Home, Web Sales on Fire at JCPenney

Carole Sloan, May 3, 2006

Plano, Texas — Home continues to hum at JCPenney.

The recent launch of Studio by the JCPenney Home Collection in bed and bath is rivaling the debut of the Chris Madden Collection two years ago. The balance of the Studio program — tableware, housewares and furniture — should be in the stores by August.

And the Chris Madden program is expected to produce $400 million to $500 million within three or four years, said Charlie Chinni, executive vp, home during the Wall Street analyst meeting here last month. Currently, “Chris is up 44% for the quarter this year compared with 2005,” he added.

John Irvin, executive vp, JCPenney Direct, which includes both catalog and the Internet businesses, said home represents more than half of the company’s direct business and “quite a bit more than half” of its profits. In 2005, jcp.com reached $1.038 billion in sales — with JCPenney Window Solutions representing one of the largest segments in sales and profits.

The company’s direct program includes merchandise that is not found in Penney’s retail stores, but with the new POS system, store customers and sales associates are easily able to access these lines, Irvin said. “The smallest store now has full product access.”

Home Traditions, a catalog and Internet vehicle launched this spring that included both unique and retail merchandise, “has been a blowout. It’s five times over plan,” Irvin stated.

As the Internet business grows, Irvin sees the catalogs becoming more of a support to the on-line channel. “We’re targeting segments — lifestyles — for growth in catalog with Home Traditions, Country, Cooks, and others,” he observed. From a practical perspective, Irvin pointed out that with fewer print catalogs, the ad cost ratio declines.

In comparing Penney’s Internet business with competitors, Irvin cited Sears at $785 million, Wal-Mart at $700 million, Target at $580 million, Macy’s at $260 million and Kmart at $160 million.

And in terms of converting visitors to buyers on the Internet, Irvin said that Penney’s rate is 9.7%, Kohl’s 4.3%, Wal-Mart 4.1%, Sears 3.2%, Macy’s 2.6% and Target 2.2%. Analyzing the way customers shop by lifestyle on the Internet, he related that 41% of total viewers look at the casual lifestyle and 32% convert to actual buyers, 35% are country shoppers and 25% convert to buyers, while traditional lifestyle viewers account for 24% of the total but actually convert to 43% buyers in that lifestyle.

After the meeting, president and chief merchandising officer Ken Hicks said that there were more than 300,000 SKUs on the Internet, “and we’re very pleased with the performance of home on the Internet.”

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