2017 has been the year of store closures for Sears Holdings (NASDAQ:SHLDQ). By the end of the fiscal year, the company will have cut its store count by more than 25%. The Kmart chain has been impacted disproportionately, with nearly 300 store closures. That said, by the end of January, the Sears chain will also have 96 fewer stores than it had a year earlier.

Sears' rapid downsizing is creating a huge opportunity for J.C. Penney (OTC:JCPN.Q) to expand in the appliance business. Furthermore, this opportunity will grow dramatically in size if Sears Holdings collapses entirely in the next few years, which is a realistic possibility.

J.C. Penney is becoming a force in major appliances

Just two years ago, J.C. Penney didn't sell major appliances. However, in early 2016, it decided to get back into the appliance business after a hiatus of more than 30 years. Since then, it has opened appliance showrooms in nearly 600 stores, in addition to selling appliances online.

An appliance showroom at J.C. Penney

J.C. Penney has opened appliance showrooms in nearly 600 of its stores. Image source: J.C. Penney.

So far, J.C. Penney appears to be gaining momentum. Appliance sales boosted the company's comp sales by nearly 3 percentage points in the second quarter, according to management. While that increase came off of a low base in the prior-year period, it still implies that J.C. Penney sold about $100 million worth of appliances during the quarter.

J.C. Penney isn't resting on its laurels, either. Just last month, it added Frigidaire-brand kitchen appliances to its assortment. By offering its customers more options, J.C. Penney should be able to continue gaining market share in the appliance business.

The overlap between Sears and J.C. Penney is huge

It has become quite clear that J.C. Penney hopes to gain market share in major appliances at Sears' expense. This is a promising strategy: Sears still has a sizable share of the appliance market, and J.C. Penney has stores in many of the same malls as Sears.

In fact, of the 96 stores that Sears has closed or will close during fiscal 2017, 55 have a J.C. Penney in the same mall. Five more have a J.C. Penney store within two miles or less. This puts J.C. Penney in position to capture a disproportionate share of the appliance revenue that would have gone to the Sears store otherwise.

Most of the opportunity lies ahead

Some readers might wonder whether J.C. Penney has already exhausted most of its opportunity to gain market share from Sears in the appliance business. After all, J.C. Penney now has appliance sections in more than two-thirds of its stores, and Sears has already been shrinking for many years.

Yet despite all of its recent struggles, Sears did about $4 billion of appliance sales during 2016. If J.C. Penney could capture even a quarter of that revenue over time, it would have a major impact on the company's trajectory. (Analysts expect J.C. Penney's total revenue to reach $12.4 billion this year.)

It's also noteworthy that of the 60 J.C. Penney stores that are near a Sears store that closed this year -- or will do so in January -- only about half have appliance sections today. It's possible that some of these stores are too small to fit an appliance section. However, to the extent that it can add appliance showrooms to many of those stores, J.C. Penney has a clear opportunity ahead to continue gaining market share in appliances at Sears' expense.

J.C. Penney has been struggling in 2017, but its poor performance can largely be traced to its women's apparel business, which accounted for 24% of sales last year. By contrast, the home department (which includes appliances) only contributed 13% of J.C. Penney's sales in 2016. Management hopes that recent strategic changes will help right the ship in women's apparel. But even if that doesn't happen, the growth in J.C. Penney's appliance business over the next few years could be enough to make up for continued weakness in the women's apparel business.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning 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 richer.