Marvin Ellison, J.C. Penney Co. Inc.’s president and chief executive officer designee, is big on body language.
“In retail, it’s very important,” said Ellison, discussing store associates. “You can know exactly what kind of day they are having by the body language. The customer can see it. Morale is tangible.”
On Thanksgiving, he toured some stores, checking the traffic and the product presentation, and the demeanor of workers — looking for people engaged, moving around, getting things done, smiling.
“I was surprised they were in such great moods,” despite working the holiday. Plus, they started at 5 p.m. versus 8 p.m. a year ago. Management debated when to open, Ellison said, yet associates “really petitioned us to open at 5. They wanted to win.”
He came and went through Penney’s stores unannounced. “I still have the luxury of being able to walk around the stores pretty anonymously. They don’t recognize me.”
It’s clear Ellison, who joined Penney’s on Nov. 1 to succeed Myron “Mike” Ullman next August, is easing into the job via an extended transition, and that shaping the customer experience will be on his agenda as the $12 billion middle-market department store furthers turnaround efforts.
“It’s less about me coming in and fixing something broken, and more about me taking something that’s in place and working to improve and refine it and taking some lessons learned at Home Depot and marrying some of those ideas,” Ellison said in an interview.
“At the end of the day, the customer has a lot of choices where to buy a dress, a shirt, a watch. The question is which retailer will create a service equation to satisfy customers so they visit again. I believe customers for the first time in a couple of years are coming back [to Penney’s] this holiday season.”
Penney’s has identified as key growth opportunities omnichannel, the home store and the center core, where the company is lacking in market share. Two stores with a new format, Bay Plaza in the Bronx and Gateway Center in Brooklyn, display updated, bigger areas for center core — fashion and fine jewelry, accessories, intimates, footwear and Sephora — with full assortments of handbags and accessories from Liz Claiborne, Monet, Nicole by Nicole Miller, Rosetti, Lulu by Lulu Guinness, Relic and MixIt.
In fashion jewelry, displays with mirrors, LED lighting, color stories and coordinating earrings and bracelets, encourage multiple transactions. All-glass watch cases illuminated by LED show product on all sides.
In 12 locations, Penney’s is testing a new shoe format featuring separate men’s, women’s and kids’ footwear sections adjacent to men’s, ladies’ and kids fashions, rather than one big footwear area.
“We are not going to roll out anything unless it’s piloted and unless the metrics in the pilot hit the hurdle rate in a way it doesn’t disrupt the business and gets positive customer feedback and associate feedback,” Ellison said, implying a cautious approach to change, to avoid the mistakes of the recent past.
Penney’s marks Ellison’s first ceo stint, though he has turnaround experience, having been instrumental in reengineering the customer experience and service at The Home Depot, where he worked for 12 years, last holding the job of executive vice president overseeing the U.S. fleet of 2,000 stores.
In the mid-Aughts, Home Depot suffered from staff cuts, reduced training, declining service, an overcomplicated reporting structure and misplaced priorities.
“It was every man and woman for themselves, so to speak,” Ellison said. “Sixty percent of the payroll went to non-service duties, like unloading trucks and stocking shelves, and 40 percent went to driving sales. In a little over three years, we literally reengineered how we spent payroll in the stores to 60 percent service, 40 percent nonservice, and dramatically simplified activities in the stores, so associates would not get confused. We became very specific on our priorities. We allowed our associates to take care of customers.”
Earlier at Home Depot, Ellison was president of its northern division, responsible for the sales and operations of more than 700 stores in 21 Midwest and Northeastern states. He was also senior vice president of global logistics for the home-improvement chain, and vice president of loss prevention. Prior to joining Home Depot, Ellison spent 15 years at Target Corp., in various roles, including corporate director of asset protection.
Ullman recently characterized Penney’s as in the final phase of its turnaround, which begs the question of when Penney’s will actually be deemed “turned around.”
According to Ellison, that happens once all the elements impaired by a failed strategy are addressed and financial trends start to swing in the right direction. “That’s when we shift from turnaround mode and start talking about taking the company toward profitability,” Ellison said. “We don’t want to be in an eternal turnaround mode.”
While he will have to defer to Ullman for a while, Ellison said there are advantages to having a long transition. “It’s important for me to go through Christmas and have a chance to see if the strategy is working and work on a postmortem. It would be more difficult coming [right] in and taking on all aspects of the ceo role,” Ellison said, pointing to the complexity of the position, from running the company and setting strategy, to managing Securities and Exchange Commission requirements and interacting with the board. “We said, ‘Let’s take advantage of a unique opportunity to learn from someone. Mike is still here.’”
And Ullman will still be around after August, when he becomes executive chairman for a year.
Ellison acknowledged the learning curve ahead pertaining to fashion and merchandising, considering his strong store operations, supply chain and logistics background.
“Absolutely. I respect the fact that there will be some things I will have to learn,” Ellison said. “I am planning trips around the country and the world to visit key suppliers, to understand the sourcing and branding process.
“When I joined Home Depot, there was no one worse with home-improvement knowledge than me. With time and effort, you can learn a lot.”
Skills learned at Target and Home Depot apply to Penney’s and other retailers. “You still have to understand customers and you have to be very aggressive in maneuvering against the competition.”
He’s had a connection to Penney’s since childhood. Growing up in western Tennessee, his parents took him to Penney’s once a year for back-to-school clothes.
“I grew up in a family with six siblings and two working-class parents who were the salt of the earth. Going to Penney’s was a special treat. It felt like a neighborhood store. We would have one shopping visit, really for school clothes, for five pairs of pants and five shirts, one for each day of the week. You had to maintain those clothes because we could not afford anything else. My mom had this delicate process of buying clothes large enough that we’d grow into them, and not so large it would be falling off.”
More often than not, Ellison wore Penney’s private labels. National brands were too expensive for his family.
Now he can afford Zegna but he’ll still sporting Penney’s. “If we are going to sell it to customers, it’s important for me to wear it so I can have an opinion about style, quality and fit, head to toe. I have some J. Ferrar in my closet. I like the slim cut, and it’s modern and trendy.”
Regarding his own style, “It’s a combination of modern and kind of classic. I tend to be one who overdresses more than underdresses. Taking my wife out for dinner on a Saturday night, it would not be uncommon to see me in a suit and tie. At Home Depot, they gave me a hard time. I wore sport jackets, dress slacks and dress shoes, not khakis. I love Gap — it’s a good company — but my personal style is more dressy.”
Among the retailers he admires most is Ikea: “They’re great at providing value, style, trend and design.” He also singled out Costco for doing “an incredible job of leveraging private brands to the highest level,” noting that Costco’s Kirkland brand touches a range of categories from wine and clothing to health and beauty, and maintains high quality. “Costco makes shopping an adventure,” Ellison said. “I go there to pick up one item and before I know it, I’ve got two carts of stuff.”