JCPenney Focuses On Ecommerce To Continue Turnaround
By Christine Kern, contributing writer
With strong Q2 results, JCPenney wants to keep momentum going.
JCPenney showed strong numbers in Q2, according to an earnings call, outperforming its competitors Macy’s, Kohl’s, Dillards, and Sears in sales growth, and now CEO Marvin Ellison wants to ensure that the retailer keeps the momentum going.
Marvin Ellison, chief executive officer said, "We are pleased to report another quarter of improved performance thanks to the commitment and diligence of the JCPenney team. Although we have significant work to do as a company to regain our status as a world-class retailer, I am pleased with the resilience and the efforts of our associates. I also remain confident in our ability to achieve the long-term financial targets we have laid out."
Fortune reported that Ellison made it clear that much remains to be done on the e-commerce front to return JCPenney to where it was before the misguided leadership of CEO Ron Johnson in 2012 and 2013. While the retailer has rebounded somewhat from its 30 percent revenue drop under Johnson’s guidance, it still has room to grow, with sales still 25 percent below pre-Johnson era levels.
Ellison wants to reclaim JCPenney’s place as a “world class retailer.” To do so, he stated, he is committing 29 percent of the retailer’s capital expense budget to technology, marking a 7 percent increase over historical levels.
“We are admittedly behind the retail industry in our omni-channel strategy,” Ellison stated on the earnings call, using the example of the in-store pick-up of online orders. Other retailers, including Kohl’s and Macy’s, have already been offering this service, while Penney will only be rolling out the service next year. That means there is a lot of ground to make up.
Included in the make-up strategy are:
- Offering greater assortments of products online.
- Reducing the number of out-of-stock items through better inventory management and coordination.
- Employing data analytics to predict what shoppers want to improve demand forecasting.
- Improving logistics to better distribute merchandise to stores, improve buying processes, and customize inventory.
- A better loyalty program that better understands its customers’ interests.
“The real litmus test is getting more people into the store and get them to buy more frequently,” ITG Investment Research analyst John Tomlinson told Fortune.
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