J.C. Penney Gears Up For Its Omnichannel Future

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While J.C. Penney admits to still being behind curve with its transition to omnichannel, the company is satisfied with the progress it has made.

“In the second quarter, sales growth through J.C. Penney.com accelerated from the first quarter and we’re very excited to see several aspects of our omnichannel capabilities improving,” president and CEO Marvin Ellison told analysts on an earnings call.

Ellison said one-third of its .com customers took advantage of J.C. Penney’s buy online and ship-to-store, which results in more physical trips to stores and more add-on purchases.

“We’re also very pleased with the improvements in our ability to leverage our enterprise inventory to better fulfill customer’s online orders from store base inventory,” said Ellison.

As a retailer with over 1,000 stores, leveraging enterprise inventory provides the company with a great opportunity for stores to act as fulfillment centers, Ellison said.

“With stores located around the entire U.S., enterprise fulfillment increases the strategic significance of many of our brick-and-mortar locations,” he said.

Ellison said J.C. Penney will be powering buy online, pick up in store and same-day delivery in several markets this year, with a company-wide rollout in early 2016.

“Our goal is to continue to expand both of these capabilities to better satisfy the needs of our omnichannel customers and never miss a sale,” said Ellison.

Ellison said the company also hired two key executives as part of its omnichannel efforts. Mike Amend, former vice president of online, mobile and omnichannel for The Home Depot is now executive vice president of omnichannel, and Mike Robbins, former senior vice president of global supply chain for Target’s U.S. stores, joined J.C. Penney as senior vice president of supply chain.

“We are committed to become a world-class omnichannel retailer, we understand the change in dynamics of retailers,” said Ellison. “We also understand that attempting to recreate a pre-2011 J.C.  Penney would not work in the new omnichannel world, so we’re adjusting our business model and leadership team to compete in this new landscape.”

Ellison said J.C. Penney plans to adjust its merchandising and services to increase revenue for each customer.

“As we shared before, in 2011 we had approximately 87 million active customers and today we have approximately 87 million active customers,” Ellison said. “It is our responsibility to provide better choices for these customers to increase their shopping frequency and their transaction size.”

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