Be sure to visit the MarthaPantry section on the JC Penney website! Loads of super-cool pantry items–salts, oils, heirloom beans, baking mixes. The selection is much broader than I anticipated! FOMs: Let’s start tasting! If you try a MarthaPantry item, post your comments here and I’ll share with others. Yum!
The new house line of home goods at JC Penney, “JCP Everyday”, is now on sale in stores and online! It is well-known that these products were designed by MSLO employees, although they are not allowed to carry the “Martha Stewart” name, pending resolution of the current court case. Some things I noticed as I viewed the items online:
1. They products definitely bear some of Martha’s signature design elements, the hen-egg blue, the faux bois pattern (one of Martha’s favorites), and the overall elevate taste level are definitely Martha-inspired.
2. Most of the products look nothing like similar items for sale at Macy’s as part of the Martha Stewart Collection. True, the pasty bags at one retailer look like the pasty bags at the other–but that’s because of the design requirements inherent in those particular items.
3. I’m intrigued by the “JCP Everyday” logo (see cookie cutters image above, bottom row at right). The two overlapping houses do, in fact, make an “M”, don’t they? Macy’s brought this up in the court case, as they sought an injunction to halt the sale of these items, even though they do not carry the “Martha Stewart” name on them. The judge denied Macy’s request, and they have appealed. Further, these items are not allowed to be sold in the Martha Stewart stores-within-stores at JC Penney, nor be placed anywhere nearby, pending the outcome of the current court case–a step taken to minimize harm to Macy’s, should they ultimately prevail in court.
FOMs: What do you think? My own message to Macy’s is this: Calm the heck down, would you? It’s clear Martha and her team have no intention of cannibalizing their own profits generated by sales at Macy’s. That wouldn’t be very smart, would it?
From the Reuters article:
“As of today, those products are on the floor and online,” Paul Rutenis, general merchandise manager of J.C. Penney’s home department, said on Monday in testimony in New York State Supreme Court.
There was some good news today for Martha in the trial with Macy’s.
First, it may be useful to back up a bit: The case is actually made up of several different claims, including breach of contract, breach of confidentiality, unfair competition, and tortious interference. In some claims, Macy’s has won injunctions, which are essentially temporary smaller rulings in Macy’s favor while the larger issues are resolved permanently in the courtroom. For example, in one injunction, the judge ruled that Martha may NOT sell items in JC Penney stores until the issue of exclusivity has been resolved completely. Macy’s asked the judge to broaden that existing injunction to include items that were designed by MSLO designers but did NOT have Martha’s name on them. These items are instead branded as “jcp Everyday”. Martha insists that these items–$100 million worth of them are already at distribution centers awaiting shipment to JC Penney stores–do NOT violate the exclusivity clause of her contract with Macy’s. Good News: Today, the judge sided with Martha, so these “jcp Everyday” items will begin appearing in JC Penney stores very soon!
However, the judge ruled that the trial would continue on to the next phase. You see, up to this point, Macy’s has been doing all the talking, as they present their case that MSLO violated the exclusivity clause of their contract. Today, the judge took into account all that Macy’s has presented thus far and agreed that may in fact be true. That’s the bad news. The good news is that the trial now shifts to a new phase; one in which MSLO gets to present THEIR side of the story to counter Macy’s claim. Go get ’em, Team Martha!
It is important to note that the judge in this case is still imploring the three parties involved to reach a settlement among themselves, without a judge’s ruling. Contract disputes such as this one are not entirely uncommon, and are often resolved with a financial settlement. In this case, JC Penney and MSLO could buy-out Macy’s contract (or just the exclusivity clause of the contract) although that seems unlikely, given the degree to which Macy’s seems to rely on the Martha Stewart Collection to generate traffic in its stores. By allowing the trial to go forward, and relying on the judge’s ruling, either party risks losing entirely.
Yesterday, the New York Times had an article on the subject underlying the current court case between Macy’s and MSLO: that it is essentially “a schoolyard fight between two boys — the chief executives of Macy’s and J. C. Penney — over the most popular girl on the playground.”
