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This Department Store Is Teaming Up With DoorDash for Same-Day Delivery: Will More Follow Suit?

By Maurie Backman – Jan 4, 2022 at 8:36AM

Key Points

  • Many consumers have shifted to e-commerce during the pandemic.
  • These days, retailers need to be creative with getting goods into customers' hands.
  • By teaming up with DoorDash, one department store that's seen its share of upheaval in recent years could give itself a real edge.

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It's a strategic move that could work wonders for a struggling brand.

Like all retailers, department stores weren't immune to the blow the COVID-19 pandemic dealt. Many, in fact, have closed their doors since the start of the crisis, which has left shopping malls in a tough spot.

Malls routinely rely on department stores to serve as anchor tenants, drawing in customers and encouraging leasing activity for nearby stores. And so losing department stores is a blow that mall REITs, or real estate investments trusts, can't 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 such brand is J.C. Penney (JCPN.Q). The struggling retailer recently announced that it will be partnering with DoorDash (DASH 0.77%) to offer same-day delivery on home products in more than 600 of its stores. And that could be just the thing that saves it.

A cardboard box outside a front door.

Image source: Getty Images.

A tough ride

Like many retailers, J.C. Penney was forced into a bankruptcy filing 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 a bailout of sorts when Simon Property Group and Brookfield Asset Management, two major mall operators, bought it out of bankruptcy.

But J.C. Penney is still facing its share of hurdles. Despite its generally affordable price point, it doesn't exactly have a stellar reputation when it comes to appealing inventory. And in an age when customers are increasingly doing their shopping online, the chain's e-commerce experience leaves much to be desired.

Teaming up with DoorDash, however, could give J.C. Penney a solid edge over its competition. These days, more retailers are making it easier for customers to procure the goods they need. Not only have many ramped up their delivery speeds, but they've also taken to offering BOPIS -- buy online, pick up in store -- as well as curbside pickup.

Offering same-day delivery could help J.C. Penney grow or at least retain its customer base for the convenience factor alone. This especially holds true at a time when supply chain holdups are forcing consumers to wait longer for the goods they order online.

Good news for real estate investors

Losing a mainstay like J.C. Penney could spell serious trouble for mall operators all over the country. In fact, a big reason why Simon and Brookfield opted to acquire J.C. Penney was to spare their own properties that loss.

By offering up same-day delivery, J.C. Penney is doing its part to once again become a contender in the department store space. And while it may need to take other steps, like revamping its inventory, to really grow its fan base, right now its DoorDash partnership is an unquestionably strategic one.

In fact, there's a good chance we'll see other retailers explore similar partnerships as consumers increasingly do their shopping online. Granted, they won't necessarily engage DoorDash's services, but same-day department store delivery could soon become a common offering. And it could give real estate investors a reason to breathe easier when it comes to their mall REIT holdings.

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

Maurie Backman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Brookfield Asset Management and DoorDash, Inc. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV. The Motley Fool has a disclosure policy.

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