J.C. Penney Co. Inc.’s stores are essential to its e-commerce strategy—and vice versa.
Consider this: 70% of J.C. Penney store shoppers visit JCP.com before they visit the store. Plus, more than 50% of online orders go through a store in some way, such as buying online picking up in store, shipping an online order from a store, having an online item returned to a store or having an item ordered online from a store.
J.C. Penney did not break down how shoppers utilized in-store pickup for online orders during the holiday season, but on Friday CEO Marvin Ellison, announced in a statement the retailer is “encouraged by a very strong performance in our e-commerce business, evidenced by double-digit growth. This validates the strength of our omnichannel strategy as efforts to improve site functionality, expand fulfillment capabilities, offer flexible shipping options and introduce a broad assortment of new product categories were instrumental to this digital sales growth.”
The retailer, is No. 33 in the Internet Retailer 2016 Top 500 Guide, did not release holiday sales figures except to say that its comparable-store sales, which include e-commerce sales, during the November-December period declined 0.8%. “The first three weeks of November proved to be challenging in stores, consistent with the trends in the broader retail industry,” Ellison said. “However, the business improved and overall comp sales for the six-week period from Thanksgiving week through the end of December were positive.”
Being an omnichannel retailer is part of the strategy at J.C. Penney, says a J.C. Penney spokeswoman. For good reason: Omnichannel customers, or consumers that shop via multiple channels, spend twice as much with J.C. Penney annually compared with store-only shoppers or online-only shoppers, she says.
“[An omnichannel] process allows a 114-year-old retailer to leverage all of our assets—our stores, associates, our inventory, our digital platform and supply chain—to reduce our costs and serve our loyal and valued customer,” she says.
Among JCP’s 1,000-plus stores, 250 can use their inventory to fulfill online orders and ship them to consumers, a spokeswoman says. “We understand that leveraging our stores allows us to have a lower delivery cost, to reduce the delivery time for customers and also drive traffic,” she says.
Online orders drive store traffic via the retailer’s buy-online, pick up in store option, which is how almost 40% of JCP.com orders are picked up. This helps the retailer’s bottom line, as the retailer doesn’t pay shipping costs for those orders, she says.
This service also helps boost the retailer’s sales as 40% of customers who buy online and pick up in store make an additional in-store purchase of more than $50 when picking up their order. JCP.com’s ship-to-store option tells a similar story. Online shoppers can choose to have an item shipped to a local store if the store doesn’t have the product in stock, instead of paying for shipping to their home, which comes with a $99 free shipping threshold. If the product costs more than $25, shipping to a store is free. Almost 33% of web orders placed in stores are picked up this way, and 20% of those customers make an additional in-store purchase of more than $50. Also, more than 90% of online order returns are processed at a store, the spokeswoman says.
While these store pickup options allow consumers to collect an online order without paying shipping in many cases, the retail chain is also working on wa two-day standard shipping option available to 95% of the U.S. for this year. Currently standard delivery time is three to five days.
Mobile also is key to J.C. Penney’s omnichannel strategy, as more than 50% of JCP.com’s traffic stems from mobile devices. The retailer also launched an app at the end of June 2016, she says.
The key now is for J.C. Penney to encourage more loyalty among its omnichannel customers.
“Today, we have approximately the same number of active customers as we did in 2011,” the spokeswoman says. “However, there’s an opportunity to increase their frequency and amount they spend on every transaction.” Internet Retailer estimates that 50% of JCP.com shoppers were repeat shoppers in 2015, according to Top500Guide.com.
Besides its omnichannel initiatives, the retailer aims to increase purchase frequency and loyalty in several ways, such as selling exclusive brands and offering services at its stores, such as eye exams, photography, and hair and makeup demonstrations from bloggers and Pinterest influences.
J.C. Penney also offer prices matching and in November it rolled out a “lowest price guarantee” in which the retailer will discount a price-matched item an additional 5%, to reinforce to a shopper that she is getting the best price, the spokeswoman says. The retailer does not yet have details to share about the program’s impact.