JCPenney banks on shop-in-shops, this time with digitally-native sports manufacturer and retailer Fanatics.

What happened
  • JCPenney launched Fanatics shop-in-shops in 350 of its locations, and plans to open 300 more by the end of the summer. Each shop is between 650 and 1,300 square feet and outfitted with a flat screen television and iPads to give customers access to JCPenney and Fanatics’ online Sports Fan Shop.
Why it matters
  • In the age of struggling department store brands, JCPenney continues to see huge benefits from its Sephora shop-in-shops and The Salon by InStyle. In 2017, the department chain brought its Sephora shop-in-shops to 642 stores and expects to add 30 more in 2018 as it continues to focus on the beauty category.
  • The Fanatics deal further cements JCPenney’s strategy, which continues to avoid solving issues endemic to the department store itself in favor of tacking on more high-performing shop-in-shops. While having Sephora in approximately 75% of its locations is a great way to reel in foot traffic and the presence of Fanatics is likely to bring in a different set of customers, both partnerships leave JCPenney at the mercy of other retailers, which could choose to walk away from the department store in the future. This limits JCPenney’s control of its turnaround efforts, which runs counter to how most companies would approach addressing such grave needs.
  • Fanatics is a rising star in the sports merch sector—it recently solidified a deal with Nike and the NFL, which, beginning in 2020, will license their products to Fanatics to produce and sell. But Fanatics is already available online and will sell the NFL and Nike merch on the NFL’s site and at Dick’s Sporting Goods, raising the question of why a customer would choose to go to JCPenney specifically to buy her sports apparel and accessories as opposed to these other businesses.