28 Jun J.C. Penney betting on improvements in display, inventory to draw customers
There is forgiveness at the mall.
Just ask Cheryl Sullivan and Gaye Pinti, who were shopping at the J.C. Penney store at the Mall at Robinson this week. They came in to check out the store’s revamped home department, fully aware of the retailer’s troubles.
Penney’s earlier this year gave up on its creative but controversial CEO Ron Johnson and brought back former CEO Myron “Mike” Ullman following too many quarters of falling sales numbers and ebbing store traffic. The company even ran an ad conceding mistakes were made in the rush to change.
The two friends from Weirton, W.Va., were magnanimous in their view of Penney’s recent problems.
“I don’t think they did anything wrong. They tried something and it didn’t work,” Ms. Pinti said. “I love the fact that they lowered prices.”
Penney’s needs more customers to take that attitude and give the department store chain another chance.
In the quarter ended May 4, the chain based in Plano, Texas, reported total sales fell 16.4 percent from the same period a year ago. Sales in stores open at least a year were down 16.6 percent. The home section overhaul contributed to a first quarter slump in sales since construction in stores around the country made it challenging to shop those areas.
Frank Merriam, store leader at the Penney’s store in Robinson, said he’s been seeing customer traffic pick up since his store’s remodeled home section officially opened in early June. Now the store carries furniture in addition to towels, curtains and kitchenware.
The strategy behind the remodeled home department matches other changes made under Mr. Johnson’s direction. Now, instead of putting all the towels in one area and the bedding in another, there are small shops featuring an entire line from one brand, just like the Liz Claiborne shop or the Levi jean shop elsewhere in the store. If a customer likes the colors featured in the Royal Velvet collection or those in the Studio line, all the matching towels and bedding products are found together.
“Everything is going to be a retraining,” said Mr. Merriam.
He’s referring both to customers who will need to poke around to see where things have landed and to employees, some of whom are learning to sell furniture for the first time.
The remodeled home department, which has a Martha Celebrations area, a Michael Graves Design shop and a Fiesta dinnerware display, even includes a place to do demonstrations, although the idea of putting in a full working kitchen was nixed because of all the complicated health requirements.
“We’ve got to get people back into the store to see it’s new,” said Mr. Merriam.
Penney’s will be using a strategy of running regular sales to help make that happen, giving customers a reason to come take a look. Mr. Ullman has not shied away from promotional offers, something that the retailer had tried to do under his predecessor. “People like their discounts,” said Mr. Merriam.
Ms. Sullivan, who was checking out the nightgowns on sale, had started her shopping trip in the home department and tried out some of the furniture. She wasn’t thrilled with the sofas and chairs on display, saying the styles were too modern and not cushy enough. “I’m not into that. I’m into comfy.”
She and Ms. Pinti said they liked the kitchenware displays and they praised some of the new clothing styles that have been brought in over the last year or so. They also like the wider aisles and the brighter, cleaner look of the store.
Even the new CEO seemed disinclined to dismiss everything that his predecessor did. On a recent conference call with analysts, Mr. Ullman said that private brands had not been emphasized enough, inventories had been trimmed too much and management had to listen better to the customer.
But, he noted, “From my perspective, J.C. Penney has made very good progress over the last 18 months, improving how our stores look, and how our brand assortments, like Joe Fresh and Happy Chic by Jonathan Adler, look in our stores.”
He made a commitment to improving the selection in several established private label brands, such as St. John’s Bay, that the retailer’s historic base of customers had said they missed. The Robinson shoppers are starting to see more merchandise as a result of that decision, but Mr. Merriam said it may take until the back-to-school and holiday seasons for those changes to be fully implemented. “You just can’t flip a switch in retail,” he said.
There are still plenty of risks ahead for the department store chain, even if it does seem to be trying to reset the clock on some things.
Penney’s is operating in an intensely competitive and saturated retail environment, noted Mary Ross-Gilbert, an analyst with Imperial Capital in Los Angeles, Calif. In addition, she wrote in a recent report, it is taking on new debt; it is trying out younger, untested brands; and it awaits a court ruling on whether its deal with Martha Stewart violated the rights of rival Macy’s. That ruling could come later this summer.
“They’ve got a lot of competition,” agreed Ms. Sullivan. She and her friend estimated they visit Penney’s every couple of months but they find themselves in Kohl’s twice a month or so.
“I’m a Kohl’s girl,” she said. “When they give you 30 percent off and they give you Kohl’s cash.”
Teresa F. Lindeman: email@example.com or at 412-263-2018.