This Department Store Partners with DoorDash for Same-Day Delivery: Will More Follow?

Like all retailers, department stores have not been immune to the blow of the COVID-19 pandemic. Many, in fact, have closed their doors since the start of the crisis, which has put shopping centers in difficulty.

Shopping centers routinely rely on department stores to serve as anchor tenants, attracting customers and encouraging rental activity for nearby stores. And so losing department stores is a blow that mall REITs, or real estate investment trusts, cannot afford in 2022.

Now, the good news is that some department stores are taking steps to expand their customer base in the new year. And one of those marks is JC Penney (OTC: JCPN.Q). The struggling retailer recently announced that it would be partnering with DoorDash (NYSE: dash) to offer same-day home delivery of products in more than 600 of its stores. And that might just be the thing that saves him.

Image source: Getty Images.

A difficult race

Like many retailers, JC Penney was forced into bankruptcy in the spring of 2020, when a lack of foot traffic hit the already struggling retailer hard. A few months later, the department store giant got something of a bailout when Simon Real Estate Group and Brookfield Asset Managementtwo large shopping center operators, acquired it following bankruptcy.

But JC Penney still faces its share of obstacles. Despite its generally affordable price, it doesn’t exactly have a great reputation for attractive inventory. And at a time when customers are increasingly shopping online, the chain’s e-commerce experience leaves a lot to be desired.

Teaming up with DoorDash, however, could give JC Penney a solid edge over its competitors. These days, more and more retailers are making it easier for customers to get the goods they need. Not only have many sped up their delivery speeds, but they’ve also started offering BOPIS — buy online, pick up in store — as well as curbside pickup.

Offering same-day delivery could help JC Penney grow or at least retain its customer base for convenience alone. This is especially true at a time when supply chain blockages are forcing consumers to wait longer for products they order online.

Good news for real estate investors

Losing a stalwart like JC Penney could spell serious trouble for mall operators nationwide. In fact, one of the main reasons Simon and Brookfield chose to acquire JC Penney was to spare their own properties that loss.

By offering same-day delivery, JC Penney is doing its part to once again become a competitor in the department store space. And while he may need to take other steps, like revamping his inventory, to really grow his fanbase, right now his DoorDash partnership is unquestionably strategic.

In fact, there’s a good chance that other retailers will explore similar partnerships as consumers increasingly shop online. Granted, they won’t necessarily hire DoorDash’s services, but same-day delivery to major stores may soon become a mainstream offering. And it could give real estate investors a reason to breathe easier when it comes to their holdings of mall REITs.

Meanwhile, investors interested in retail stocks (as opposed to mall REITs) may want to focus on companies that are specifically taking steps to step up their shipping and delivery game. Given the general shift to e-commerce, moving goods quickly could be the ticket to customer loyalty in the years to come. And same-day delivery is really just one of the many offers retailers can use to improve the customer experience.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.