I had a few occasions chatting with the IT people of the company in the past few years. They were reluctant to adapt to the on-line trend of the retail market. One year, they wanted to expand their on-line catalog business; the next year, they closed the on-line catalog business and moves the majority of their IT people overseas in the following years. This time, it appears that the new SVP, Mike Amend, hired from Home Depot, is ready to face the on-line retail business challenges.
This article highlights a lot of positive actions for the company to transition itself from a traditional retail business to an on-line one.
Recognizing its market strength: Research from comScore tells Penney that its customers have household incomes of $60,000 to $90,000, and they tend to be hardworking, two-income families living both in rural and urban settings. They don’t have the discretionary income to commit to membership fees.
Last month, Penney added the ability to ship from all its stores, which immediately made about $1 billion of store inventory available to online customers and cut the distance between customer and delivery.
About 80 percent of a store’s existing inventory is eligible for free same-day pickup.
Last week, it offered free shipping to stores with no minimum purchase. Large items like refrigerators and trampolines are excluded.
JCPenney.com now stocks four times the assortment found in its largest store by partnering with other brands and manufacturers.
More than 50 percent of its online assortment is drop-shipped by suppliers and doesn’t go through Penney’s distribution. Categories added range from bathroom and kitchen hardware to sporting goods, pets and toys
JCPenney.com now has one Web experience regardless of the screen: phone, tablet or desktop.
Its new mobile app and wallet include Penney’s new upgraded Rewards program. Customers can book salon appointments on it. The in-store mode has a price-check scanner.
Penney set out to “democratize access to the data,” so that not only the technical staff could understand it, now dashboards and heat maps allow the artful side of the business — the merchants — to measure such things as sales to in-stock levels or pricing to customer behavior.
Having an effective supply chain has always been key to retail success. Whether you call it micro-merchandising or the customer-centric supply chain, the challenge has traditionally been to quickly identify trends or activity in a store that is outperforming the norm, and rapidly roll this out to all stores with similar attributes and customer behaviours. Indeed, much of the ‘flair’ that separated well- from poorly performing retail operators was down to the ability of some key individuals to spot trends, clusters and patterns that drove better understanding of customer behaviour, and act upon these insights to deliver to customers’ demands.
This macro-level insight is, however, no longer good enough. Today, retailers need to be able to understand not only how items are performing across the entire retail estate as well as within individual stores and spot trends and patterns accordingly; they also need to be able to marry this micro-level performance to geographic and demographic information to reflect the demand from a particular store’s customers. And, they need to be able to forecast how those same items will be performing in weeks and months to come.
This is the capability that is required to truly deliver today’s customer-centric supply chain. But it demands a level of detail simply too difficult for humans to manage. Software solutions are designed to raise the average performance level by helping the poor or below average operators benefit from the expertise of the higher performers and placing this supporting technology in the hands of those key individuals who would act as district or regional manager.
But the needs of today’s customer-centric supply chain have outpaced even the majority of these solutions.
Flowcasting has often been referred to as ‘the Holy Grail’ of demand driven supply chain planning (and rightly so).
Driving the entire supply chain across multiple enterprises from sales at the store shelf right back to the factory.
So is Flowcasting a retail solution or a manufacturing solution? Many analysts, consultants and solution providers have been positioning Flowcasting as a solution for manufacturers.
While it’s true that some manufacturers have achieved success in using data from retailers to help improve and stabilize their production schedule, the simple fact is that manufacturers can’t achieve huge benefits from Flowcasting until they are planning a critical mass of retail stores and DCs where their products are sold and distributed.
For a large consumer packaged goods manufacturer, this means collecting data and planning demand and supply across tens of thousands of stores across multiple retail organizations, all of which have their own ways of managing their internal processes.
Traditional mall retailers like Gap, J. Crew, and Abercrombie & Fitch have faced declining sales in recent years.
And the problem might be signaling something even more troublesome than dowdy apparel. Instead, it is a total shift in how teen consumers think.
Young people want to purchase experiences rather than actual stuff, and when they do buy clothing or shoes they want to be able to showcase purchases on social media.
“Their entire life, if it’s not shareable, it didn’t happen,” Marcie Merriman, Generation Z expert and executive director of growth strategy and retail innovation at Ernst & Young, said to Business of Fashion. “Experiences define them much more than the products that they buy.”
The only apparel young people want is clothing that can translate into an experience on Instagram or Snapchat.
Given their limited budgets and frugal tendencies, they’re more likely to purchase lots of clothes at fast fashion retailers, like cutting-edge Zara or cheap Forever 21, so that they have ample images to share.
Zara is a fast fashion retailer that has achieved staggering success since its inception in 1975. Compared to its Zara peers in retail, Zara has one practice that helps contribute to its competitive advantage: an agile project management oriented supply chain.
Agile Project Management
Broadly, agile project management is based on the 12 principles brought forth by the agile manifesto. This manifesto forms the basis for a project management theory that focuses on iterations, adaptations, collaboration, and constant improvement. As opposed to many other project management designs, agile project management is a non-linear approach to problem solving that hopes to provide flexibility and adaptability, without having to go back to the start with each iteration undertaken.
While originally developed for software and technology problem solving, agile project management has gained acceptance in the supply chain industry for its ability to help companies adapt to market dynamics. In the same way agile project management helps a software company develop non-linear solutions to problems, agile project management allows a supply chain to creatively adapt to market evolutions without having to disrupt supply chains from start to finish. Zara has used this agile supply chain to earn a distinct and unmatched advantage in retail.