Jeffrey Allison Details JCPenney Home Strategy

Carole Sloan, January 8, 2007

JCPenney has a three-pronged growth plan for its already dynamic home business that includes growing key businesses, improving the customer experience, and the store rollout of off-mall units where home is a major player.

While continuing to focus on its powerhouse private brands, JCPenney "will not walk away from national brands and exclusive brands," said Jeffrey Allison, evp, general merchandise manager, home and custom decorating.

JCP "will continue to be very focused" and grow its dominant product home segments — window, bed, and bath — as well as continue to improve the shopping experience for home, especially in-store, and to build the rest of its home businesses including housewares and furniture.

A key element of this will be "to look at growing our key private brands."

Overall, home is playing a key role in the company's 50-store-a-year rollout in mostly off-mall locations. Allison emphasized, "Home is an important part of the new model." The customers in these communities are new home owners, many first-time home owners, and home furnishings already has a high penetration in these areas, he related.

Looking at home merchandising specifically, Allison noted that the Chris Madden for JCPenney Home Collection "is one of the single biggest brand stories in the company." Allison said, "The game plan for 2007 is to look at the assortments, marketing, and pricing to bring Chris Madden to a new level of sales."

While some of the home segments in the Chris Madden program are at strong levels, he said, "There are a lot of categories where the potential hasn't been maximized." He cited as one of the brand extensions the hotel program in window, bed, and bath. "We've reinvigorated the brand each year since the launch and have seen a new level of sales." Looking forward, Allison said, "We love the relationship with Chris Madden and the partnership. There is significantly more upside across our businesses."

Addressing the question of whether Penney has dipped too low in pricing in the highly competitive home textiles marketplace, Allison said, "We are making sure that we have what customers want at smart prices. We are constantly working on the price/value equation and we build quality into the products at smart prices — in private brands, national, and exclusive brands. And this is not necessarily the lowest price in the market."

From a strategic perspective, improving the shopping experience is "a primary focus — making it easier to shop whether in-store, via the catalog, or on the Internet." The goal, he said, "is to take cross-channel sales to a new level." The first step is making the in-store experience "easy to shop." The totalprogram, he admitted, "will take a lot of work." Major initial moves are being implemented in the stores, where new POS programs have reduced the process to connect customers to either the Internet or catalog for reference or purchase to five steps from 25.

The next step, he said, will be to make it easier for customers on the Internet or looking through the catalog to shop in-store.

Reflecting on his six years with JCPenney, most recently as executive vp of planning and allocation, Allison is highly systems-sensitive. "Having just come out of that sector, we built it from scratch. There were no central systems." In his new role, he will be even more sensitive to where and how the current systems support the home business — and will have a first-hand awareness of what can be done to improve.

As for direct imports, Allison said, "I don't have a formula about the percentage of direct imports we will have in relation to the total. The ability to drive direct imports is important as part of our total business model, but it doesn't mean we will abandon importers or domestic suppliers."

Reflecting on his inheritance in the home area, Allison said, "We have a great home business. It's never easy to follow one of the legends of the industry like Charlie [Chinni], but he developed a very good team. My job objective is to sustain and take the business to a new level."

In other home areas, Allison remarked that the company is looking at opportunities to increase the store count of furniture departments from its existing 170 stores. "It's come a long way and definitely has a place in our stores." As for housewares, a relatively new category for the company, "We continue to fund and feed the growth here."

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