JCPenney Emphasizes Growth of Online Sales
JCPenney's Upcoming 2Q15 Results: Should Investors Be Optimistic?
Focus on online business
Department stores are investing in the growth of their online businesses. They recognize the importance of delivering a convenient online shopping experience for their customers. According to L2, a benchmarking and education firm, Nordstrom (JWN) is the most digital-savvy department store on L2’s Digital IQ Index for department stores, with a digital IQ of 148. Macy’s (M) and Bloomingdale’s rank second and sixth, respectively, in the Digital IQ Index. Sears (SHLD) ranks third, and JCPenney (JCP) is fifth.
JCPenney makes up more than 1.0% of the portfolio holdings of the SPDR S&P Retail ETF (XRT) and 0.02% of the iShares Russell 1000 Value ETF (IWD).
Initiatives to grow online sales
To ensure faster delivery, JCPenney plans to introduce buy online and same day, pick up in store in ~250 stores in 12–15 major markets this year. The company also plans to launch a same-day delivery option in select markets in 2016.
JCPenney has also launched its app (application) on the iPhone, which allows consumers to conduct an image search based on the photos of an item or the barcode. It also locates a similar item on the company’s website.
Investing in online assortment
In 1Q15, JCPenney’s online sales saw strong sequential growth, driven by enhanced online product offerings and improved search and navigation. The company is now restoring its inventory investments to pre-2012 levels. An expanded inventory helps drive higher customer conversion and satisfaction. The company has also increased the number of stores used to fulfill online orders by more than 160 stores.
Macy’s, Kohl’s, and JCPenney are no longer reporting their online sales separately. These companies follow an omnichannel approach to their businesses that integrates the physical and online channels. Strategies introduced in one channel have a positive impact on the other. For instance, according to JCPenney, there’s a 20% chance that customers who take advantage of the buy online, ship to store option will purchase additional merchandise when they visit a store. The company’s initiatives in home merchandise, like bringing back the printed home catalogue, have positively impacted its online as well as store sales.
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