JCPenney takes a stake in Martha Stewart

Jeff Tyler Dec 7, 2011

Kai Ryssdal: We come now to the portion of the program in which we ask a not-entirely hypothetical question. Can two companies who’ve seen better days come to each other’s mutual aid?

JCPenney and Martha Stewart most certainly hope so. Penney said today it’s going to spend about $38 million to buy a stake in Martha Stewart Living Omnimedia. Both companies have been struggling. A lot. So they’ve come up with a deal that will have small Martha Stewart shops within Penney stores.

Marketplace’s Jeff Tyler gauges the odds of success.

Jeff Tyler: In a little over a year, JCPenney will unveil a new store within its stores.

Martha Stewart says it’s something different for her brand.

Martha Stewart: I have long wanted to have my own free-standing stores, and I’m going to be able to do that within JCPenney.

This is hardly Stewart’s first foray into retail partnerships. You may remember this from the ’80s.

Martha Stewart commercial: I’m Martha Stewart and I’m Kmart’s new consultant for entertaining and lifestyle.

George Whalin: She had an exclusive deal with Kmart for a long time. And that’s limiting when you have just one retailer you’re doing business with.

George Whalin is president of Retail Management Consultants.

Whalin: I think it’s good for both companies.

JCPenney gets a big-name brand to lure shoppers. But the deal won’t be exclusive.

Macy’s commercial: The new Martha Stewart Collection, only at Macy’s.

Stewart has deals with Macy’s, Home Depot and Pets Smart. She doesn’t see a conflict.

Stewart: This will be different merchandise. It will not be the same design. Louis Vuitton is at Macy’s, but it’s also at Saks. It’s also on Madison Avenue. It’s also on 5th Avenue.

It’s not the products that concern some experts: It’s the business deal.

Michael Levy is professor of marketing at Babson College.

Michael Levy: I think having an exclusive private label will benefit JCPenney. I don’t understand why it had to be an ownership position.

He says Penney could have set up the Stewart shops without investing directly in her struggling company.

I’m Jeff Tyler for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.