J.C. Penney has conducted extensive research regarding trends in the mid-tier consumer segment. J.C. Penney CEO Marvin Ellison offered some thoughts about customer engagement trends gleaned from the company’s research on Thursday during the Piper Jaffray Consumer Conference.
“What we’ve determined pretty consistently is that the consumer is in a really positive shape from a financial standpoint,” Ellison explained. “The consumer tells us that their wages are up, their job stability is better than it’s been in many years. They have price appreciation in their home. They have more money in their savings accounts than they have had quite a while and energy prices although up are still down relative to last year. So overall, the consumer is telling us, they feel really good about their personal economic position. What they’re telling us is that they are pulling back a little bit on apparel-related spend because they are spending more on experiences and entertainment, but also because of some of the uncertainty that may exist in the broader macro that they can’t predict.”
Ellison noted the potential presidential election effect.
“We don’t have a perfect line of sight of what’s driving that, but there is a lot of data, there is a lot of research that shows when there is a presidential election, without an incumbent, it tends to lower consumer confidence that may be playing a role,” he added. “But we talked a lot about controlling what we control at J.C. Penney. We are a very apparel dependent retailer. We’re never going to get out of the apparel business, but we understand that we have to do things that are more conducive to where customers are spending their money.”
Where are customers spending their money?
“Our customers are saying to us that they are spending a lot on home beautification,” Ellison noted. “And we understand that we can do a lot better at that. And so we decided to roll-out appliances to 500 stores. We’ll have that done in the third quarter and we have 1,200 major appliances online, a seamless online process of ordering, delivering, hauling away your old appliances and installing new appliances in one seamless process. We think it’s a best-in-class process. We also talked about expanding our window treatment area. J.C. Penney was the most dominant retailer in America just 10 years ago in custom windows and we think we can get a lot of that back. We’re going to expand the space in 500 stores. And we mentioned some strategic pilots we’re doing with Ashley’s Furniture, the No. 1 branded furniture retailer with a wonderful vertically integrated infrastructure, distribution centers, and delivery. And also we’re going to look at piloting Empire flooring because our customers say to us, we loved to buy flooring from you as well as window treatments, and so we have the strategic partnership we’re going to pilot to see. We understand the consumer’s pullback a little bit. It’s an environment that is a little more difficult to anticipate, but it’s our responsibility to fight through that environment, and we think we’re doing a good job at that.”