If you have been following MSLO lately, you would not be blamed for worrying about the current state of the company–the stock price has plummeted and stabilized at the low end, the company is heavily vested in traditional media (which is undergoing much tumult industry-wide) and has suffered layoffs, it has all but lost its television presence, and there is unsettled leadership (former CEO Lisa Gersh stepped down after only five months at the helm). The one fiscal bright spot at the company of late has been its merchandising. Simply, Martha is still seen in the eyes of the public as an arbiter of good taste and high quality, and most importantly, consumers trust her. If Martha says it’s a good thing–you can be sure it’s a good thing.
It is Martha’s reputation for producing good products that the two retail giants–Macy’s and JC Penney’s–are hoping to leverage in their stores. Indeed, embattled JC Penney’s CEO Ron Johnson’s job may depend on his Martha Stewart-anchored plan to resuscitate that company’s housewares department. And, as the Associated Press reported:
“[Macy’s CEO Terry] Lundgren said Macy’s has spent 40 percent of its overall marketing on the Martha Stewart brand and other labels in the home area, even though the home category represents 17 percent of total sales. That’s because even though the home area is typically slow turning, it drives shoppers to the store. “I need the Martha Stewart business to be exclusive,” Lundgren said. “I don’t have a substitute.”
The judge ordered the three companies into mediation on Friday, in an attempt to have them resolve the issues themselves without a court-ordered judgement. So, even as the courtroom drama continues, one thing is for certain: the Martha Stewart brand is still as strong as ever in the eyes of consumers. And that is most definitely a good thing for MSLO.
Check out this very flattering quote from the New York Times article :
It is easy to forget that Ms. Stewart altered the way that people live by decoupling class and taste. Part of the reason that she seems embattled — her media empire is shrinking fast — is that she won her corner of the culture war. When you go into Target or Walmart and see a sage green towel that is soft to the touch, it may not carry her brand, but it reflects her hand. Her tasteful touch — in colors, in cooking, in bedding — is now ubiquitous; she just doesn’t get to cash all the checks anymore.
As you probably know, the Martha vs. Macy’s trial has begun. Let’s recap the relevant developments:
– In 2005, MSLO and Macy’s enter into an agreement to sell Martha Stewart branded items in Macy’s stores. The agreement gives Macy’s exclusive rights to sell Martha Stewart branded items in specific categories: bedding, bath, cookware, and dinnerware. Importantly, the agreement also contains language that allows MSLO to sell Martha Stewart branded items outside Macy’s stores, as long as they are sold in stand-alone Martha Stewart stores. (For at the time, there was a single Martha Stewart store in Japan.)
– In 2011, MSLO entered into a partnership with JC Penney to sell Martha-branded items in dedicated spaces inside JC Penney stores, essentially creating a Martha Stewart “store within a store” in JC Penney stores nationwide.
– In 2012, Macy’s sued both MSLO and JC Penney, claiming that the partnership was a breach of Macy’s exclusive right to sell Martha Stewart branded items in the specific product categories. Initially, Macy’s asked the judge to order MSLO to cease any collaborative efforts with JC Penney until after the issue was resolved at trial. However, the judge did not allow Macy’s request.
– Since then, MSLO and JC Penney have forged ahead to create MarthaHome, a “store within a store” offering three collections of products: MarthaPantry (food items), MarthaCelebrations (paper party products), and MarthaWindow (window treatments). It is also known that MSLO designers are working with JC Penney to create the “JC Penney Everyday” collection, which will offer products in those categories to which Macy’s claims to hold exclusive rights. In order to adhere to the MSLO-Macy’s exclusivity agreement, the JC Penney Everyday products will NOT have any Martha Stewart branding on them. (Although there is a connection: “Martha Stewart Everyday” was the name of Martha’s collection sold at Kmart stores from 1997 – 2009. Also, MSLO has for many years had a publication called “Everyday Food”, which also inspired a popular TV cooking show, also called “Everyday Food”.)
