Three Top 500 retail chains ride the comeback trail
May 6, 2015 01:38 PM
Who doesn’t love a good comeback story?
Three big-name retail chains are vying for the inaugural Internet Retailer Excellence Award in the Comeback of the Year category. Internet Retailer will present the award June 3 during the Internet Retailer Conference and Exhibition in Chicago.
The three candidates show it is possible, even in this age of quick and merciless e-retail innovation, for merchants to not only survive rough patches but to bounce back and set a course for web growth. Here are the candidates and a look at each of their cases, along with some recent e-commerce developments for each retailer:
J.C. Penney Co. Inc.
Ron Johnson, a former Apple Inc. executive who took over as CEO of the department store chain in June 2011, left that job less than two years later not only having failed to turn around the retailer’s fortunes but inspiring some observers to pen its obituary. But during the 2014 fiscal year, J.C. Penney, once one of the biggest catalogers, managed to regain some of its online footing: It generated $1.225 billion in web sales, up 13.4% from $1.080 billion in 2013. JCPenney.com accounted for 10.0% of total sales of $12.257 billion. That 2014 web sales figure is below the $1.590 billion the department store retailer posted in 2011, its top year for web sales. But on on a percentage basis the web accounts for a greater portion of Penney’s sales now.
The chain, No. 37 in the Internet Retailer 2015 Top 500 Guide, isn’t standing still on e-commerce, either. Late last year, for instance, Mike Rodgers, senior vice president of omnichannel strategy and execution, told analysts that J.C. Penney now ships online orders from 50 of its 1,100 stores in three merchandise categories and plans to expand that program. “Right behind that we will do same-day pickup and after that same-day delivery,” he said, adding that Penney’s wants to win more loyalty from customers who shop via its website and stores. “Converting 10% of our store-only customers to omni-customers represents a potential of $1.2 billion in incremental sales,” he said. “That's because omnichannel customers spend three times more than a store-only customer and they visit our stores or online 2.5 more times per month than store-only customers. Quite simply, omnichannel customers are much more loyal.”
Pier 1 Imports Inc.
E-commerce always offers a way back in. The housewares retail chain abandoned e-commerce in 2007, making its full-scale return in 2012. So far, that decision is paying off handsomely. For fiscal 2015, the chain, No. 161 in the Top 500 Guide, reported that e-commerce accounted for 11% of total sales at Pier 1 Inc., nearly triple the percentage in 2014—4%—growth that reflects the housewares merchant’s new emphasis on the web. The 190% year-over-year growth in online sales outweighed a drop in store sales. Web sales growth totaled $134.4 million in fiscal 2015. Pier 1’s total sales for fiscal 2015 were $1.866 billion. (
All that web growth doesn’t mean Pier 1 wasn’t employing its real estate in service of the web, either. Stores played a central role in online sales performance in fiscal 2015, Laura Coffey, executive vice president and interim chief financial officer, told analysts on the earnings call. “For the full-year, approximately 60% of our 2015 e-commerce sales touched our stores, whether originating on an in-store device or being picked up in a store.”
The future seems bright: Pier 1 expects to reach $400 million in web sales, or 20% of all sales, by 2017, Coffey says.
Criminals made the 2013 holiday shopping season disastrous for Target. The longstanding retail chain suffered a gigantic data breach, with credit and debit card details of 40 million customers and other personal information of 70 million shoppers exposed. Breach-related expenses topped $191 million. But even as Target underwent leadership changes and left Canada, e-commerce proved a shining light: Online retail sales increased 30% during the chain’s fiscal 2014, which ended Jan. 31, 2015, a rate double the U.S. e-commerce growth rate of 15.4% during 2014 as estimated by the Commerce Department.
Some of the latest news from the chain, No. 16 in the Top 500 Guide, points toward continued focus and success with e-commerce. For instance, in March Target said it would invest more than $1 billion to improve its technology in an effort to restructure and build on digital sales gains. That’s a logical move as chief strategy officer Casey Carl in March told investors and analysts that mobile conversion rates increased 69% year over year in 2014 while mobile traffic grew 44%. That’s something he attributes to consumers’ continually evolving shopping habits. “Almost everything begins on mobile,” he says. “98% of Target guests shop digitally and the vast majority of that shopping comes using a mobile device.”
Key to Target’s e-commerce growth could be its Cartwheel mobile coupon app, executives say. The app has been downloaded more than 13 million times and is responsible for more than $1 billion in revenue since it launched in May 2013—another aspect of the comeback.