JCPenney has faced the same challenges that bedevil the entire department store vertical, ranging from lower foot traffic at malls to the high operating costs that come with significant brick-and-mortar investments. As a result, the category as a whole appears to be headed toward a period of consolidation: Saks parent company HBC recently paid $2.65 billion for Neiman Marcus Group, and activist investors recently raised their bid to buy out Macy’s, according to the Wall Street Journal.
Owned by Simon Property Group and Brookfield Asset Management since late 2020, JCPenney is actively working to retake its place as a leading department store retailer, most notably with a $1 billion turnaround plan unveiled in September 2023. Since unveiling this vision, the retailer simplified its loyalty program design in April 2024 to nearly double the rate of rewards for members, and in June 2024 it invested $40 million to upgrade its Reno, Nev. distribution center with a new induction, sorting and packing system. However, there’s been even more going on behind the scenes and in a growing number of JCPenney stores.
The retailer is in the midst of rolling out new next-generation store technology, including new point-of-sale (POS) hardware and software, as well as upgrading its stores’ WiFi and network bandwidth. A proof of concept in 30 stores is being followed by enhancements to approximately 150 JCPenney stores this year, with upgrades across the retailer’s 650+-store fleet scheduled to be completed within the next two years.
JCPenney CIO Sharmeelee Bala revealed the critical role that the retailer’s valuable customer data will continue to play in its turnaround, which is only appropriate since “the lens we have maniacally focused on is the customer and the customer experience,” she said in an interview with Retail TouchPoints.
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Retail TouchPoints (RTP): You began in your post at JCPenney in 2022. What were some of your main goals at that time, and how have they changed?
Sharmeelee Bala: When I started, the main conversation with the board and CEO was about the fact that JCPenney had not actually been investing in its technology for a long time, [even though] a couple of decades back its tech had been top of the line and cutting-edge. So my job was to “keep the lights on” while also bringing in newer and better technology built for the future. The question was, how do we bring this together without touching every single system [in our tech stack], because nobody has those investment dollars. We determined that customer touch points were where we needed to invest. So we’re focusing on our stores and digital systems, applications and ecosystems, because that’s the way we meet our customers. Our goal is to be flexible and efficient in stores, and that the overall customer experience is something that [shoppers] can be happy with.
We’ve invested “surgically” in some [aspects of the customer experience], such as when they’re browsing or searching online. For example, we added a “shop the look” feature, which, if I as a customer don’t know all the products JCPenney offers online, will make recommendations for things that go with each other. We’re also putting into play some elements of personalized communications around sets of products, making it easier for [shoppers] to search and find.
In our stores, the new POS systems have more flexibility — for example, associates don’t have to go to a different screen to place an online order for a customer. We’re also going mobile-first; it will help during peak times to have cashiers walking around with mobile devices to check out customers. That could be a big winner for us, because no customer wants to wait in line. These are things that customers will immediately see.
RTP: How did that dual mandate — maintain the status quo while preparing for the future — affect your decisions around digital technology?
Bala: Digital was [an area] where we had to ensure the foundation we built would be scalable. It’s a home-grown digital ecosystem, but we’re building in microservices so that I’ll be able to “plug and play” [when adding new systems and functionalities]. We won’t build everything in-house, but I will build when I have the intellectual property, and I’ll choose third-party solutions when they work for us.
RTP: What about the many areas supporting the customer experience?
Bala: It’s all starting with data cleansing. We have a beautiful set of data that we can use for processing improvements and efficiencies, but we have to do data hygiene to ensure we’re using the data to its fullest extent — and we’re not there yet. However, we have brought in AI and machine learning-enabled systems in areas including merchandising, planning, assortment planning and supply chain, because we don’t want to just focus on the systems that can maintain the status quo. Planners and operational associates on our digital teams already are using these tools to help with algorithm-based modeling, for example with shipping routes, nodes and choosing which store to ship from. This has helped us reach the customer faster; in fact, we improved delivery time by half a day in Q4 2023.
RTP: You mentioned investments in AI and machine learning. Have you encountered any resistance or fears that people’s jobs would be eliminated?
Bala: With any new tech that comes into play, people will resist, but in this case it’s less worry about losing their jobs and more about losing control, particularly if they have always managed things on Excel. We’re taking the time for training, and stressing that we’re augmenting, not replacing — and sometimes, the data can prove that these models are better than individuals calculating on worksheets. We want to give them the data about why we’re doing certain things, which will actually help their overall work and their efficiency.
In some areas people have been very receptive — they can immediately see more about what they want to do [with these tools] versus doing things manually. They say ‘We’ve been waiting for this, give it to us.’
Additionally, as the CIO, I’m focused on improving developer and engineering efficiency, [so I’m looking at] places where we can bring in the generative AI models and automate things such as test case scenarios and code reviews.
But overall, the foundational thing is data, and we want to get to a point where we’re data-driven in areas like supply chain and merchandising. I’m also looking at where I can [continue to] utilize customer data in a meaningful way.
