JC Penney wants to remodel your bathroom

JCPenney CEO: Here's why we're expanding into home services

When you think about remodeling a bathroom, you don't think about J.C. Penney, but CEO Marvin Ellison wants to change that.

The department store is going to expand its home services by testing six new programs in 100 stores. Shoppers can buy a GE washing machine, arrange for a bathroom remodel consultation, get a haircut at a JCPenney salon by InStyle and pick up some new Nike gear — all in one trip.

Starting later this month, shoppers will see signs in the J.C. Penney home departments and on its digital storefront for services in bathroom remodeling, home heating and cooling systems, quick-ship and installed blinds, whole home water solutions, awnings and smart home technology.

"It's a $300 billion market that we believe we have the opportunity to pick up some significant market share," Ellison said during an exclusive interview on CNBC's "Power Lunch."

JCPenney CEO: We're trying to de-emphasize our dependence on apparel

Ellison knows a thing or two about home services and appliances, having spent six years working for Home Depot before coming to J.C. Penney in 2014.

While department stores may be falling out of favor with shoppers as mall traffic slows, home improvement retailers like Home Depot and Lowe's are logging enviable sales gains quarter after quarter as homeowners invest in their houses instead of filling up their closets.

Ellison is hoping to increase his sales with both new and current customers. He said 70 percent of his current shoppers are homeowners.

While some may argue that this new expansion is outside the retailer's comfort zone, Ellison isn't concerned.

"If you go back on the timeline, J.C. Penney actually served a lot of these products and services at one time in our history," Ellison said. "A lot of people said the exact same thing about the appliance business, but we were able to roll out 500 showrooms and it was one of our strongest categories for 2016."

More than a year ago, J.C. Penney began to bring back appliances from General Electric, LG, Samsung and others after having exited the appliance business more than three decades earlier.

Expert: Every single retail company needs to try new things

"If you think about the retail landscape overall, every single company has to try new things," Dana Telsey, CEO of Telsey Advisory Group, said in reaction to Ellison's interview. "If you're just going to sit there and be an apparel company the entire time, you're not going to capture the new demographic, the new customers."

In the retailer's fourth-quarter earnings call in February, Ellison said appliance sales are driving significant comparable sales growth and improving productivity.

While Ellison did not call out Sears by name on that earnings call, he did allude to it and expanded home services by saying "now that we have a large mall competitor donating market share in this category, we feel the timing is right for us to test a series of home install initiatives."

J.C. Penney and Sears stores overlap in 400 of the country's malls, though both retailers are closing stores as more sales move online and into other categories altogether.

"If we can get our apparel business back on track and combine that with the initiative of beauty with Sephora, home with appliances and some of these new service offerings, we think we can have a really good 2017," Ellison said.

—CNBC's Mack Hogan contributed to this report.

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