Yahoo Finance EXCLUSIVE: JCPenney’s First Store Opening in Eight Years Trumpets $1 Billion ‘Refresh’ Plan
At JCPenney, it’s no longer a sea of racks.
With its $1 billion “refresh” program, Penney’s sets higher standards for store presentation — and it’s most evident at the retailer’s new store in the Willowbrook Mall in New Jersey, the first opening by the retailer in eight years. The refresh project is ambitious, designed to reverse Penney’s sagging sales trends, and in its early stages.
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Two days prior to the ribbon-cutting for Penney’s official opening Friday in Wayne, N.J., WWD met with Penney’s chief merchandising officer Michelle Wlazlo for a tour of the store. For five years since joining Penney’s from Target, Wlazlo has been overhauling the retailer’s portfolio of private brands — weeding out weak ones, differentiating the ones that matter, and adding new private labels to fill merchandise voids such as Xersion for active. She’s also orchestrated a steady buildup of denim, casual and beauty offerings and brands with such additions as Arianda Grande fragrance, Smashbox cosmetics and Two Faced mascara; Puma and Fila in active, while Levi’s, Reebok, Adidas have enhanced presentations. Martha Stewart in home, as well as a storage and organization section, were launched not long ago, and plus- and big-and-tall sizing is seen across private and national brands.
In juniors, or as Penney’s calls it “Young-Minded,” brands such as Forever 21, Juicy Couture and Arizona Body have been added, reflecting efforts to change perceptions of Penney’s as a store just for older audiences. In February, Penney’s announced its partnering with Johnny Wujek, the Los Angeles-based celebrity costume designer and stylist to launch the retailer’s first Gen Z-inspired formal collaboration. And the rollout of JCP Beauty departments with its inclusive mix of masstige, prestige and mass brands from new, emerging and established companies, to all 660 stores following Sephora’s defection to Kohl’s, is complete.
Now, with much of the merchandise work done, Penney’s wants to strut its stuff and it’s being done through the refresh program disclosed in August.
The new Penney’s in the Willowbrook Mall (roughly 20 miles from midtown Manhattan) is housed in a former Lord & Taylor site and replaces the old Penney’s that was located just outside the mall. With two levels, 65,000 square feet of selling space and about 120,000 gross square feet, Penney’s in Willowbrook Mall is marked by smarter category adjacencies that correspond better to how people prefer to shop. For example, handbags is just behind sportswear; kids fashion is adjacent to the photo studio and the Disney shop; juniors is next to prom, and JCPenney Beauty is right beside the salon.
There’s a clear demarcation between casual and dressier fashions. Just past the entrance from the inside of the mall, there’s the a.n.a. casual private brand on the right, and to the left, the private Worthington brand for more polished, wear-to-work, dressier styles. The setup signals that Penney’s, in its appeal to working- and middle-class families, those segments of American society that have been most hurt by inflation and higher interest rates and struggling to make ends meet, offers fashion for all occasions and end uses.
Other key innovations on the selling floor, as highlighted by Wlazlo:
Two central, faster checkout stations, replacing the old setup with several checkout counters randomly situated through the store.
Movable fixtures so categories and brands can be bolstered or pared down based on selling trends.
An open-floor plan for longer sightlines and easier navigation.
More mannequins.
Bright LED lighting and updated fixtures.
A rotating shop for home and holiday items on level one for a taste of the home assortment on level two.
“Gotta Have It” signs flagging 124 replenishment-type items sold at “exceptionally” low prices, like T-shirts.
“When you’re starting a store from scratch, you can think about how to use the space differently, and you’ll feel it here,” said Wlazlo, on the tour. “We’re actually using the space more effectively. Everything is mobile so we can move things, which is really important. There’s flexibility in the space. But more than anything, we looked at this market and said, ‘what brands or businesses do we need to expand or shrink slightly?'” Private brands a.n.a., Worthington and Stylus, as well as national brands such as Levi’s and Puma, each have a pumped up presence, among other brands.
“In this store, especially with this being a more intimate space, we moved all the things she buys with her apparel, next to apparel,” said Wlazlo. “I know that seems like a simple concept, but think of how in many stores accessories are way over, on another side of a store, far away from apparel. We listened to the customer and put things together that should be together.
“We moved all intimate apparel and shapewear adjacent to dresses, because if you’re wearing a strapless dress, a backless dress, a halter dress, a fitted dress, no matter what kind of dress you’re wearing, you need a solution underneath. We got that here. This is unique to the store.”
