US department store chain JCPenney began the year with a change of ownership, emerging from bankruptcy and a new chief executive. More recently, the business has undergone a digital transformation to help the company shift gears from surviving to thriving. Speaking at the eTail Summit and Expo 2021, JCPenney’s senior manager of analytics and site tagging Andy Ma highlighted the impact of customer experience on the bottom line and how the rapid change in consumer behaviour in 2020 accelerated t
d the century-old retailer’s need for a digital transformation.
Ma said integrating unified Adobe analytics, Medallia digital and Quantum metrics enabled them to understand the issues their customers are facing which allowed the leadership team to better prioritise.
“We put together a process that identified the issues our customers are facing and helped our teams prioritise and enhance their online journey, measuring the impact” he said. “It’s not enough to just solve a problem, but that what you solve actually made a difference.”
According to Ma, customers have always expected a quick and easy checkout process. In physical stores, a customer’s frustration would impact his or her overall visit, stating that nine out of 10 consumers who experienced convenience during their shopping experience make repeat purchases with those brands compared to those brands who struggled to offer the same level of convenience.
“It’s not surprising to have that behaviour shift to online as well,” he explained. “Building a really satisfying digital journey for your customers can really go a long way.”
Other than understanding customers’ issues and addressing them immediately, Ma said communicating and responding in real time, as well as creating a seamless purchasing experience, are also important in creating a smooth journey.
Digital transformation may not be enough
Michael Baker, a retail consultant and former head of research at the International Council of Shopping Centers, said reinventions of legacy retailers have occurred before but they have been proven to be temporary fixes.
“JCP has been shedding real estate for many years. It has changed its discounting strategy and then changed back again. It has formed partnerships with brands like Sephora, Mango and Joe Fresh, all widely hailed at the time but all false dawns,” Baker told Inside Retail.
“The big picture is that JCPenney, like other mass merchandisers in the mid-market, has long been outflanked by competitors not burdened with the same obsolescence. Its decline has been slow and painful to watch.”
In May last year, after a long period of decline, the department store chain finally bowed to the inevitable and filed for bankruptcy protection.
According to Neil Saunders, managing director of GlobalData Retail, the coronavirus crisis effectively broke JCPenney’s limbs, making further progress all but impossible.
“Even before the pandemic, JCPenney’s road to reinvention was the equivalent of climbing a steep mountain with nothing other than the burden of an enormous pile of debt,” Saunders said.
Saunders added, however, that bankruptcy has provided a narrow path forward for the retailer and had given JCPenney the financial means to weather the current downturn in demand and the scope to restructure its operations as the retail economy starts to normalise.
The process of reinventing the firm will not be easy, though, he said.
“The reality on the ground is that JCPenney needs a complete overhaul in terms of its assortments, store designs, ways of marketing and connecting with shoppers, and its brand image,” Saunders explained. “In other words, a wholesale makeover is required to restore the company’s fortunes. In normal times, that process of reinvention would be challenging; accomplishing it in the midst and aftermath of a pandemic is more than a tall order.”
Saunders suggested that one of the most immediate priorities of the company should be the closure of underperforming and bad space.
“JCPenney is exposed to a high number of weak malls and locations and it needs to quickly cut its losses.”
Seeing growth
Closing stores has been one of the company’s priorities since it emerged from bankruptcy after being bought by mall owners Simon Property Group and Brookfield Asset Management Inc.
Since filing for bankruptcy, JCPenney has shuttered more than 150 stores, and it will close 15 more as part of its store optimisation strategy.
Stanley Shashoua, who was chosen by Simon and Brookfield to serve as JCPenney’s interim CEO after former CEO Jill Soltau left the business a couple of months ago, said he was already seeing signs of growth in the business.
“JCPenney is a great American family destination, and our strength is in our storied brands and the services we provide,” he said in an interview with CNBC. “We’re seeing week-over-week improvements in the business, and we’re increasingly optimistic as we work our way through this.”
Shashoua specifically cited growth in the home goods and athletic apparel categories which were seen to have outperformed during the Covid-19 outbreak.
Saunders said the progress JCPenney has shown since last year has been slow but developments like the reimagined store format in Hurst, Texas, showed some good forward thinking.
“Bankruptcy bought JCPenney time; it is a drug that is providing life support during a time of dire distress,” Saunders said. “Recovering is the difficult part, and it is still by no means certain that JC Penney will pull through or get back to full health.”