JCPenney Invests in Omnichannel Tech, and it's Working

The tides may be turning for JCPenney, as the company firmly invests in omnichannel technologies, including buy-online, pick-up-in-store (BOPIS), a new mobile app, and mobile POS. Total sales during the company's second quarter 2016 grew 1.5%, to $2.9 billion, while  comparable sales increased 2.2% year over year during the quarter and 6.3% from levels two years ago. 

"Since becoming CEO a year ago, the team and I have made considerable progress balancing the art and science of retail by improving our execution in omnichannel, marketing, store operations, supply chain and merchandising," said Marvin R. Ellison, chairman and CEO.  "There is still much work to do, but I am confident that our focus on sales growth, new technology and expense management will continue to accelerate our turnaround and create shareholder value."

Mobile is a major component of the company's new strategy. It's newly redesigned JCPenney app enables customers to locate items, apply coupons and access their JCPenney Rewards more easily.  The app has quickly generated a 4.5 star rating on the Appstore.

"This app is far superior to our previous version and will allow us to take better advantage of the massive traffic growth in the mobile channel," said Ellison. "We know that mobile is the single greatest touch point for our customers in-store and online and the conversion of our app since launch has been outstanding."

Shoppers can also complete their purchases with a variety of shipping and pickup options. In the second quarter the company completed its BOPUS rollout, now available in all 1,000 stores, and 40% of customers who visited a store to pick up a BOPUS order also purchased additional items. Over 150,000 items on are eligible for same-day pickup at any JCPenney store within four hours of the order being placed.  

Ellison noted over 50% of JCPenney's online orders go through physical stores and "omnichannel is not a catchphrase at JCPenney. It is a strategic process."

"This process allows a 114 year old retailer to leverage all of our assets, our stores, associates, our inventory, our digital platform and supply chain to reduce our costs, to serve our loyal and valued customer."

Concerning delivery, the company plans to offer a standard delivery turnaround of two business days or less to over 95% of the U.S. population in 2017. To efficiently fill orders, JCPenney has made significant investments in state-of-the-art systems that support an enterprise-wide fulfillment strategy to minimize markdowns and improve customer service.  In addition to a network of three direct logistic facilities, 250 stores are now capable of filling orders with store inventory and shipping directly to customers.

JCPenney is also in the process of having mobile devices to help employees with checkout. The company is replacing virtually a third of its point-of-sale units with a plan to continue that process on into 2017.

"So it’s an ongoing effort, but when we look at our internal service results in every category, we’re up versus the first quarter and up versus last year," noted Ellison. "So to me, that’s the data point that matters most and what we’re doing is working."