In women’s fashion, “We’re the place to get dressed up,” said Wlazlo, adding that even through the pandemic, when people were stuck at home wearing sweats, Penney’s maintained its assortment of men’s suits and dresses. “We are based in Texas, and let’s just say Texas people were going out to eat and doing things. We saw a lot of suiting and dresses so we stuck with the business during that period. In fact, we relaunched J. Ferrar and Stafford (men’s suits) in 2021, right in the heart of everything.…Post-pandemic, we’re seeing men still wearing a suit, but they’re wearing it with a sweater polo underneath, or a shirt without a tie. So suiting is back. Sometimes it’s just the jacket. Sometimes it’s the pants. Sometimes it’s both.” Penney’s hosts approximately 500 “suit-up” events annually in the stores and online to help students feel confident on interviews and as they prepare to enter the workforce after college. At these events, Penney’s offers up to 50 percent off career apparel, discounts on salon and beauty services, and $30 headshots.
To balance the fashion presentation, “We probably built our casual, all-day part of the business exponentially in the last five years,” Wlazlo said. “The area that we’ve expanded the most over the years has been really on the denim and casual side, where we’ve introduced most brands. We had been so dressed up. Now we’re dressing for every occasion.”
As Wlazlo sees it, Penney’s beauty salon is “the mothership of differentiation” from competitors. “We provide 100,000 services in our salons every week,” be it coloring, cutting or styling hair; blowouts; facials, or shaping brows. Salon services have grown 10 percent year-over-year, according to Wlazlo. “Customers are loyal. They come in up to seven times a year, some even more. They are loyal to their stylist.” Other key differentiators seen at the Willowbrook store and throughout the chain are the photo studios, extensive big and tall and plus size offerings, and the 50-50 balance of private brands and national brands. At other department stores, private brands represent 20 to 30 percent.
JCPenney Beauty has an open-sell format so customers can get at products without needing an associate. “The beauty advisers in all of our stores are experts and they’re here to help, but we do want people to discover on their own and not feel like they have to get someone to open up a case for that.”
The beauty and salon businesses, Wlazlo said, are “completely linked” by one shared leadership team overseeing the salon and beauty advisers and stylists. A stylist in the salon would recommend beauty products, while a beauty adviser could suggest a visit to the salon, or to be photographed in JCPenney Studio. “We don’t just sell things. We actually service the customer in a holistic way,” said Wlazlo. “There’s this connective tissue. Our ability to link all of our services and product businesses together is a differentiator. It’s the mind set of our associates.”
With 65,000 square feet for selling, Penney’s in Willowbrook Mall is significantly smaller than typical Penney’s locations, which on average have 100,000 square feet of selling. Still, Penney’s in Willowbrook feels larger than it actually is due to its extended sight lines and openness. As Wlazlo said, “It’s not so small we can’t provide all of the offerings we need to.”
She’s thinking tighter, more efficient units for the future. “If we can have a more flexible store size, we’ll take the opportunity. If we can do some smaller stores, that would be great. But we want to make sure that we don’t sacrifice any of the customers’ needs. So will you see some more smaller stores? Probably. Opportunistically, if we can do something in a smaller space, we would. We are really important in smaller communities and rural communities, and we actually have good performances in some of those smaller markets. At the same time, we have some very strong stores with 100,000- to 125,000-square-foot selling.”
Penney’s has closed hundreds of stores over the years. The count is down to 660 stores. “We love our fleet size,” Wlazlo said. While there could be a few wonted closings in the future, no significant rounds of shutdowns are seen, she said.
About a month ago, Penney’s launched its “Gotta Have It” pricing programming, which this spring flags 124 items in kids, men’s and women’s apparel, active, footwear, intimates, men’s basics and home being sold at very low prices. They tend to be products like T-shirts that consumers regularly replenish. Gotta Have It diverges from Penney’s high-low and coupon oriented pricing. “These Gotta Have It pieces modify prices less frequently,” Wlazlo said. “You can count on the price. If you have a coupon, it can be used on our Gotta Have It items. There might be one or two price hits, but it’s not going to have this constant, 40, 50, 60 percent off.”
