Penney thinks outside of the box with new stores

Carole Sloan, April 26, 2004

The Box 1 concept is paying off for JCPenney, both in its new free-standing stores and in the renewal of existing stores.

The concept will be carried through in new stores as well, with seven planned for 2004. The Elmhurst, N.Y., store that opened last month clearly followed the format. The company announced plans for seven additional free-standing units. The 14 stores are budgeted at $150 million for this year.

Key in the Box 1 format are better adjacencies, wide aisles, brighter lighting, centralized front-end checkouts, central return desks, high-capacity fixtures that put more merchandise on the floor instead of the back room, and Hot Spots and Hot Zones — areas that dramatically call attention to important and changing merchandise offerings.

"The Hot Spots concept really works," said Charles Chinni, executive vice president and general merchandise manager of home, fine jewelry and family shoes, during a tour last week of the Cedar Hill free-standing store just south of Dallas.

Hot Spots, he added, "allow us to show our best or newest items across the store. And they also tell us quickly when featured merchandise isn't right. In home textiles, for example, window coverings are a Hot Spot with the feature display telling customers that Penney is 'The Window Authority.'"

A major aisle presentation, forming a right angle, showcases the bedding department with the corner item as the Hot Spot feature. In bath, brightly colored towels are the Hot Spot set adjacent to the presentation.

Hot Spots throughout the store "are consistent in presentation, graphics, and fixturing," said Vanessa Castagna, chairman and CEO of JCPenney stores, catalog and Internet. The Hot Spots merchandise, she added, accounted for 10 percent of the stores' business last year, "and we expect a substantial increase this year."

The free-standing stores are 94,000 square feet gross, with about 75,000 feet of selling space. They are pegged to do $200 per square foot this year, according to Ken Hicks, president and chief operating officer. In contrast, Penney's full-line mall stores had $143 in gross sales per square foot last year, but that was up from $127 in 2000, "improved but still below competition," Hicks remarked.

In a presentation to financial analysts here, Hicks noted that the free-standing stores are targeted to take advantage of "population shifts — new growing areas where malls have not yet been planned or built." They also will be used to fill in markets.

For the next several years, Penney envisions some 75 to 100 free-standing stores across the country, Hicks said.

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