JCPenney banks on babies, but seizing Toys R Us’ market share continues to ignore the company’s endemic problems.

What happened

  • JCPenney is opening 500 baby shops in its department stores, sweeping up market share from the liquidation of Toys R Us and its Babies R Us brand. This will move some previously online-only SKUs—cribs, high chairs, strollers—in store, in addition to an expanded children’s apparel assortment, which currently does $1 billion annually.

  • In the aftermath of Toys R Us’ bankruptcy and the shuttering of its U.S. stores earlier this year, other mass retailers are rushing to fill the void the company left behind. Amazon continues to expand its private-label offerings, which now include a handful of brands for babies and kids, including Moon & Back for baby apparel and Mama bear for diapers and other child-friendly household essentials—Target, Walmart and buybuy BABY are also revamping their stores and sites as baby destinations.

Why it matters

  • In the past few years, JCPenney has taken on various projects for self-preservation, including shop-in-shops for Sephora, its best-performing segment, and the sports retailer Fanatics. While they have brought the company and influx of sales, these tactics are skeptical as they do not constructively evolve JCPenney’s core business.

  • Expanding its baby section may be a positive development for JCPenney, as it wouldn’t be counting on an external player to buoy its department store sales. And while the company is right to seize the opportunity left in Toys R Us’ wake—especially given that competitors are doing the same—the long-term health of the department store is dependent on JCPenney finding a way to differentiate from other mass retailers that’s not just capitalizing on a failed business’ market share. Again, it seems as though JCPenney is pulling itself in too many directions—in July, the company announced it would reverse course, targeting its core customer (middle-aged moms) instead of pursuing millennial shoppers, but it’s not clear how focusing on baby products meets this goal, as millennials begin families of their own.


This article is exclusive to Loose Threads Members, who get access to actionable analysis, insights and private events that drive growth.