JCPenney Home Overhaul Underway

Carole Sloan, April 26, 2010

The home division, and in particular the home textiles category, has lots of great style and brands but there is an off-balance in presentation on the floor at JCPenney in the view of the company's leadership.

“We can add style and fashion even in the commodity products,” said John Tighe, who was recently named svp, gmm home. “Some of the new exciting things are not well presented; we need to position them better,” he added.

Tighe, and Steve Lawrence, evp, senior gmm of mens, kids and home, discussed their very short term views of the Penney home department for which they became responsibility just two months ago.

They turned the question of “what went wrong” in the industry's powerhouse in home textiles to Mike Ullman, chairman and ceo, in interviews after the annual analysts meeting here last week.

The answer, said Ullman, “was a lot of things. There was not a strong clarity of offer. We were too clever in trying to stimulate the customer. Our core businesses have to be run professionally on the basis of good/better/best, and we were simply a victim of the recession.”

Looking ahead, both Tighe — who briefly attended the Home Fashions Market here in March while in a transition from his prior assignment as svp for the dot com business, and earlier was on the apparel side — and Lawrence see many similarities.

“The markets are very similar with fashion and core essentials. Some segments move faster than home while others are about the same.” The key, Tighe added, “is to add style and fashions. We already have lots of great style brands but the minus is that the balance is off on the floor.”

In the near term, added Lawrence, “We'll peel back what doesn't make sense.” As an example, he pointed to the window hardware category where JCPenney has nine brands.

Added Tighe, “As far as brands are concerned, does it make sense for each to be represented in all product segments?”

Overall, both merchants emphasized that not just the buy of the product, but the presentation and marketing need tweaking. “There's a role for brands and product development, but our merchandising and buying needs to be clearer.”

Traditional, which appeals to the core Penney customer, has a very strong success in Chris Madden and with American Living and “can create an important traditional segment. The key is successful balance — we can go from ditch to ditch. Traditional is our crux, but we can't overdo it. We're not as strong in transitional and modern, where the existing collection — Cindy Crawford, Linden Street and Studio — will be joined in the August launch of Liz Claiborne in top of the bed and window along with a broad spectrum of apparel products.”

To date, the changes under Lawrence and Tighe include the assigning of John Kendig to furniture department as dvp, dmm, who is to “focus on this business and grow it,” said Tighe. Sue Gregson, recently named dvp, dmm for window, will report to Tighe directly.

While not using the recession as a cop out, Lawrence attributed some of the home business' travails to this period. “There were decisions made as a result of the tough economy, and it's tough for us to see competitors come back better.”

In a earlier presentation to the analysts, Lawrence remarked that there was a great similarity to the men's business in prior years. “It's a well-balanced assortment, and we're still dominant, especially in window and home as a well-built dot-com business.”

On the negative side, however, he believes the department has become over assorted. “We've taken the brands into too many categories; we don't have a key item focus and in-store needs to be easier to shop.”

Tighe added, “We have the strength of our private brands, professional and engaged sales associates and a large dot-com business built off the catalog business.” In fact, home represents the lions share — more than one-half — of the dot-com business, in part because of the catalog prowess which now is being purposely subdued.

His goals for the division, Tighe said, include “maximizing our core business with balance in price, and private vs. national brands as specific opportunities. We need to accelerate our growth, simplify our store presentation and be in stock.”

In addition, Tighe sees a need for improving style especially in window, bedding and tabletop as well as growing bedding and towels. “We need to transform home marketing, and increase our dot-com business.”

Further discussing home, Ullman said furniture and window skew the pricing matrix, but bed and bath are the key to effective pricing. In addition, Lawrence said “ Competitive pricing is an issue and we need to have a clarity of pricing versus layered discounts.”

In discussing the marketing programs, Tighe referenced his most recent assignment in the dot-com sector. Today, dot com as a division provides $1.5 billion in sales and is not growing. A key reason is the downsizing of the Big Books — the company's famed giant semi-annual catalogs. The goal for dot com with the new approach is to add $1 billion over the next five years.

Today, Tighe said, “We have a very strong market share in all home and a strong share of wallet with dot com and in store only merchandise. Going forward, the strategy is to execute dot-com fundamentals linked to the customer versus the long life approach of the catalogs.

He considers the current online assortment to be A-plus with “a younger customer that is quicker and more nimble.” The goal is to leverage the company strengths in the direct-to-consumer business and expand the impact of the Find More programs that enable customers in-store to find merchandise that may be out of stock or simply not carried in the store's in inventory.

The company also is joining the many retailers looking to capitalize on the mobile marketing craze as well as social media.

The Big Books, Ullman explained “carried a lot of overhead” and the company has programmed a major drop in catalog business, though it now sends out product-specific and customer-directed mini catalogs.

Overall in merchandising, Ullman said, Penney uses 40 different metrics to determine each stores' merchandise, pricing and style mix — even when they are in the same geographic area. “Pricing and sizing is done as it relates to a local situation. We're trying to improve localization” with the broad array of company centrally determined product.

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