JCPenney Focuses Turnaround Efforts on Boosting its Merchandising Strategy

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JCPenney Focuses Turnaround Efforts on Boosting its Merchandising Strategy

By Jamie Grill-Goodman - 11/18/2019
The new retail lab store offers a merchandise assortment which ranges from categories such as “All Day” for casual work wear and weekend wear to “Chill” for stylish 5-to-9 and lounge and sleepwear.

The J. C. Penney Company saw a small win in its recent third quarter as it struggles to find a way to turn the department store retailer’s story around. The company reported an operating net loss of $97 million in the quarter, which is 41% smaller than the loss it recorded in the same quarter a year earlier. In 2019, JCPenney has lost $300 million.

However, it also reported comparable store sales decreased 9.3% and total sales decreased 10.1% to $2.38 billion.

As JCPenney looks for a lifeline, CEO Jill Soltau, who took the reins of the struggling retailer a little over a year ago, said CMO Michelle Wlazlo, who also just joined JCPenney earlier this year, and her team have been hard at work on the retailer’s merchandising strategy. Through extensive consumer research, the retailer has identified five “lifestyles” which shaped its approach to merchandising in a way that it hopes will resonate with its customers.

“We are merchandising by these lifestyles which will inform all product decisions and future experiences,” said Soltau in its recent earnings call.

Another element of providing compelling merchandise, Soltau said is JCPenney’s visual merchandising strategy. 

“It may seem obvious to have visual merchandising in a department store,” she noted, “yet it is something JCPenney had moved away from in the past and that was a mistake.

“Through our research, we know that visual merchandising coupled with proper inventory management and of course the right product, creates an emotional connection with the customer which is another step to driving traffic and sales.”

To this end, JCPenney has tested visual merchandising in the women's category within the five lifestyles it has identified and recently implemented this strategy into 92 stores to start.

“We are currently measuring the impact and we'll continue to refine and expand this effort in a way that best serves the business,” Soltau said.

In terms of the phasing and timeline of in-store initiatives, Soltau said the retailer has been testing all year, up to the recent addition of its lifestyle merchandising and visual merchandising into 92 stores. JCPenney is continuing to read and monitor the results of these tests to “determine the best course forward,” which led to its recent grand opening of its brand defining store in Hearst, TX.

“So we are very early on this journey,” said Soltau, “and the brand defining store has over 100 components, 100 touch points within the store that we are actively measuring and monitoring and reading. And we'll determine the best course forward based on what the customer says.

“Certainly, we all are working with a healthy sense of urgency here at JCPenney. But at the same time we are going to ensure that we are making the right decisions for the customer and the right decisions for the business.”

Earlier in the call, Soltau noted that the new lab store the retailer opened earlier this month is an investment in JCPenney’s future.

“A brand defining store is not a prototype to roll out across all our stores and it is not a flagship store,” she said. “Our brand defining store is the fullest articulation of our customer strategy. It is a store where we can leverage learnings from customer feedback yet also observe customer preferences and shopping behaviors. It provides an inspiring shared experience and engages customers in new ways. It's a lab.”

While JCPenney’s has provided details about its in-store initiatives, Soltau noted that it knows that nearly 90% of customers begin their path to purchase online. The retailer doesn’t break out e-commerce performance from in-store performance in its earnings reporting, but Soltau did note the company is working on its e-commerce experience to drive traffic across all channels.

“We are building a viewpoint of what needs to be done and customers will continue to see incremental improvements over time,” she said.

“As it relates to our digital space, we are in enhancing our customer experience, the user experience, we are making it easier to navigate,” she followed. “We are building out storytelling to drive that emotional engagement with the customer, make it easier to find what they're looking for as well find their style.

Soltau also noted the company has been working on the “frictionless and seamless effort” to shop cross functionally between its digital and physical space and that the company has a “full organization focus” on improving its mobile web, website and mobile app.

“I am confident that delivering our strategy, coupled with our ongoing discipline and commitment to improving the foundational elements of our business, will return JCPenney to its rightful place in the retail industry," Soltau said in a press release.