J.C. Penney Evolves Merchandising Strategy to Seek Greater Brand Loyalty

Even after a disappointing first-quarter performance, J.C. Penney CEO Marvin Ellison remains confident in the brand’s turnaround plan to return the company to greater fiscal success and brand loyalty. A key component in that turnaround will be J.C. Penney’s merchandising strategy.

“At J.C. Penney, we know we must continue to pivot our merchandise assortment toward less weather-sensitive categories, while providing our customers with more reason to shop in our stores,” Ellison said during the May 13 first-quarter earnings call, according to Seeking Alpha. “And candidly, our over-reliance on apparel hurt us in times during the first quarter, when weather patterns were not conducive to apparel sales. And the consumer was simply spending their hard-earned dollars on experiences, entertainment, and to beautify their home. While apparel will always be important to J.C. Penney, we’ve conducted a detailed review of our customer current and future shopping patterns, and we’ll start to strategically shift our merchandising mix to sell more products and services that correlate to where customers are spending the greater percent of their dollars.”

John Tighe, J.C. Penney’s Chief Merchant, has taken the lead in this effort, and he and his merchant team are in the process of exploring category roles and allowing the data to guide decisions on which categories will continue to grow, which categories to add, and which categories will begin to minimize in the assortment, Ellison noted.

“The first quarter was clearly challenging from a top line perspective, and we’re disappointed in our results relative to our own expectations,” Ellison said. “When I look back at the first quarter, and compare J.C. Penney’s results to our competitive space, I feel confident that we’re still winning in the marketplace.”
Ellison noted some areas of strength during the first quarter.

“First, we continue to see strong performance in our existing Sephora inside J.C. Penney shops,” he said. “We’re also very pleased with the performance of our 28 new locations that opened at the end of April, bringing our total number of Sephora locations to 546. The first few weeks of the selling season in these 28 new locations have exceeded our expectations. In fact, this wave of openings is delivering our best-ever new opening performance from an average sales-per-location perspective. This is incredibly encouraging as we’re placing Sephora shops in the smaller more rural locations than ever before, but the power of this great partnership is clearly resonating with our customers in all locations. We have another 30 openings scheduled for mid-June, and we have two openings planned for later in 2016.”

J.C. Penney will continue to gain market share by organically growing sales in existing stores, by adding new locations, and by delivering new brands in its Sephora shops such as Origins, L’Occitane, plus expanded Kate Somerville, Marc Jacobs, Fresh, and Bumble and bumble, Ellison added.

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