Browse Tag: jcpenney

Beauty Battles: Sephora And JCPenney Deepen Partnership

Rows of lipstick

With revenue expected to exceed $62 Billion in 2016, the US cosmetics industry is a retail powerhouse. While $17B of that amount generated online in 2013 suggests this brick-and-mortar retail segment is susceptible to online pressures just like most retail sectors are, the growth in the overall market segment — plus the product discoveries customers need to make — seem to ensure that foot traffic and customer time spent with new product offerings will remain a key factor driving space needs going forward.

In fact, one struggling anchor retailer is doubling down on the power of the makeup counter to help address its own foot traffic declines. This November, JCPenney’s flagship store in Salinas, CA’s Northridge Mall will open 3,000SF of its space for a new Sephora store-inside-a-store. 3KSF comes in at double the usual space outlay for Sephora stores within JCPs. As Donna Mitchell at NREI writes:

Larger than the typical 1,500-sq.-ft. location, the store is one of 60 new Sephora inside JCPenney locations that are set to open this year. The move is big because it marks 10 years since the Plano, Texas-based fashion retailer began opening Sephora units inside JCPenney stores in 2006. It means expansion in one of the few retail categories that post consistent sales increases through bricks-and-mortar locations, and it exploits an important competitive advantage over, according to industry observers.

“Take companies like Ulta Beauty or Sephora. They are insulated from,” says Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment-banking firm headquartered in New York City. “Amazon can’t put makeup on you. They are doing something Amazon can’t do. That is a very big deal.”

Both Ulta, which plans to open 100 stores in fiscal year 2016, and Sephora pamper shoppers with complimentary consultations and mini-makeovers. Those services are not just tertiary in the battle to stay competitive. Ulta Beauty, for instance, posted a same-store sales increase of 15.2 percent for stores and e-commerce, along with a 23.7 percent increase in net sales.

Beautiful Numbers

The U.S. make-up market is expected to maintain positive growth through 2018, with an anticipated compound annual growth rate of 3.8% for the five-year period of 2013-2018, reaching $8.4 billion. Similarly, the global fragrances and perfumes market is expected to experience positive growth through 2019, with a compound annual growth rate of 2%.

The largest category in the cosmetics industry is skin care, accounting for nearly 35.3% of the global market in 2014. The products in the global skincare segment create a $121 billion industry. Hair care products represent a large segment of the beauty market too, with sales reaching $11.6 billion in the U.S. in 2014.

JCPenney’s Conference Call: Salvation Lies Online

Beleaguered retailer and mall anchor JCPenney’s CEO Myron Ullman may have stopped his company’s bleeding, but will it be mark the end of JCPenney as a brick and mortar brand?

In a recent summary at Motley Fool of JCP’s recent shareholder conference call, hints in the tea leaves about JCP’s future abound — and they don’t necessarily look great for the physical store side of the business.  Andrew Marder writes:

J.C. Penney in the long run
Talking about J.C. Penney’s long-term plans, Ullman said during an earnings conference call that the retailer is “focused on refining [its] merchandizing and marketing strategies, in order to steadily grow sales and significantly improve gross margins.” This is where the rubber hits the road and investors find out if Ullman can make J.C. Penney into a new, better business.

The company’s biggest long-term problem is that J.C Penney is a mall-based company. As sales move increasingly online and mall traffic dries up, J.C. Penney needs to shift in order to keep itself afloat. The company’s current move is to push for more online sales. Ullman sees that: In the last quarter, online sales rose 25.7% compared to the same period in the previous year.

Ullman has worked to bring J.C. Penney’s online and physical stores more in line with each other. In November he said, “The success of reflects the reintegration of store and online buying, planning, and allocation.” When he first came back to the company, Ullman said that there was “little synergy between stores and online” — a situation he’s worked to improve.

That seems like a sign that Ullman’s head and strategy are in the right place. This company still has a long way to go, but it’s clearly making the right moves. There are very few people who thought J.C. Penney could bounce back from the Johnson reign, and I wasn’t one of them. However, Ullman has convinced me that he knows what his customers need and that he can give it to them while still making money. I’m excited to see how his plan plays out.

Retail space professionals are reminded: losing an anchor can easily be a prelude to losing a whole ship.

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JCPenney Announces Closure Of 33 Stores

English: JCPenney store at the Holiday Village...

Citing 33 stores as “underperforming”, retailer JCPenney announced the closure of nearly three dozen stores and the elimination of 2,000 jobs late on Wednesday. The wave of closures hits 21 states with Wisconsin the hardest hit, and is intended to produce $65 million in savings for the beleaguered retailer.

“As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly,” said Myron E. (Mike) Ullman, III, chief executive officer of JCPenney.  “While it’s always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success.”

The full list of closures is below.