4 Ways J.C. Penney Delivers a Compelling Shopping Experience
Mired in a “sea of sameness,” not to mention stumbling sales, multichannel retailer J.C. Penney is challenged to differentiate itself from its competitors. By creating emotional connections with consumers through easy and enjoyable shopping experiences — no matter the channel — it believes it can do just that. And at last month's National Retail Federation Convention & Expo in New York, Clarence Kelley, Penney's executive vice president, director of planning and allocation, outlined four tactics the company uses to better serve its customers.
1. Research customers. To effectively serve its customers, J.C. Penney tries to learn as much about them as possible. The company researchers do this at each channel: store, Web and catalog. The company frequently asks customers if they're happy with the products and sizes offered.
Kelley cited the company's catalog as a valuable tool to communicate with and learn from customers. This customer research has led the company to launch it own brands — American Living, Sephora, Kimora Lee Simmons’ Fabulosity — reflecting what Penney believed its customers wanted.
2. Optimize inventory. The company takes advantage of like-item historical data to drive current-day inventory forecasts. This includes optimizing sizes down to the individual store level based on how many units that store is expected to sell.
Kelley cited the example of two stores, one in Davenport, Iowa, the other in El Paso, Texas. The data shows that the store in Davenport sells more size large than the El Paso location; therefore, it'll receive a prepack shipment with an increased percentage of large sizes. Then the company uses “open stock” inventory to supplement the gaps in the prepacks.
While open-stock merchandise is expensive to handle, mixing it with prepack stock optimizes inventory. “It pays for itself by not having to markdown or liquidate your inventory,” Kelley said. He also noted that J.C. Penney does its assortment inventory planning 12 weeks to 16 weeks prior to the next inventory shipment to help keep level inventory flows. Penney always maintains a set amount of presentation-level inventory and then enough inventory in-house to cover sales.
3. Strong executive support. Kelley stressed the importance of Penney's integrated business units. “You can't work in silos,” he said, noting that planning and allocation, merchandising, marketing, supply chain, and other segments continually work together to optimize inventory levels.
Senior management is involved in supporting all segments of the business. An example of the company's increased focus on employees is J.C. Penney University, its own in-house training program.
4. Offer more choices. “We want to be able to offer the right product at the right time at the right size at the right place at the right price,” Kelley said. J.C. Penney makes the most of all shopping channels; in fact, it recently upgraded its Web site.
And in many cases the selection comes down to the size. “Sizes are a very important part of the emotional connection with the customer,” Kelley said. To optimize the choices at the retail level, J.C. Penney constantly shifts its inventory deployment, often due to factors such as size and color of apparel, deploying more resources where sales are occurring and pulling back from where they're not.
