JCPenney Sets $1 Billion Program of Upgrades
Furthering turnaround efforts, JCPenney plans to pump more than $1 billion into its business by fiscal year 2025 to improve stores, the website, customer experiences and operational efficiencies.
On Thursday, the company said the investment is self-funded through its own operations and that it builds on “significant progress” last year with the launch of JCPenney Beauty, product collaborations, store refreshes and improved digital shopping.
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“JCPenney is on strong financial footing and is steadily increasing relevance and frequency with our core customers,” Marc Rosen, chief executive officer of JCPenney, said in a statement. “We are poised for continued growth and know that the surest path to success is by focusing on our customers. That’s why we are wholly committed to serving hardworking families across America with the attention, value, quality, choice and experience they deserve.”
Penney’s has endured three decades of declining performance, in recent years marked by management changes, strategy shifts and reversals, and meddling by shareholder activists and private equity owners. The retailer went bankrupt in May 2020 after getting clobbered by the pandemic and being forced to temporarily close stores.
But the Dallas-based retailer was lifted out of bankruptcy by two major mall owners and its new owners, the Simon Property Group Inc. and Brookfield Property Partners LP, thereby reducing its debt from around $5 billion to about $500 million.
Though many retail experts regard Penney’s as a dinosaur on the retail landscape, for Simon and Brookfield, it’s still important to the health of their shopping centers. Penney’s merchandising primarily appeals to working- and middle-class families, those segments of American society that have been most hurt by inflation and higher interest rates and struggling to make ends meet.
On Thursday, Penney’s spelled out how the $1 billion will be spent, citing investments in improving digital capabilities and seeking to make the online experience more seamless and more personalized with upgrades to the website and the mobile app, including improved search functionality and product details, customer product reviews and more customized product and styling recommendations.
Investments will also be made in upgrading the stores. Upgrades are in the works on several of the retailer’s 650 stores, including improved technology and associate tools and physical improvements to help the stores look better. A new point-of-sale system that better integrates with inventory and upgrades to in-store Wi-Fi networks for faster and more reliable connections for customers and associates are also in the works. So far, more than 100 stores have been refreshed.
Penney’s further indicated that it is upgrading merchandising tools and supply chain operations “so customers can shop the right products at the right place and at the right price. New inventory management systems, among other tools, will enable greater accuracy in decision-making and efficiency in execution, allowing JCPenney to cater to customers’ unique needs, fulfill orders faster and reduce purchase delivery times.”
Enhanced tools will also scale Penney’s ability to provide customized and localized product assortments to better meet local community preferences and trends.
Last spring, Rosen laid out Penney’s evolving game plan during an interview with WWD. A big part of it seemed to center on efforts to capture more customers in the 20- to 40-year-old demographic through a battery of new strategies. At the same time, Penney’s must maintain its older, traditional base and working-class family appeal.
Among the strategies he cited was the rollout of JCP Beauty departments with its inclusive mix of masstige, prestige and mass brands from new, emerging and established companies, to all 660-plus stores following Sephora’s defection to Kohl’s, a direct competitor.
Rosen also underscored that Penney’s is pursuing additional collaborations with designers and celebrities, and has been advancing its private-label programs by reducing redundancies and sharpening what each existing label stands for, while adding new ones. It’s an effort to cast a more modern, fashionable image and provide greater exclusivity. Growing digital sales, which represent about 30 percent of Penney’s total volume, and securing a bigger niche in dress-up categories such as dresses and men’s suits, where the private-brand program and collaboration play a big part, are part of the agenda.
Penney’s is also creating centralized point-of-sale checkouts to replace checkouts placed in different areas of the store, and is equipping associates with devices for mobile checkouts and easy access to information on product availability. It’s about providing speed of checkout, convenience and better service.
In another maneuver revealed Thursday, Penney’s has put together a “reinvigorated customer strategy and brand proposition,” called “Make it Count.” It involves emphasizing fashion, beauty and accessories offerings with value, accessible prices and inclusive sizing. Most recently, Penney unveiled its partnership with celebrity stylist Jason Bolden to reimagine collections for two private labels — J.Ferrar and Worthington — made for every size, shape and body. Make It Count also promotes the benefits of Penney’s credit card and loyalty programs, localized assortments, and community involvements and philanthropy.
“Too often, we are forced to make compromises between time and money, quality and price, responsibilities and enjoying life’s moments,” Katie Mullen, Penney’s chief customer officer, said in a statement. “We want to show customers that we are in it with them, just as we have been throughout our history, and investing in helping them make the most of their moments.”
Make it Count will feature vignettes “telling customers’ stories of personal, emotional and transformational moments in their daily lives, and reinforcing how JCPenney products are part of these wonderful memories,” the company indicated.
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