THE TOP TEN
AFTER BATTLING A DOWNSCALE IMAGE FOR YEARS, J.C. PENNEY IS RETAILING'S CINDERELLA.

Byline: HOLLY HABER

DALLAS--J.C. Penney Co. has struck a chord with consumers. Long a stodgy store for low-priced basics, the chain has transformed itself over 10 years into America's favorite department store with a flair for fashion.
Penney's winning strategy has been to concentrate on a handful of its own labels that offer classic and contemporary looks at reasonable prices. It zeros in on the taste and buying habits of middle-income America by surveying consumers weekly at its own testing centers nationwide.
"We study the average retail price that garments are selling for--not just in Penney's but in the world--and we target the price range where most people want to buy things," said Jim Hailey, president of the women's division.
For quality control, the company dispatches inspectors to all its contractors worldwide and ships samples of its private-label goods to its own Quality Assurance Center near the Plano, Tex., headquarters. Rigorous testing procedures assess how the garments will hold up--and measure up against the competition.
The thoroughness has paid off. According to WWD's survey, Penney's scored first in almost every category. It scored first among all age groups, among households with children, those college educated and those without college degrees, working women, empty nesters and traditional families. It also scored tops among all income groups, except those in households over $70,00, where Macy's was named the first choice to shop.
In addition to naming a favorite apparel retail store, respondents were quizzed on why the store was their choice. Here's how some Penney customers replied:
. "They have a big selection, and the quality is really good with all their clothing. Good, just good."
. "I like the prices and I like the selection, and I seem to do well when I shop there. They always have a wider variety, and I can always find color and selection. I like the friendliness of the (sales) people and the location is convenient to my home."
. "The sales people do not pressure you, but they are there when you need them. I have a small waist and it is very hard for me to find clothes in my size. They usually have my size."
Penney's ranked first as the best store for sportswear/casualwear, suits and dresses, career clothing and activewear/bodywear. It ranked second behind The Gap for jeans.
Penney's Worthington women's career sportswear, Hunt Club casual sportswear and Arizona junior jeans are among the most recognized and best-selling brands in America. The company also has high expectations for its junior sportswear label, which was renamed M.B. Clothing Co. from Mixed Blues about four months ago.
Along with its intensified focus on merchandising, Penney's has spruced up the apparel departments in about 500 metropolitan stores. With wooden fixtures, mannequins, poster-size fashion photos and better lighting, they're more attractive than the old mass-merchant environment.
The chain of 1,100 stores has also created boutique environments and has sent its message out with strong national television and print advertising emphasizing how it's changed.
It's all paid off on the bottom line: The mammoth retailer and cataloger has been an industry leader in sales and profits in fiscal 1992 and 1993, when its profits leaped 20.9 percent to $940 million and sales hit $19 billion. Its robust performance has continued this year, with a 11.4 percent surge in earnings and a 6.7 percent gain in same-store sales for the second quarter ended July 30.
Sales continued to climb solidly in August and September, with the women's division achieving double-digit sales gains, according to Hailey. "The strongest categories in the women's division are intimate apparel, women's accessories, jewelry and cosmetics," Hailey noted. "One of the things we are happiest about is that we are experiencing sales gains in all 13 categories in the women's division, which is pretty unusual."
Penney's has a knack for coming up with new concepts. For example, it's launching an exclusive eveningwear line by Victor Costa, which will be in 18 stores this month, along with an exclusive large-size sportswear line by exercise guru Richard Simmons, in stores Feb. 1.
"We don't have too many stones left unturned, and we're constantly changing," said Hailey.
The chain has recently picked up some national brands that for years refused to sell to it, such as Ultima II cosmetics and most recently, Leslie Fay. Its best-selling women's apparel national brands include Alfred Dunner, Norton McNaughton and Koret of California. Leslie Fay, Hailey noted, "is off to a good start."
A cataloger since 1963, Penney's saw opportunity when Sears, Roebuck & Co. bowed out of the business last year. The company has introduced smaller specialty catalogs, such as books for African Americans, overweight children and elderly people.
The world is Penney's next horizon: The company will open stores in Mexico and Chile next year and continues to explore markets in Latin America, besides running various operations in the Caribbean and the Mideast.

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