What J.C. Penney Is Doing This Holiday Season to Win Back Shoppers

NEW YORK (TheStreet) -- J.C. Penney (JCP) was all but dead two years ago when holiday sales plunged 32%.

Now, the department store retailer is revamping the look of its stores and improving its inventory of apparel and novelty items in hopes of beating last year's 2% holiday sales gains. J.C. Penney expects fourth-quarter same-store sales to increase by 2% to 4% this year.  
   
Shoppers visiting Penney's will see more Levi's jeans, St. John's Bay sweaters, tech-centric toys and seasonal attire. 

One of this year's innovations is the "buy online, ship from store" program, which will be tested at 50 stores around the country to reduce the likelihood of missed sales because items were out of stock. Other chains already have a similar program, including Macy's (M) , Target (TGT) and Best Buy (BBY) .

TheStreet recently visited one of the test stores at Roosevelt Field Mall in Garden City, N.Y., where we met with manager Garth Simpson.

At the upscale mall, a team of four associates were equipped with new mobile devices that also act as registers. The devices receive an alert each time an online order is placed. The merchandise is then gathered from the store's inventory and then shipped via UPS (UPS) to the customer.  Shipments are delivered within two days (the only time frame available; prices vary by location).

Simpson pointed out that the program is limited to basic apparel, including shoes, lingerie and outerwear. An expansion to more categories, said Simpson, would require an increased number of associates at the store level.

There is also a greater "depth of ownership on key holiday items," said Simpson. This means there will be more merchandise in the store that have proven to be big sellers so far this year, such as St. John's Bay and Nike apparel. Last holiday season, J.C. Penney was still restoring inventory levels in classifications the consumer wanted to buy, such as private label St. John's Bay, which was removed from the store as part of former CEO Ron Johnson's bid to make the retailer more upscale.

"We brought back key item basics and popular private brands that customers wanted, while editing out unproductive brands that weren't resonating," said CEO Mike Ullman on J.C. Penney's fourth-quarter 2013 earnings call, highlighting the changes the business was undergoing during the holiday season.
  
Simpson pointed out many of the differences during TheStreet's tour of the store earlier this week. Employed at J.C. Penney for 18 years, the manager has climbed through the ranks of store associate and survived the failed tenure of former CEO and Apple (AAPL) executive Johnson.
 
Here is what else TheStreet found that will be different at J.C. Penney this holiday season vs. 2013. 

 
     
   
   
1. Wider Selection of Electronics and Toys This Year 

According to Simpson, "our gift selection varies from year to year based on industry trends, and we traditionally offer unique tech gifts."  It's just that this year, J.C. Penney will be selling more tech accessories throughout the season, including Bluetooth wireless headphones and digital breathalyzers. 
    

 
   

2. More Impulse Holiday Gifts   
     
J.C. Penney has created an ugly sweater destination in its stores this year to pack some intrigue into its apparel assortment. The collection includes sweaters, hats, scarves and pajamas, and is tailor-made to encourage photo sharing by customers on Twitter (TWTR) and Facebook (FB) .
      


  

3. Traditional Furniture Styles Are Back En Vogue
   
According to Simpson, J.C. Penney's "furniture selection last year consisted of mostly modern items, with a smaller selection of traditional pieces." This time around, J.C. Penney has infused more traditional, neutral tones into its furniture to cater to a wider audience, while bringing back a greater quantity of recliners.


 

4. Traditional Colors Are Back in the Apparel Section 
 
In apparel, J.C. Penney has committed inventory dollars to more holiday red for its dress and blouse collections for females. When asked if J.C. Penney did not offer the color red a year ago, Simpson remarked, "We have always carried red in a variety of styles, however this year it's more prominent."
   


  
  
5. Top-Selling Departments Are Easier to Find  
    
With days until the unofficial start of the holiday shopping season, J.C. Penney corporate has allowed a store leader like Simpson to overhaul where top-selling merchandise is situated on the sales floor. The goal: Tempt the consumer as soon as they hop off an escalator or head to the cash register to pay.  

The Nike (NKE) athletic wear section pictured above was once occupied by golf attire, which was moved to the back of the store in a day by associates. "In our store specifically, Nike has a higher (sales) penetration compared to golf," noted Simpson.  He added that "the move is specific to this location, and is not a company directive."
  


   
 
6. Gift Cards Are More Seasonal
   
On Black Friday, from 6 a.m. to noon, Target's (TGT)  customers can purchase gift cards up to $300 at a 10% discount. This is the first time Target has ever offered a discount on its gift card purchases. Unlike Target, J.C. Penney will not be discounting its gift cards on Black Friday.

But, the company has plastered more seasonal pictures, such as Santa and reindeer, on its gift cards this year as opposed to last year. Said Simpson, "This year we have a larger variety of styles compared to last year."

Macy's offers a similar incentive. When a person opens a Macy's card, he receives a 20% new account discount for in-store and Macys.com merchandise purchases made on the card.

Ultimately, giving consumers discounts on name brands when opening a card is one way to drive the penetration and income mentioned by J.C. Penney's Record.
       
 

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates PENNEY (J C) CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PENNEY (J C) CO (JCP) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself."

You can view the full analysis from the report here: JCP Ratings Report

 

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