JCPenney's Multi-Channel, Multi-Brand Vision

(MoneyWatch)  Channel integration -- and some eye-catching partnerships -- have helped JCPenney bounce back into retail relevance, CEO Mike Ullman told the National Retail Federation's NRFtech IT Leadership Summit in Colorado Monday.

With its legacy of catalog sales, Penney's did multichannel retailing long before anybody used that term. In the four years since Ullman took over as CEO, integration efforts have been extended deep into the planning, buying, merchandising, and marketing arenas. E-commerce is a $1.6 billion business for Penney's.

In the process, Chief Information Officer Tom Nealon said, Penney's has gone from a completely decentralized operation to one built on an Internet platform that allows better store visibility, nimbler pricing, and more effective coordination between planning, merchandise allocation, and messaging.

"Our executive board really gets it," Nealon told the gathering in suburban Denver. Nealon came to Penney's from Southwest Airlines two years ago. Ullman spent time at IBM earlier in his career and has a better understanding than many retail CEOs of how to "get our IT infrastructure aligned with the objectives of the company." (Perhaps to underscore this point, Ullman tooled around the convention hotel on a Segway.)

When he was recruited to JCPenney, Ullman said, "I was very uninterested in running a department store. I told the board, if you want me, we're going to have to start over."

While on the Starbucks board, Ullman said, "I watched Starbucks enable people to make decisions at the point of sale. ... Our engagement scores are higher than Starbucks today." Some $250 million in dotcom-ready point-of-sale terminals have been installed at Penneys "from our smallest store in Cutbank, Montana, to our largest store in Queens" so that all merchandise on the Web is visible to store associates.

New brands like the Sephora store-in-store continue to attract younger shoppers who like to research and buy online as well as in-store. The European cosmetic brand launched at JCPenney in 2006 and attracts Penney's youngest, most affluent, and most frequent shoppers, who spend an average of 45 minutes in the department. "The customer loves it," Ullman said, and Sephora represents 70 percent of beauty sales in the 85 Penney's locations where it operates a store-in-store.

As the former head of LVMH Moet Hennessy Louis Vuitton, which owns Sephora, Ullman connected the companies. Similarly, Ullman's tenure on the Polo Ralph Lauren board helped Penney's seal a deal to launch the RL American Living "lifestyle concept." Forty categories of clothes, accessories, and home fashions hit stores last spring, some better-received (women's and kids' clothing, window coverings, handbags) than others (menswear).

"We still think it can be a billion-dollar brand," Ullman said.

Image of J.C. Penney store in Astoria, Ore., by bellav via Flickr