Marvin Ellison isn’t lacking ideas on how department stores can be revived.
As the J.C. Penney chief executive officer sees it, department stores have to get wise to the “accelerating” casualization of America, consumers shopping closer-to-need year-round, the opportunity to provide new kinds of services, and the importance of omnichannel initiatives. And of course, store closings should be part of the agenda in many cases.
Asked how department stores can be fixed, Ellison replied: “The conventional wisdom that the apparel issue is driven by what’s happening with e-commerce is not true. It’s part of it, but the bigger part, specifically in the U.S., is the massive shift with how consumers are dressing and shopping. Consumers are buying closer to the occasion. If it’s Mother’s Day, Easter, Father’s Day or even Christmas, they’re buying closer to the occasion.”
On the casualization of America, Ellison said, “From traditional department store retailers, consumers want more newness and relevant trend and a higher degree of casualization,” versatile enough to go from work to play. “That is one of the key reasons why fast-fashion and off-price are winning. It’s about relevant trend, more newness. Retailers have to create more newness and give customers more reasons to come back more often.”
Regarding America’s overstored retail landscape, “What is happening today, including the 138 stores that J.C. Penney is closing, is a rationalization of the fact that we have too many stores. When I was in the home improvement space we concluded in 2008 that we and the industry were overstored and the leadership made a strategic decision to start to drive productivity in existing locations. No other retail segment identified that as effectively.”
Ellison also advised advancing omnichannel services and operations. “The challenge is there is limited capacity to deliver and fulfill online product at the rate that online is growing,” Ellison said. “You have UPS, Fed Ex and the U.S. Postal Service delivering e-commerce product. For argument’s sake, if e-commerce doubles in the next few years, there is no capacity for them to double their ability to deliver the stuff. They just can’t do it. The modernization of that enterprise has been lacking for quite a while. Retail companies that do the best job of combining their e-commerce platform with their ability to provide pick-up-in-store and ship-from-store are going to be the winners.”
Ellison also advised that as e-commerce and omnichannel evolve in the retail equation, “You create services like Sephora inside J.C. Penney, salon services, services where customers will get some level of consultation, like in window treatments, water softeners, major appliances, furniture. We are piloting a simple smart home system in partnership with Samsung,” testing some small shops in stores selling simple devices, like a camera monitor on doorbells, and programming music or lights from a smart phone. “We have a predominant female customer and one of their key concerns is safety and security.”