Aided by investment in online, mobile and cross-channel initiatives, J.C. Penney Co. Inc. has been recovering from a freefall that put the retail chain’s future in jeopardy. Today , J.C. Penney named a new CEO who will lead the company starting Aug. 1, 2015.
Marvin Ellison, executive vice president of stores at The Home Depot Inc., will succeed Myron E. “Mike” Ullman who will become executive chairman of the board for a year. Ellison officially joins the retailer Nov. 1 as president and CEO-designee but does not take on the official CEO role until August. Ullman, who had been Penney’s CEO for seven years until November 2011, returned to the top spot in April 2013 when the retailer fired Ron Johnson, the former Apple Inc. executive whose tenure at Penney was marked by sharply declining sales as he sought unsuccessfully to refashion the Penney image.
Ellison has been at Home Depot for 12 years, and in his current position since August 2008. Before Home Depot, he spent 15 years at Target Corp.
“It is a great pleasure to welcome Marvin Ellison to J.C. Penney,” Ullman says. “Over the course of his career, he has proven his ability to produce results by improving operations, building customer loyalty, and motivating his teams. His experience and leadership are exactly what we need to accelerate the progress we have made over the last 18 months.”
Ellison says Penney is “moving in the right direction and there is an extraordinary passion to win at every level of the organization. “As president and, ultimately, CEO, I will be focused on positioning the company to compete in a rapidly changing retail environment for the benefit of our customers, shareholders, suppliers and associates,” Ellison says.
Penney has indeed recorded improved results of late. In the first two quarters of its fiscal year total sales increased 5.7% to $5.6 billion from $5.3 billion in the same period a year earlier. A big part of that comes from gains in online sales, as JCP.com revenue increased more than 21% during the first half of this fiscal year to $522 million from $430 million, based on an Internet Retailer analysis of Penney’s reported results. In fact, online sales growth accounted for 31% of Penney’s revenue growth in the first half of the current fiscal year.
That represents a significant reversal for Penney, whose executives have admitted it lagged competitors in online and mobile programs, as well as in linking its stores to the web. Penney, No. 37 in the 2014 Internet Retailer Top 500, increased its web sales only 5.9% in 2013, according to Top500Guide.com, while the top 25 retail chains in the Top 500 Guide increased their North American e-commerce sales 16.7%.
However, the company made clear in presentations this month to investment analysts that it intends to continue to invest in online and cross-channel programs, as it has in the past several months.
Mike Rodgers, senior vice president of omnichannel strategy and execution, told analysts that J.C. Penney now ships online orders from 50 of its 1,100 stores in three merchandise categories, and plans to expand that program next year. “Right behind that we will do same-day pickup and after that same-day delivery,” he said, referring to programs that such competitors as Target, No. 18 in the Top 500, and Walmart.com, No. 4, have implemented or tested.
Penney recognizes that customers who shop its web site and stores are far more valuable than those that just shop in its stores, Rodgers said. “Simply by converting 10% of our store-only customers to omni-customers, that represents a potential of $1.2 billion in incremental sales,” he said. “That’s because omnichannel customers spend three times more than a store-only customer and they visit our stores or online 2.5 more times per month than store-only customers. Quite simply, omnichannel customers are much more loyal.”
The retailer recognized the importance of cross-channel shopping when it hired Rodgers in February to fill the newly created omnichannel position. He previously was chief information and operations officer at Saks Fifth Avenue, No. 38 in the Top 500.
Rodgers also noted that Penney had recently introduced a new mobile app for iPhones, with an Android version to be released in the first quarter of next year. Smartphone shoppers are an increasingly big part of Penney’s business, he noted. “Since 2012 until now, desktop traffic has dropped from 72% to 52%. Tablet (traffic has risen) 13% to 16% but mobile has gone from 15% to 32%,” he said. “By the end of this year we expect mobile will outpace desktop and tablet combined.”Favorite