NEW YORK — The private brands and price promoting are back in force, but J.C. Penney is moving forward, not in reverse, according to its chief executive officer Myron “Mike” Ullman.
“We’ve got to keep evolving this company. We are not going back to 2011,” Ullman said during an interview at the grand opening of Penney’s in Brooklyn on Friday, showcasing the company’s most advanced vision on interior design and merchandise display.
Ullman, back at work after some surgery, underscored that the Brooklyn store represents tests on several fronts, from merchandise presentations in accessories and footwear to LED lighting, updated and varied surface treatments, and open-sell and self-serve formats. If successful, these tests could be applied to other stores.
“Despite all the turnaround issues, we are using this store as a laboratory,” Ullman said.“By far, this is the most impressive and best expression of J.C. Penney.”
The store — Penney’s first in Brooklyn and the first to be opened by the retailer in two years — is situated in the Gateway Center’s phase two in East New York.
For Ullman, in his second stint as Penney’s ceo, it’s so far, so good, with the Brooklyn store a positive part of the turnaround effort. His first stint lasted from 2004 to 2011, when Ron Johnson took the reins and sent the company on a disastrous reinvention ride. Ullman returned in April 2013 to get the company back on course.
There has been some concern that Ullman’s encore revolves around simply undoing what Johnson did and bringing back the old ways. But during the interview, Ullman cited progress at Penney’s, including healthier margins and lower expense levels; investments in renovating and updating key stores, such as those in Bay Plaza in the Bronx, where Macy’s opened last month, and in Roosevelt Field, Long Island; the ongoing successful rollout of Sephora in-store shops “at an aggressive pace” and a focus on raising productivity at existing units and furthering omni- channel efforts.
Under Johnson’s tenure, expenses ran amok, new merchandise didn’t take and customers defected to competitors. Since returning to the helm, Ullman has put Penney’s on a turnaround path by reinstating in-house brands that were downsized or dropped and by employing aggressive discounting. In the first half, Penney’s gross margin rose to 34.5 percent from 30.2 percent in last year’s first half, and the net loss declined to $524 million from $934 million the year before. Sales rose 5.7 percent, to $5.6 billion, from $5.3 billion.
The 124,000-square-foot Brooklyn store, considered one of the 140 “box B” Penney’s because it’s one level, shows few remnants of the Johnson regime, with the exception of mobile checkouts and shop formats for Levi’s, Disney, Liz Claiborne and Arizona. There is also a pared-down Joe Fresh shop.
The private-brand revival is obvious, with Worthington, jcp and a.n.a. front and center and close to Sephora and, after being shelved by Johnson, Ambrielle intimates back on the display.About half the inventory is private brands, which have margins that are 300 to 600 basis points higher than other brands; 20 percent is national brands; and 25 percent is merchandise concepts that are exclusive to Penney’s, such as Sephora, Modern Bride and Call It Spring by Aldo.
Ullman said he expects the Brooklyn store to rank among the chain’s top 10 performers. It’s a group that includes other New York City sites, namely the Herald Square, Bay Plaza and Queens Mall units. Gateway Center has the benefit of, as Ullman said, “more walk-in traffic within a half mile than any other store in the company. It’s an important market in terms of density,” Ullman observed.“I happen to know the other anchors [at Gateway] do extremely well.” Target, Best Buy, Michael’s and DSW are among the anchors. Ullman made the decision to open at Gateway during his first stint at Penney’s. He declined to project a volume for the store, though one official said that, since the soft opening a week before the official opening, business was 12 percent ahead of plan.
“We’re using this store as a lab. There are a lot of new ideas here,” said Katheryn Burchett, senior vice president of real estate, who, along with Tony Bartlett, executive vice president of stores, pointed out several of the innovations, among them:
• Fashion jewelry displays with mirrors, LED lighting, easier access, color stories and coordinating earrings and bracelets, to encourage multiple transactions.
• All-glass watch cases illuminated by LED to show product on all sides.
• Separate men’s, ladies’ and kids’ footwear sections adjacent to men’s, ladies’ and kids fashions, rather than one big footwear area. Men’s and kids shoes are boxed and self-serve; women’s shoes retains the “sit and fit” format, where associates retrieve requested styles and sizes from storage.
• A truly “designed” intimate apparel area (as opposed to typical wide-open pads), with regular and full-sized mannequins, frosted glass for intimacy, panty forms and panty tables for easier shopping and visual impact.
• Modernized fixturingincluding brushed-chrome“ballet” bars (rather than the old-fashioned four-ways) and mobile walls for flexible display. n Fitting rooms with variant lighting to simulate day and night.
• Myriad flooring and surface treatments, from the polished-concrete main aisle to laminate woods and gray ceramic tiling to segment departments.
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