Wlazlo considers the installation of the central checkouts, which also service pickups and returns, among the biggest changes on the selling floor, to improve the merchandising. “It’s allowed me to do a lot more with the product,” she said. “If you’re trying to merchandise this beautiful product around all these registers that would be scattered around the floor, it completely loses the storytelling.”
The merchandising has been further enhanced by populating stores with more mannequins. On average, stores display 221 mannequins across men’s, women’s and kids, but 62 new mannequins per store are being added to locations undergoing a refresh. They are in three tones of gray and in regular and special sizes in men’s and women’s, to better represent customers with different physiques.
A new POS is rolling out, and is in about 30 stores including Willowbrook Mall. “This new point-of-sale system makes things easier, quicker. We can use mobile devices now so you don’t have to be at the register to check people out. We’re also upgrading the entire infrastructure of the wiring, the Wi Fi, everything.” The next-generation POS offers speed checkouts, simplifies applications for JCPenney credit and enrollments in the JCP Rewards program and improves visibility to merchandise inventory across stores, making it easier for customers to find what they are looking for.
On the fixturing side, tables, T-stands, wall displays are being brought to the stores so there’s better product storytelling, and greater visual interest. “If you would have walked into a JCPenney five years ago versus today, it’s a night and day difference as far as the the inspiration in the storytelling with the use of the mannequins, the tables, the lighting, the walls, everything,” Wlazlo said.
Not all of the $1 billion refresh budget is for the store upgrades. Some of it continues to be allocated to upgrade jcpenney.com and its navigation, storytelling, adding videos on applying makeup, outfitting and other topics, creating continuity between what’s shown online and in-store, and overall providing a more appealing and better online experience, Wlazlo said. “So much of the storytelling you see in the store here is connected into online. If we’re telling a story about cargoes, that cargo story is showing up online and in stores. So it really is fully integrated.” There’s one merchant team for both store and online channels.
Part of the $1 billion refresh budget is also for improvements in the supply chain, and planning, allocation and replenishment systems.
“So it’s the gamut,” Wlazlo said. “One year you might invest more in one area, and when that’s done, you’ll invest in other areas. I don’t think it’s static as far as percentage.” Penney’s does not break out how much of $1 billion gets allocated to the different areas of the business.
Wlazlo emphasized that being able to open a new store, such as in Willowbrook Mall, is ideal for implementing all the desired floor changes. “This store amplified and enhanced some things and we’ve had some new things that we want to do. This store has some movable walls and some additional fixturing that other stores don’t. But if you go into any store, you’ll have this beautiful assortment of Worthington, Liz Claiborne, St. John’s Bay, Stafford. The adjacencies will be, by and large, the same. You’ll have a beautiful beauty space and salon space but they may not be connected. You’ll have amazing intimate apparel, but it may not be near dresses. We’ll have a great handbag area, but it’s probably further away,” from women’s apparel in certain stores.
“I would be just as proud for you to walk into any other store. But we took the opportunity in this store to actually say where are all the areas where we can do even better and let’s do them here.”
Penney’s went bankrupt in May 2020 after getting clobbered by the pandemic and being forced to temporarily close stores. But the Dallas-based retailer was lifted out of bankruptcy by two major mall owners and its new owners, the Simon Property Group Inc. and Brookfield Property Partners LP, thereby reducing its debt from around $5 billion to about $500 million. Penney’s viability is important to the health of their shopping centers, and that includes the Brookfield-owned Willowbrook Mall.
While the developers have given Penney’s a new lease on life, the $1 billion refresh program is being funded by Penney’s itself, according to the company. So far, 120 of the 660 Penney’s stores have been refreshed, with many, though not necessarily all, of the upgrades seen in Penney’s in Willowbrook. Nearly 70 refreshes were done last year, and the plan is to refresh the entire chain.
“Since our restructuring, we’ve been generating a healthy cash flow. We have good liquidity,” Wlazlo said. “That’s why we’ve been able to reinvest in the company. We are in very strong financial shape.”
Penney’s is expected to report fourth-quarter/year-end 2023 financial results in early May. For the third quarter of last year, the Plano, Texas-based department store had a net loss of $30 million versus a loss of $17 million in the year-ago period, and an operating loss of $10 million versus operating income of $2 million in the year-ago period. Net sales in the three-month period declined to $1.53 billion from $1.71 billion. Penney’s volume in 2022 was just over $8 billion. It peaked in 2006 at more than $20 billion.
The men’s big and tall active area at Penney’s Wayne, N.J. store.
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