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At J.C. Penney, the approach to back-to-school is anything but academic.
This story first appeared in the June 19, 2008 issue of WWD. Subscribe Today.
Next month, in a concerted and aggressive push to become hipper and shore up some merchandise holes, the chain will roll out and market four new exclusive youth-oriented brands — in juniors, private label Decree, as well as exclusive brands Fabulosity, Le Tigre, and in young men’s, American Living. The company will also start selling WhiteTag in young men’s.
Juniors, along with accessories, dresses and contemporary apparel, is among the few clothing categories Continued from page one that hasn’t cracked under the weight of the poor economy. It’s a $1 billion-plus business at Penney’s and a standout there for several years. Last year, juniors posted the best gains at the Dallas-based department store chain, and did well through Christmas.
Penney’s quotes statistics from NPD, the Port Washington, N.Y., market research firm, indicating the retailer has the nation’s biggest market share in junior denim, and the third biggest share of the junior market overall, behind Kohl’s, the industry leader, and Macy’s.
“We are looking at building on our strength,” Liz Sweney, Penney’s executive vice president of women’s, said in an exclusive interview. “Juniors is a significant growth opportunity.
“The goal is not to be third,” Sweney added. “The goal is to surpass those players out there.”
Asked if Penney’s ever unfurled five labels in the same season, Sweney replied: “I’ve been at Penney’s for eight-and-a-half years and in my time, we’ve never done it.”
For Penney’s to sustain its momentum in juniors, the marketing is critical, and becomes increasingly challenging, considering the greater complexity of the offering and the need to make the messaging clear so each label projects its own character and brand image. Penney’s declined to provide details of the marketing campaign, which is being planned, or how juniors is faring after last year’s success. With the product development and marketing organizations in high gear, it’s clear the team is anxious to score big again, though the pressure is on, considering that comparisons will be tough against last year’s store gains and this year’s deteriorating retail climate.
They are conditions far from ideal for such a major rollout of new lines, given declining same-store sales at many retailers, spiraling gas and food prices and rising unemployment. Myron “Mike” Ullman, Penney’s chairman and chief executive officer, has described the retail environment as among the worst he’s seen in his 35-year career. Of course, executives and analysts have said newness is the key to grabbing market share in good or bad times.
According to some analysts, Penney’s also needs to capture more of the cool factor that certain specialty chains have, notably Abercrombie & Fitch and Hollister. “It’s tough for J.C. Penney to be edgy enough to catch the fickle junior consumer,” said Russell Jones, a director at restructuring and advisory firm Alix Partners, which recently conducted a consumer survey on shopping preferences. “They are always interested in being cool, and cool is usually associated with something new that hasn’t been on the landscape forever.”
“We’re seeing that the junior market is becoming increasingly influenced by value and fashion. [Juniors] want both,” said Marie Driscoll, director of Standard & Poor’s retail equity research, noting that Penney’s offers these things. “The only thing that J.C. Penney doesn’t have to the same degree as the vertical brands in the mall is the coolness factor, but definitely their denim is cool.”
Even though juniors has less discretionary income than when the economy was better and there were more part-time jobs, the market remains very brand driven, Driscoll said. However, she added that Penney’s could be getting some, but not many, shoppers who are trading down from specialty players in the mall.
B-t-s at Penney’s officially kicks off July 10. That’s when Fabulosity, Decree and WhiteTag, along with the young men’s component of American Living, developed by the Global Brand Concepts division at Polo Ralph Lauren, will be set on the selling floors. Le Tigre has been in Penney’s stores since April, and the retailer has begun selling American Living in the men’s, women’s, home and children’s categories. The season runs through Labor Day.
In terms of volume, “back-to-school is not more important than Christmas. But it’s a core competency at Penney’s, and a very important part of the year — probably more so than typical department store competitors,” Sweney said.
The upcoming b-t-s program, said John Tighe, Penney’s vice president for juniors, represents “an evolution of what’s been going on for years” at the chain rather than a strategic shift. “We have a very good teen junior business, and strong market share.”
For juniors, Penney’s has adapted its three-year-old merchandising approach targeting four lifestyles: conservative, traditional, modern and trendy, and three price tiers: good, better, best. It’s designed to fill voids in the assortments and already has been implemented extensively in the women’s and home areas.
“It’s a very, very strategic methodology to determine what brands we need in our assortment,” Sweney said.
Penney’s juniors department now targets four lifestyles, which are:
– All-American, considered the lifestyle with the widest appeal and driven by denim, fashion knits, fleece and sweaters. The key brands are The Original Arizona Jean Company, Levi’s, Flirtitude, C7P…A Chip and Pepper Production, Le Tigre, which is owned by Kenneth Cole Productions, and Decree.
– Fast Track, for trendy fashion denim and “conversational” prints, represented by Fang, Underground Soul, Self Esteem and Vigoss.
– Dressy/Going Out, for evening and work clothes, including dressy separates for special occasions and the brands B Wear, Tracy Evans, Heart and Soul and Star City.
– Urban, which targets fashionable hip-hop styles including Southpole and Fabulosity by Kimora Lee Simmons.
“A few years ago, we were really ‘Mom’s store,'” Sweney said. “But with all the initiatives over the last few years, we are becoming much more relevant. Many teens really look to us. They might shop the mall to come up with style ideas and then she comes to Penney’s to get style with great prices. We are [no longer] Mom’s store. We are very relevant to the teen style.”
According to Penney’s executives, where teens go, adults follow. “Through our research, we found out how influential the teen is in the household. Teens today are much more influential on the spending than ever….They’re really style advisers for their family,” said Tighe.
What’s critical to making juniors click is the production cycle and flowing the goods in so there’s constant newness. Penney’s says its production cycle time in juniors, from the time the goods are designed to when the customer can first buy them, has been reduced to 17 weeks from 52 weeks three-and-a-half years ago. Also, there’s an improved flow, with key items coming in weekly.
Decree will be the lead label in the juniors department, and could be among the top brands at Penney’s, with Arizona expected to maintain its top position as the biggest in-house label.
While Arizona is collegiate, preppy and item-oriented, Decree will offer layering, feminine details and a greater sense of individual style and outfitting. Decree will fall into Penney’s better tier, with prices from $18 for a tank top to $38 for a five-pocket pair of jeans and $85 for outerwear. There also will be a separate Decree “accessory zone” to round out the outfitting, as well as signature fixtures, denim tables, lifestyle graphics and a platform of three mannequins. “It’s a full teenage-girl brand, head-to-toe,” Sweney said.
Fabulosity takes a more opulent, urban and evening approach, with a lot of gold looks and animal prints, and T-shirts, knit tops, sweaters, jeans, skirts, dresses, hoodies, jackets and outerwear. With items ranging from $29 to $108, Fabulosity falls into the retailer’s best pricing tier. There also will be huge pictures of Kimora Lee Simmons, the celebrity behind the label.
Penney’s perception of teens, which executives point out is based on research, seems more Richie Cunningham than James Dean. “The most interesting thing about teens is that they are really very close to their parents,” Tighe said. “Seventy five percent like to do things with their parents, and kids want to succeed. They are very much into being successful. There isn’t a rush to disassociate from their parents.”
Ken Hicks, Penney’s president and chief merchandising officer, takes the point of view one step further. “Teens have always been a cornerstone of our business,” he said. “And they are emerging as today’s key influencers of purchase decisions made by their family.”