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JCPenney Focuses on Product

The internet will be the merchandise hub going forward for JCPenney, enabling the $19.9 billion retailer to leverage and expand its merchandise and marketing efforts across all three of its channels — retail, catalog and internet.

Until now, the direct and retail channels have had separate merchandise and marketing staffs, both of which, in home, now are under one management structure. Previously, said Ken Hicks, president and chief merchandising officer, "we had two independent silos and were not able to optimize product trends. This also will enable us to better coordinate assortments in size and color opportunities."

A particular advantage, Hicks explained, "is the ability to expand and add styles and brand, as well as offering a consistent message among all three channels." Similarly, Hicks said, "the marketing is becoming clearer with customers, and we are able to do more target marketing." Home is one of six target segments in this integrated approach.

Despite the uncertain economic conditions, Penney is stepping up product development, with two major launches due in home this year, Myron (Mike) Ullman III, chairman and ceo remarked at the company's annual presentation to analysts at the Mandarin Oriental Hotel here.

In home, Linden Street marks what the company is calling the largest single launch of any home program and is scheduled for a July debut in all three selling channels. All home departments will be included in the launch — in contrast to the American Living brand launch, which had bed, bath and window as the initial departments, with housewares, tabletop, furniture, rugs, lighting and accessories to follow later this year and into spring '09.

Linden Street, Ullman noted, "is not too aspirational." Hicks claimed the label "will make us even more competitive in home décor. It's cozy, casual, familiar, comfortable, fresh and friendly."

For back to school, JCP will feature Dorm Life, a program that offers bedding, furniture, lighting and accessories. Both new lines were designed, developed and sourced in-house.

As for American Living, the full-store merchandise program developed by the Global Brand Concepts division of Polo Ralph Lauren, Ullman cited the window coverings segment "as a pleasant surprise" in its strength. Overall, "American Living has met our expectations with some of the merchandise 'wildly over plan' and some disappointing. The customer loves the quality, style and fit," he added, pegging its potential as a $1.5 billion business.

To offset the general economic situation, Ullman outlined what he termed "a bridge plan" that includes reducing new store openings this year to 36 from the 50 previously announced, to save $200 million in capital expenditures. Major store renovations will drop to 20, down from the 60 planned. And inventories will be moderated as another step in crossing the "bridge."

In analyzing Penney's private brand positioning, Hicks put American Living at the "best" level of the matrix in traditional with Chris Madden and Chris Madden Hotel in the "better" segment of traditional. Linden Street falls into the "better" segment under neo-traditional, while Studio, "which has exceeded expectations," lies in the "better" level in modern.

JCPenney Home Collection, pegged at the "good" level of conservative, Hicks noted, "is a promotion and conservative line and it will get smaller."

As for national brands vs. house brands, Hicks noted, "In hard window, we have all the brands, but there are no longer brands in either home textiles or furniture."

As part of the two-day session, which included a tour of the Penney store in Garden State Plaza in Paramus, N.J., Jeff Allison, evp home, gave an overview. He pointed out a significant change in merchandise presentation using a Chris Madden bed covering in the home textiles department that was on a Chris Madden bed and flanked by the nightstand from the furniture group as well as accessories — an early move to "lifestyle presentation."

Throughout the home division, Allison remarked, "Area rugs are strong, custom decorating is on plan, hard window is strong and we have had great response to Outdoor Oasis," a seasonal outdoor offering that includes merchandise from furniture to tabletop.

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