JCPenney integrating store, e-commerce operations

JCPenney (NYSE:JCP) is working to align its stores and e-commerce operation while preparing to do more targeted and personalized marketing with consumers.

As part of a strategic initiative, the retailer is progressing in its efforts to leverage more than 1,000 store locations along with their inventory for e-commerce transactions, Internet Retailer reported.

The chain is testing the fulfillment of web orders from stores and plans a full rollout for next year, said Marvin Ellison, president and CEO designee, in a presentation at Piper Jaffray's Annual Consumer Conference last week. Ellison came to JCPenney last year from Home Depot and will become CEO in August.

"We have to be more intimate, and more customer specific and we have to tie everything to a common, effective way to gaining more value and more return for every ad spend," Ellison said.

The department store chain is also testing a program in which shoppers buy online and pick up in the store on the same day, with a chainwide rollout planned for 2016. "We are going to have the ability to ship that product to the store free of charge to customers. That's going to be a change," he said.

The retailer plans to "optimize and digitize" its locations, including distribution centers, to use real estate to the best business advantage. "We believe that the retailer that has the closest access to a population density will be the retailer that can win," Ellison said. JCPenney is in the final stages of rolling out item planning and inventory allocation tools from Oracle. These components will help ensure the retailer has the right amount of product available where it is needed across its operation.

Sharper pricing is also part of the company's strategy. "We're going to spend a lot more time on the dynamic of pricing and what we have to do to ensure that we are priced right, but we're priced right meaning that we are delivering the best value in the market, but we're also protecting ourselves from a bottom line perspective," Ellison said.

A greater variety of products will be offered on the retailer's website. Ellison commented that JCPenney will "assort our online business in a way that we're going to bring in new customers," as opposed to treating it as an extension of the store inventory, but with more sizes and colors. He did not elaborate on exactly how the retailer plans to increase the variety.

The retailer closed 40 stores last year, bringing its total store count to 1,020. Ellison said JCPenney will continue to close unprofitable stores, but that it's a "misconception" that the company has a lot of unprofitable stores, the Dallas Morning News reported.

"Until we can understand the power of being able to buy online and pick up in store same day, we'll start to understand how many stores we really need," he said.

While JCPenney's online capabilities fell behind in recent years, the company's previous format as a catalog retailer is advantageous as there will be no need for major investments in building distribution centers, according to Ellison.

For more:
-See this Internet Retailer article
-See this Dallas Morning News article

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