J.C. Penney isn't looking to open new stores. The company's CEO, Myron "Mike" Ullman, believes the U.S. already has 80 million or more excess square feet of department store space.
Instead, the company is looking to remodel existing locations and add Sephora shops inside stores that don't already have them to improve the shopping experience. But, when it comes down to where Penney believes it can separate itself from the competition, the company believes its information technology prowess is an advantage it can bank on.
According to a report by Maria Halkias of The Dallas Morning News, Penney has put its IT function on the same footing as marketing, merchandising and store operations.
"I'm saying IT isn't the back door. It's the front door," Mr. Ullman was quoted as having said in a recent interview.
According to Mr. Ullman, 2009 is the year that Penney's IT function is enabling the company to achieve growth.
"Many of our competitors are still building the [software and online] tools to run the business. We're past that," he said.
The department store chain's investment in IT includes a hiring push to add 150 people to its "digital center for excellence." The additions will join the current 1,700 Penney employees and contractors responsible for IT.
Chief information officer Tom Nealon told the Morning News, "Our IT people are linked to the business, not like I've seen at other places I've worked. That's a real advantage."
Penney has somewhat bucked the outsourcing trend by bringing back creative and development jobs in-house. It uses Tata in India for support and maintenance functions.
One of the products of Penney's IT efforts is a new "smart fixture" kiosk that will be tested in the home departments of four stores next month. The unit has a 52-inch touch screen that is iPhone-ready and enables shoppers to find products sold by Penney but not in-stock at a given store. It also allows customers to scan merchandise in stores to get information about features, colors, sizes, cleaning information, etc. that can be emailed.
Penney understands that not all of its shoppers will take to the kiosk or other tech-based concepts it develops. "We have to match customer tastes with technology," Mr. Nealon said. "Some people are very digital, and you have to interact with them. Others are more comfortable with store associates."
Discussion Questions: How dedicated are other department stores to using IT as a means to achieve a competitive advantage? Is J.C. Penney as ahead of the competition as its management believes?