Businessmodel of JCPenney

Customer Segments

JC Penney is a large retailer, serving a range of consumer demographics. The Company principally positions itself to cater largely to middle-to-low income households. Recent reports suggest that the demographic segmentation of the Company’s customers, sees its typical customer being an adult female aged between 35 and 45, with a household of three or more people.

JC Penney operates an extensive network of stores across the US, serving customers in urban and suburban areas. The Company has an operational presence in 49 of the US’s 50 states, as well as in territories such as Puerto Rico. In particular, the Company is active in Texas, Michigan, Florida, and New York.  JC Penney does not currently have any significant operations outside of the US. It does, however, offer international shipping to a number of countries, including the UK.

Value Propositions

JC Penney provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as one of the largest and most well-known retail groups in the US, with a brand name associated with reliable and high-quality products and services;
• Its extensive network of stores, with the Company operating a wide network of more than 1,000 physical retail outlets across 49 US states, reaching a large customer base in urban and suburban communities;
• Its efficient distribution infrastructure, with the Company operating a number of warehousing, distribution, and dedicated dot-com distribution facilities across the US, enabling it to supply its stores and its customers quickly and efficiently;
• Its reasonable prices, with the Company seeking to offer its customers value for money with high-quality products at competitive prices, as well as offering various deals and discounts on branded items; and
• Its accessibility, with the Company operating an e-commerce platform, as well as a mobile application, that enables customers to make purchase and track orders from anywhere. ### Channels

JC Penney operates a website at www.jcpenney.com, through which the Company provides information on its product catalogue, store locations, and other activities. The Company’s website also doubles as an online retail channel, which allows customers to browse products, make purchases, and track deliveries. Additionally, the Company offers its customers a mobile app for Android and iOS devices, which enables customers to make purchases from mobile devices.

JC Penney makes the majority of its sales through its network of retail outlets, spanning 1,021 stores across 49 US states, with a significant presence in Texas, Florida, and Michigan. The Company also employs teams of in-store sales and support personnel who serve customers directly and in person across the US.

Additionally, JC Penney operates its own distribution and storage infrastructure, fulfilling online orders through its dedicated distribution centres, and managing its merchandise inventory through a nationwide network of distribution and storage centres and warehousing facilities.

Customer Relationships

JC Penney makes a number of its sales through its online sales channel on a self-service basis. Its e-commerce platform allows customers to browse products, make purchases, arrange deliveries, and manage account details online and via mobile devices, without interacting directly with members of the Company’s sales and support personnel.

JC Penney makes the bulk of its sales, however, through its physical retail outlets, where members of sales and service staff are available to provide personal care to customers, offering direct assistance with queries, enquires, complaints and product returns. The Company seeks to provide effective and approachable customer support, encouraging repeat business.

Alternative, JC Penney operates a dedicated customer support organisation, the members of which customers are able to contact over the phone in order to receive tailored responses to queries and questions. The Company also provides a range of online resources, such as FAQs and shipping information, which can be accessed by customers independently.

JC Penney also operates a number of social media accounts – including with Facebook, Twitter, Pinterest, and YouTube – through which the Company can interact directly with customers. In particular, it uses its Twitter account as an additional customer care channel.

Key Activities

JC Penney is a holding company. Through its principal operating company, JC Penney Corporation Inc, the Company operates a digital and physical retail business. The Company operates through two principal channels, selling merchandise and services to consumers through its network of more than 1,000 department stores and its website at www.jcpenney.com, which can be accessed via applications for desktop, mobile and tablet devices, as well as in-browser.

The Company’s department stores and website offer almost identical product catalogues. JC Penney operates an extensive distribution and storage network across the US, with online customer purchases fulfilled by direct shipment to the customer from its distribution facilities and stores or via its suppliers’ warehouses. The Company’s core product categories include sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings.

Key Partners

JC Penney works in close collaboration with a network of partner companies and organisations across the US. These partners can be categorised broadly as:

• Supplier and Vendor Partners, including suppliers of products and merchandise which the Company resells online and in-store, as well as supplier of services, technologies, and equipment that are utilised more broadly across the Company;
• Retail and Branding Partners, comprising various retailers and consumer brands with which the Company establishes exclusive and non-exclusive partnerships to sell products in its stores;
• Joint Venture Partners, comprising various commercial entities with which the Company provides joint services or embarks on joint projects through mutually owned entities;
• Channel and Distribution Partners, comprising various distribution and logistics service providers that support and enhance the Company’s own in-house distribution infrastructure; and
• Strategic and Alliance Partners, comprising various market-leading companies across multiple sectors, notably the retail and consumer goods sectors, with which the Company collaborates on branding, marketing, and other projects. JC Penney has a number of partnerships in place. This includes a rebranding tie-up with InStyle Magazine to enhance the Company’s in-store salon environment, an exclusive retail partnership with beauty company Sephora, and a retail partnership with Hallmark in relation to its wedding and engagement ring range.

Key Resources

JC Penney’s key resources are its brands and intellectual properties, its merchandise and supply chain, its online retail platform, its It and communications infrastructure, its network of retail outlets, its distribution and warehousing infrastructure, its partnerships – notably its exclusive retail deals, and its personnel.

JC Penney owns and or leases a large portfolio of properties across the US that are key to its ongoing operations. This notably includes its network of 1,021 retail outlets across 49 states, as well as extensive distribution and storage infrastructure, including distribution centres and warehouses.

JC Penney additionally owns a number brands and trademarks that are key to its ability to provide a unique service to its customers.

Cost Structure

JC Penney incurs costs in relation to the procurement of products and merchandise, the procurement of professional services, the management of its supply chain, the development of its online retail platform, the maintenance of its IT and communications infrastructure, the implementation of marketing and advertising campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 JC Penney’s largest expense related to its cost of goods sold, which totalled $8.07 billion for the year. The Company also recorded selling, general, and administrative expenses – including warehousing, occupancy, and salary and benefit costs – in the amount of $3.78 billion

Revenue Streams

JC Penney generates revenue through the sale of various consumer goods items through its network of retail outlets, as well as its online e-commerce platform. The Company principally derives revenue in the form of sales fees.

In 2015 JC Penney generated total net sales for the year in the amount of $12.63 billion, up slightly on the $12.26 billion recorded by the Company in 2014. More than half of the Company’s sales relate to its apparel and accessories product lines, which together accounted for around 59% of the Company’s sales for the year.