At more than 100 years old, JC Penney may look like an old-school retailer. But seeing its revenue decline by more than $4 billion between 2011 to 2015 was a powerful incentive for an old dog to learn new tricks, and the retailer is betting big on a hybrid cloud implementation to fuel its turnaround.
The disastrous decision by former CEO Ron Johnson to abandon its traditional cost-conscious customer base in the hopes of attracting more upscale shoppers sent the company’s sales and stock price tumbling, eventually bumping the retailer off the S&P 500. In response, the company brought back erstwhile CEO Mike Ullman on an interim basis to right the ship.
“JC Penney went through some challenges that alienated our core customers for a lot of reasons,” says Raj Lakshmaihgari, JC Penney’s vice president of Oracle and corporate solutions, who spoke Tuesday at the Oracle OpenWorld customer event in San Francisco. “We needed to get back to what our customers wanted.”
The company found that what customers wanted was a return to JC Penney private brands like St. John’s Bay and Liz Claiborne, mixed with a smattering of higher-ticket national brands like Levi’s and Nike. Customers also wanted more pizzazz in their shopping experience, with additions like in-store Sephora shops, and exclusive and well-priced collections from popular brands like shoemaker Aldo. And most of all, they wanted to find the same products and consistent service across both online and in-store retail channels, regardless of how they accessed the products.
This so-called omnichannel shopping experience is the holy grail of customer experience marketing (CX) today, and implementing it requires a massive makeover for the retailer, both operationally and on the technical front. Newly installed CEO Marvin Ellison said in a Wall Street Journal article that the company needs to work on what he called "the science of retailing," pointing to problems with inventory replenishment and e-commerce in particular.
For example, the company treated online and store merchandising as two separate businesses. It lacked real-time or predictive modeling tools, or the ability to talk to customers across multiple channels like online, mobile, or social platforms. Heavily customized legacy applications created information silos that blocked the company’s ability to build a single view of the customer.
“We needed to quickly get our arms around a very complicated scenario and simplify,” Lakshmaihgari says. “With that in mind, we are moving to a hybrid cloud model.”
The company is midway through deploying CX and supply chain applications on Oracle PaaS and IaaS services, which will help the company move quickly on urgent projects like omnichannel, he says.
The retailer is using Oracle Responsys Marketing Cloud Platform to identify and market to customers across different channels, and has also deployed supply chain management, customer experience, revenue management, and billing applications. (JC Penney also plans to soon add modules for procurement, social media, and customer service.) The company will be able to build a personalized customer experience by drawing information from multiple sources, all of which are tied into the same basic system.
The project should wrap up in the second quarter of 2016, but JC Penney is already seeing early results. Sales through JCPenney.com have grown over the past two quarters, with one-third of online customers taking advantage of omnichannel capabilities like buying online and having their purchases shipped to a nearby store.
Another bright spot is online marketing campaigns, where revenue per e-mail has increased by 122% and conversion rates per unique visitor have increased by 25%. The bottom line reflects these IT efforts; although still losing money, JC Penney beat earnings expectations for six out of the last seven quarters, and sales continue to rise.
Find out more on Oracle.com: