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J.C. Penney Transformation: Two Months In

BY Marianne Wilson

J.C. Penney is in the very beginning of its transformation. But the first component of the strategy — a new pricing model that jettisoned hundreds of promotions in favor a three-tier model — in already in place. And not surprisingly, experts are weighing in.

Citi retail analyst Deborah Weinswig predicted in a recent note that Penney’s revenue will decrease 7% this fiscal year as shoppers long used to seeing big discounts and promotions seek out such rival retailers as Macy’s. She expects same-store sales to fall 9%, more than she originally anticipated. For the full fiscal year, Weinswig expects total sales to decline to $16.06 billion, down from $17.26 billion the year before.

J.C. Penney shoppers interviewed by Citi liked the new pricing, but two-thirds weren’t aware of it. Once they were informed about the strategy, 26% said they would shop Penney’s more often, and 8% said they planned to shop there less.

Despite her less-than-stellar outlook for this year, Weinswig believes the chain’s new strategy is likely to catch on with consumers with time. Her advice: stay the course.

"We believe our findings demonstrate that the strategies announced to transform (Penney’s) business are the right actions to take and will resonate well with consumers over time," she wrote.

A similar point of view was offered by JP Morgan. After visiting stores in four regions, JP Morgan said it believes J.C. Penney’s store experience is greatly improved, but that near-term sales trends since the pricing change (which went into effect on Feb. 1) look softer than initially expected. However, the firm said patience is required for the company’s turnaround.

J.C. Penney hasn’t said all that much about how the pricing changes have impacted its business to date. The chain will report its quarterly earnings in May.


More As I See It entries.

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REI names new leadership for IT, e-commerce

BY CSA STAFF

SEATTLE — Recreational Equipment Inc. haspromoted Bill Baumann and Brad Brown to SVP information technology, and e-commerce and direct sales respectively. In addition, Kathleen Peterson has been named VP REI Private Brands.

"Bill and Brad’s promotions recognize the strategic importance of the information technology and e-commerce divisions to provide the infrastructure required to support REI’s growth over the next five years," said Brian Unmacht, REI’s EVP. "Kathleen’s remarkable 25-year career with premier global brands serves her well as she leads the expansion of our award-winning branded gear and apparel offerings."

Bill Baumann joined REI in 2008 as VP information technology. He leads the rapidly-growing division that is responsible for business application services and technical support, including application development and support, personal computing, technical services and networks. Baumann is also focused on ensuring that REI’s technology will drive competitive advantage in support of REI’s growth.

An REI leader since 1998, Brad Brown joined the co-op as VP information technology. In 2006, he became VP e-commerce. In his role, Brown oversees REI’s two e-commerce stores, REI.com and REI-outlet.com, and leads digital strategies to support sales, community engagement, outreach and membership initiatives. He also partners with the company’s retail leadership to leverage REI’s multi-channel approach that allows customers to shop with REI whenever and however they wish.

Following a career with adidas and Polo Ralph Lauren, Kathleen Peterson joined the REI Private Brands division as director of sourcing in 2007. She was promoted to divisional VP in August 2011. As VP REI Private Brands, she leads the design, development and commercialization of all REI-brand and Novara branded products, and industry collaboration in product stewardship. She replaces Lee Fromson, who was recently named SVP merchandising. REI’s in-house team develops award-winning gear, apparel and bikes sold exclusively by the company under the REI and Novara labels in the categories of camping, hiking, cycling, urban lifestyle, travel and general outdoor recreation.

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Wireless Workstations Save Time and Labor

BY CSA STAFF

By Christine Wheeler, [email protected]

Thanks to wireless technology, carts with on-board power supplies are opening up new frontiers of efficiency, productivity, and profitability in retail stores and distribution centers. These mobile powered workstations (MPWs) carry computers, barcode scanners, and printers of all kinds, reducing foot travel and paperwork wherever they go.

Capitalizing on the benefits of auto-ID technologies, MPWs integrate a facility’s software with wireless devices to establish mobile stations for barcoding, label-printing, and so on. In many enterprises, countless hours are wasted as employees walk to and from a deskbound computer where they log information into a database, print labels/orders, etc. Often, these employees are merely keying in or confirming data they have previously written on paper at the work site — a classic redundancy of effort. In contrast, an employee operating an MPW has continuous, paperless, real-time access via warehouse management systems (WMS), enterprise resource planning (ERP), or automated data collection (ADC) software from anywhere in the facility.

