JCPenney's Internet sales rise 15% in 2007 to $1.5B
By Carole Sloan -- Furniture Today, April 27, 2008
New York — JCPenney's Internet sales climbed 15% to $1.5 billion last year, making it the fastest growing of the $19.9 billion retailer's three sales channels, company officials said at their annual meeting here with securities analysts.
Now, the Internet will be a merchandise hub — offering a larger selection of product than the other channels, stores and catalog.
Until now, the direct and retail channels have had separate merchandise and marketing staffs. Now, at least in home products, those staffs are under one management structure. In furniture, this move is expected to encourage sales via the catalog and Internet in stores without furniture departments. Product assortments in each channel will be parallel — a situation that presently does not exist.
"We had two independent silos — one for retail and the other for direct, which included both catalog and Internet — and were not able to optimize product trends. This also will enable us to better coordinate assortments in size and color opportunities," Ken Hicks, president and chief merchandising officer, told the analysts.
The shared assortment will help improve Penney's ability to "expand and add styles and brands, as well as offering a consistent message among all three channels," he added. In contrast to the Internet sales growth, same-store sales were flat in 2007 and catalog business declined 15%, officials said.
Home is one of six target merchandise segments already involved in the integrated approach.
Despite the uncertain economic conditions, Penney is stepping up product development with two major launches due in home this year, Chairman and CEO Mike Ullman III told the analysts.
Linden Street, to debut in July in all three selling channels, will be the retailer's largest single launch of any home program. Hicks described the brand as "not too aspirational" and said it "will make us even more competitive in home décor. It's cozy, casual, familiar, comfortable, fresh and friendly."
In time for back to school, the company will feature Dorm Life, a home furnishings program that offers bedding, furniture, lighting and accessories, for the college student market.
American Living, the full store merchandise program developed by the Global Brand Concepts division of Polo Ralph Lauren that debuted this year, has met expectations, said Ullman, who said the program potentially is a $1.5 billion business. Furniture will join the merchandise mix in spring 2009.
Hicks noted that the company no longer sells national brands in furniture or home textiles. He said wryly, "We are buying direct from the same suppliers as our (former) domestic suppliers."
As part of the presentation, analysts toured a Penney store in Paramus, N.J. Jeff Allison, executive vice president, home, said that in a significant change in merchandise presentation, the company was showing top-of-bed goods from its Chris Madden Home brand in the home textiles department on a Chris Madden bed, flanked by a nightstand and accessories. It's an early move to "lifestyle presentation" throughout the home division, he said.
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