view the last 18-months of jcp 's actions as the company being led by the gang that couldn't shoot straight.
Maybe Pennys should have one section or third floor space of stores devoted to nicer items..
Don't need Martha Stewie; Yup, she did a lot for K-Mart..
Kind of divide off the other Section, then turn the rest off the store into a Target, Costco and WalMart.
Otherwise, we or many are going to "stick a fork in them"...We always liked Pennys..
But they have to change and survive, now; And do whatever it takes..?
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