Today, Martha appeared in court and testified for four hours. She said that she believed her agreement with JC Penney was structured to be in compliance with the MSLO-Macy’s agreement. She also claimed that Macy’s had breached the contract by not maximizing sales of the Martha Stewart Collection at its stores. Martha claimed that she wanted to open Martha “store within a store” concept in Macy’s, but they were cool to the idea.
The trial is expected to last several weeks.
From The Huffington Post:
The biggest opportunities for Martha Stewart Living are in selling products for the home, including bedding, bath and kitchen merchandise. That’s because as the housing recovery gains momentum in the economic recovery, people likely will put more money into their homes.
During her testimony on Tuesday, Stewart said she always wanted to open big shops within Macy’s stores, but the retailer never embraced that concept. Instead, she said the merchandise in Macy’s stores is just “here and there.”
That’s why she said that a proposal from Penney’s Johnson to create shops filled with home merchandise was appealing to her. She called Johnson a “visionary.”
“We hoped this business would be growing,” Stewart said. “It just boggles my mind that we’re here sitting in front of you, judge.”
Do NOT mess with Martha! MSLO has filed an appeal to the judge’s preliminary injunction, claiming there was an “erroneous interpretation” of the agreement with Macy’s, and that there was also “an incorrect application of the legal standards for a preliminary injunction”–basically, that there can be no damages, as no products have been sold at J.C. Penney.
Further, MSLO claims that, notwithstanding the new partnership with J.C. Penney, MSLO has continued to work diligently with Macy’s in “good faith” and pointed to good sales figures for the Martha Stewart Collection items as evidence that there have been no damages.
It is interesting to note that when Macy’s signed their contract with MSLO in 2005, they didn’t seem to have a problem with the fact that Martha’s contract with Kmart ran through January 2010. For a time, Martha Stewart items were available in both stores, and were profitable ventures for both companies. FOMs: Wouldn’t you love to see Martha’s products for sale at both Macy’s AND J.C. Penney? Now, THAT would be a good thing!
From Businessweek.com:
Martha Stewart Living argued in the court documents filed today that sales under the J.C. Penney agreement aren’t slated to start until March and Macy’s hasn’t shown it’s being harmed by preparations.
“The record in fact shows that since the announcement of the JCP agreement, MSLO has continued to work in good faith with MMG, sales of Martha Stewart collection items at Macy’s have not declined, and overall Macy’s sales have increased considerably,” lawyers for Martha Stewart Living said in the court documents.
via Martha Stewart Living Seeks to Appeal Macy’s Suit Ruling – Businessweek.
More details about Martha’s new store-within-a-store for J.C. Penney are trickling out. Looks like Martha will be in good company, as J.C. Penney has inked deals with other lifestyle icons like Michael Graves (already at Target), Terence Conran, and Jonathan Adler. Martha is getting star treatment however, with her own dedicated store-within-a-store.
The company is betting hard on Martha Stewart to be a fortune changer. It has already been announced that J.C. Penney has brought on board two former Apple employees who led that company’s successful expansion into retail stores. The launch of Martha Stewart shops at J.C. Penney will be huge, no doubt. Expect to see a major ad campaign to accompany the launch. Go, Martha!
From Home Textiles Today:
JCPenney at its meeting with analysts here Tuesday evening unveiled a host of new brands for the home department, which will be revamped as of March 1, 2013 with a Martha Stewart shop as its anchor. The 20,000-square-foot home area will also include shops or boutiques featuring products designed by Sir Terrance Conran, Jonathan Adler, Michael Graves and Bodum. As for the Martha Stewart shops, executives did not go into detail about merchandise, president Michael Francis said JCP recently reviewed more than 3,000 potential products for the space.
via JCPenney unveils new home brands – 2012-05-15 | Home Textiles Today.
Friends of Martha: Celebrating All Good Things Related to Martha Stewart 