Because an MPW can carry a computer and relatively heavy peripherals, such as a high-volume label printer, it is more versatile than a handheld scanner or thermal printer. If you already own the computers that the carts will carry, it is also less expensive than converting to handhelds. An “on-demand” high-volume label printing/PC station saves time and labor because it enables the use of more than one type/size of label, a full computer screen to toggle between different programs, and more.

An MPW can increase the number of items processed per day by facilitating stocking, inventory management, receiving, order-picking, inspection, packaging, shipping, cross-docking, etc. With such streamlined operations comes improved accuracy, in part because stock-keeping units (SKUs) can be identified with barcode scanners and immediately entered into or checked against the facility’s database. Although a large facility might need more than one, a single MPW can often do the job of two or three stationary desks, which means fewer computers and peripherals will be needed overall. For example, the cart can be used all morning at a receiving dock and then wheeled to the shipping department for the afternoon.

In receiving, an MPW operator can quickly scan barcodes to identify incoming items and then inspect, re-label, and re-route them, all at the same workstation. The operator can track previously shipped parcels and keep track of multiple SKUs. He or she can even take and file a digital photo to provide proof of the condition of a returned shipment, immediately credit the customer, and print a receipt.

For put-away, SKUs can be easily barcode-labeled/re-labeled as they are placed on shelves, which can also be labeled. That way, when the time comes to pick the item, it is more likely to be where it is supposed to be. For directed picking (coordinated picking for multiple orders), when the MPW is on a particular aisle the system’s software can tell the operator what other items are needed from that sector of the stockroom/warehouse.

In shipping, an MPW operator can quickly scan outgoing items to verify that the order is correct and scheduled for the proper method of shipment. For break-bulk and mixed-unit orders, MPWs allow fast, on-site printing of labels, packing slips, etc.

In Virginia, Care-A-Lot Pet Supply tested an MPW in their distribution center, scanning products in their receiving and shipping departments and printing labels for pallets and general organization. Management was so pleased with the improved efficiency that they purchased several MPWs for the center and more for the company’s retail stores. Care-A-Lot reports that since the workstations were introduced, productivity has increased by 40%.

Shipping accuracy was the major concern at the Magneti Marelli Powertrain USA plant in North Carolina. Management there was determined to reduce the number of mislabeled outgoing pallets loaded with electronic throttles and other components bound for automakers and other customers. A typical shipment consisted of multiple pallets, each of which required at least two labels. The weak point turned out to be the 30-40 steps each inspector had to take to the label printer. Sometimes, after an inspector had retraced his/her steps, labels in hand, the labels would end up on the wrong pallets. The number of errors was significantly reduced once the company purchased MPWs. Now, every inspector can scan and print labels right beside the pallet that needs them. Thanks to swivel casters, the workstation can be easily maneuvered to the next pallet in seconds.

Obviously, different needs require different MPW configurations, so shop around until you find the model that fits your facility. Some basic attributes, such as sturdiness and durability, trump other characteristics, but the best MPWs are also ergonomic. For starters, the one you choose should have large, stable work surfaces and adjustable shelves. A tall employee should be able to quickly raise a shelf to the most convenient height, and a shorter worker on the next shift should be able to lower it just as quickly. Casters should roll smoothly and quietly, yet should be lockable for stability and safety.

The more your workstation can do, the more your business can accomplish, in ways you might not yet envision. That’s why you’ll want your new MPW to be versatile. Check the weight capacity of individual shelves and of the unit overall. For maneuverability in narrow warehouse aisles, a small “footprint” is important. The cart you buy should definitely be powerful enough to run various devices simultaneously — look for one that can hold and power four devices for at least eight hours and can be recharged in five to eight hours.

Choosing the best MPW power package for your business can be difficult on your own. Some manufacturers have technicians who will make sure your package is fully integrated with the cart and the devices you intend to run. Some even have software tools on their websites that help the customer choose the most appropriate power package by calculating the total wattage of the equipment to be supported.

Christine Wheeler is marketing director for Newcastle Systems Newcastlesys.com, Middleton, Mass. She can be reached at [email protected].

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