I was an invitee to ‘CXO Master Class’ session sponsored by
Kyron Accelerator. CIO of JCPenney Mr Scott Laverty, a veteran with 28 years of
experience in information technology shared his thought on the Changing Face of
Retail. Here is excerpts of Fire-side chat with Scott where he answered
questions from Vikram Ahuja and many startup founders including me.
Q: You have been in
the industry for 28 years in Retail Industry, how has retail changed since you
started?
Scott: The biggest change in last 30 years has been the
“Internet” which is very powerful. For us the change is what they call
“Omni-channel” where they differentiated Online vs Store is dimishing. My view is that it has boiled down to just
Retail. In terms of our consumer, she doesn’t care how she is interacting with
me as to online or store or anywhere else. She may like a dress somewhere and
would take a picture and find them in our store. That’s probably the single
largest change – the buying behavior of consumer. JCPenney is 112 years old and
so are the channels and infrastructure. What we are trying to do is be nimble,
flexible and dynamic for consumer. With our new CEO coming in, he is bringing
lot of changes from being rigid to flexible, focusing on customers etc
Q: Interestingly
JCPenney was one of first retailer to adopt e-commerce. How you continue to
stay on top of competition?
Scott: Infact we were one of the first retail website 20
years ago. We also used to have 400 page catalogue. All that others are now
speaking about ‘buy online and pick up from store’, we have been doing that for
30 years. Though we pioneers in starting our website, frankly speaking we lost
our way in between. In last couple of years what we have done is brought back
our focus on internet and consumer. We have re-done our UI where it was pretty
difficult for consumers to navigate from cart to make payment. We fixed major
part of UI, we changed our search to accommodate how our buyers do. We also
launched our mobile app during this holiday season which was a significant hit.
We are trying to make it seamless between online and store. Say one of our
buyer wants to buy a shirt and we don’t have it in his size. Now, if I find it
in any other stores I’ll ship it directly to him. This is small change, but
leads lot of sales. It also cost us more money to ship, but we get life time
value because he is happy to comeback. So rather than seeing only transactional
view, we look from a broader view of keeping the customer with us for longer
time.
Q: How do you balance
between New Technologies versus Old school best practices?
Scott: In a large company like ours, IT alone has 600
people. We have many small groups working on innovative ideas. For example one
group is working on what can we do have dynamic stores, how can associates
spend more time with customers versus time spent on setting up the store. We
have a long way to go on this.
Q: How are you
striking balance between online & offline stores?
Scott: One of the things we are trying to do is bring
balance in product selection in terms of online & in-store. We are trying
to converge and extend product offering. For eg: I may have 20 different shirts
online but only 5 in the stores. So with online we are giving our consumer
classic line extension. The strategy is about providing seamless experience for
our consumers, we really don’t worry whether they buy online or in-store. One
more thing we did is we started providing sales credits to the store even for a
online sale based on items shipped.
Q: How well you
understand your customers?
Scott: I want to say we are light years ahead in terms of
understanding the customers than everybody now. Our merchant group really
invigorated and focused on understanding our customer groups. We have 7
different customer groups based 28 parameters like demographics and buying
patterns. Our merchants groups are focused on how to reach them and development
team is developing products in line with these groups.
Q: As CIO how do you separate
in-house innovation and engaging with startups?
Scott: Great question! I actually worked with a company like
Kyron when I was with Borders. I brought 3 startups into my website. I’m pretty
much believer of leveraging startups with brilliant ideas. We are trying to
change the perception in JCP on innovation, we are opening up for startups and
ideas, who visualize and solve the problems differently. I’m excited about
ideas which helps us make more money. But at same time we cannot have hundreds
of startups doing hundred different things. We are looking for three or four which
has high impact, high ROI and can be scaled.
Q: You probably have
pitched by a lot of startups. What is that you are looking in a startup you
potentially want to engage with? How do startups reach out to you?
Scott: Surprisingly, we are not pitched by that many right now.
First I’m going to look is, does it matter to our customer. It has be about
shopping experience, it has to effect customers positively. It may be a cool
widget but most important is it has to be scalable, practical and really
customer driven. We also look at some specific purpose like security. If it’s
something which helps me get better sleep at night, I’ll look into it.
Frankly speking, I don’t have time to look into unsolicited emails. Even if
you have greatest idea and you send me a email it would be no good. In my view
it has to be curated. We would like to work with company like Kyron who can
help us find 5 suitable out hundreds of them.
