Now … there's even more inside

DSN Retailing Today, May 9, 2005

PLANO, TEXAS -- JCPenney's well-known marketing riff, "It's all inside" may not have been entirely true, based on some recent best-selling additions to the company's assortment. Over the past 12 months, the company has layered in a number of new brands to complement its mix of private and national labels. During the store-tour portion of JCPenney's recent analyst meeting, lead merchants pointed out these changes during the walk-through. The tour was held at a 163,000-square-foot, dual-level unit in the Stonebriar Centre Mall in Frisco, Texas--a store within three miles of two Kohl's.

The company highlighted aspects of the Box 1 format designed to improve the customer experience. These included cross-merchandised displays and key item hot zones, clearly marked with updated signage and as many as 30 in-store billboards per unit.

JCPenney is also investing approximately $250 million in point-of-sale technology, speeding up transaction time and shortening "the least favorite part of [the customer's] shopping experience," quipped Steven Raish, evp and cio.

Aside from improved in-store marketing presentations, high-capacity fixturing is making a refreshed JCPenney easier to shop as well as stay in stock. Key items such as men's khakis are now on auto-replenishment, letting buyers focus on what fashions are trending well in terms of sales and adjusting merchandise flows accordingly.

While no retailer is always 100% in stock, JCPenney is taking advantage of its tri-channel retail model to reduce the chance of missing a sale. Associates are trained to refer customers to the Internet or catalog for out-of-stock items. Computer kiosks in-store make this process even easier and have been a success in getting approximately 25% of customers to make their purchase via this channel in-store, leading to an impressive "$1.1 billion in referral sales in 2004," Raish added.

The Internet also allows JCPenney to differentiate itself in terms of its extremely broad and deep home and apparel assortments. It can offer a broader selection of colors and sizes than many of its competitors and realizes that this is a way to enhance consumer loyalty. This is true from a kaleidoscope of window coverings to an extended range of bra sizes.

"Sizing is very important," noted Liz Sweney, evp and gmm, women's apparel, who pointed out the women's and petite sizes that had been expanded into some of the company's misses lines are doing "very well" in the private label MixIt. Sweney added that the company will be upping its assortment of long pants as well in misses, addressing the needs of taller consumers. Plus girls and husky boys sizes are also vital in children's.

Items are more clearly merchandised by brand in the new format, whether it's Jones Wear career apparel, Sag Harbor casual wear or the new Nicole by Nicole Miller line of fashion separates, which has been the centerpiece of the spring 2005 ad campaign. While the assortment features new brands, the store entrance is still flanked by St. John's Bay and Worthington, two key proprietary labels. The company is also doing well with a younger label, W, that was introduced recently in misses.

In men's, the most recent addition, nick(it) had a strong presence on the floor. The British-inspired, youth-oriented line was designed in conjunction with Nick Graham, who previously developed the Joe Boxer brand, replacing square footage once occupied by the older, down-trending Towncraft label.

"Building up our young men's offering is extremely important to growing our overall men's business," said Lana Cain Krauter, evp and gmm, men's and children's, adding that recent NPD Group research had determined that it was one of the only department stores that gained share with men in their twenties last year. Krauter also highlighted the company's relatively new tuxedo business, which has been a success, featuring boxed shirt sets at $69.99. Already in 300 stores, this business is being added to 500 doors. On the casual side, along with national brands such as Izod, private label Arizona dominates.

JCPenney has also rejuvenated its juniors and young men's assortments. Already the No. 1 retailer in juniors' girls apparel in the department store channel, the company is newly making this category adjacent with young men's in 15% to 20% of stores. This strategy has proven successful for specialists including Abercrombie & Fitch and Express.

The home category is also extremely important for JCPenney, whose JCPenney Home brand alone brings in more than $1 billion a year in annual revenue and is in position to approximate $2 billion in sales in the next two years, according to Charles Chinni, senior vp and gmm for home, fine jewelry, family footwear and women's accessories.

The company introduced an exclusive line, "At Home With Chris Madden," in partnership with decorator Chris Madden last year to great success in categories including bedding, furniture and decor items. Joining forces with Madden has helped elevate the taste level and all-important consumer perception of JCPenney's offering, with high-style, high-thread count and Egyptian cotton towels. It was one of the broadest, most heavily marketed launches in company history.