JCPenney home plan: item merchandising

Carole Sloan, May 14, 2001

PLANO, TX — Dominance in towels and sheets is a priority in the home division for JCPenney.

These two business segments were singled out as keys for the home division at the company's vendor summit meeting here earlier this month, ranking as targets along with denim and underwear for the whole family.

These corporate goals were among the directions outlined for key suppliers by Allen Questrom, Penney's chairman and ceo; Vanessa Castagna, president, JCPenney stores and catalog; and senior executives including Charlie Chinni, senior vp, gmm, home.

In a wide-ranging discussion of the new directions Penney is taking, company executives emphasized "promoting more open communication, risk taking and creating an aggressive attitude toward building items and sales."

Noting that Penney "had always been the store that the customer could depend on to find these types of key classifications," Penney executives reiterated that "we have rededicated ourselves to build these classifications back to the dominant position" it held for many years.

As examples of dominance, window coverings and comforters were cited in the home division. National brands also are important across the store, with Royal Velvet in home cited as one of the key "destination national brands" where the company must establish dominance to drive customers into the stores.

Overall, the merchants emphasized that "the foundation for a strong merchandise assortment is key-item focus" and stressed that both the merchandise departments and their suppliers would be focused on this goal. Suppliers were challenged to participate in the development of key items through the use of their logistics and ideas to bring "the best items in the best colorations, trend-right and shipped when the customer wants them and expects us to have them."

Suppliers also were challenged to have sophisticated forecasting systems and to develop weekly, and sometimes daily, communications in the planning and growing stages. Pricing also must be continuously analyzed to ensure competitive parity.

With the development of key items and businesses, the company will market its mix aggressively and frequently.

The new company marketing strategy, said John Budd, senior vp, marketing, will offer a new sense of urgency — "acting instead of reacting, offering the right items at the right time, and designed to convince customers to shop at Penney."

The new approach, Budd explained, will include "significant increases in marketing investment, focused on weekends and store-wide events." The efforts will be across preprint, direct mail, TV and radio with high-impact creative and ad content for the fall and holiday seasons.

Preprints will be increased, both in drops and page counts, direct mail and TV will be targeted for store-wide events and weekends, and Super Saturdays will emphasize high-impact key items.

In addition, Budd said, the company will leverage its database to maximize and expand direct mail efforts.

Key to the new marketing thrust, Budd said, will be high-impact headlines, stronger save stories, compelling price points and offers, less copy with more relevance, item density and maximizing return on ad investment.

At the meeting, Penney also outlined its new logistics network that is designed to simplify the process of getting merchandise to the stores. The company is developing 14 store support centers that will receive merchandise for all stores and cut the post-allotment of merchandise to 48 hours. Imports will average a store shelf transit time of 26 days.

Currently, explained Tim Troy, senior vp and director of supply chain management, suppliers ship merchandise to the more than 1,000 plus Penney stores with three weeks allocated to getting merchandise into the stores. For imports, the store shelf transit time currently averages 37 days.

For vendors, Troy explained, the changes will cut down individual orders from the stores to 14 bulk orders to the store support centers. As part of the new program, vendors will have clear compliance standards vs. the "undefined" compliance parameters of the past. And for support, Penney is developing dedicated supply chain specialists.

Three centers will open this year in Buena Park, CA, Statesville, NC, and Dallas. Six additional units will open in the first half of 2002, and the final five in the second half of 2002.

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