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04/20/2022

JCPenney Uses Targeted Promotions to Grow Online Sales

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From Chain Store Age, April 19:

A move away from blanket discounts has resulted in big improvements in major e-commerce metrics for J.C. Penney Co. Inc.

The retailer has been using Metrical predictive artificial intelligence (AI) modeling-based solutions in its e-commerce promotions. The results have included a 40% increase in new cart creation, an 18% reduction in cart abandonment and a 10% improvement in revenue on targeted visits.

In 2018, Penney’s online conversion rate was below optimal levels and the department store chain frequently used discounts to drive sales. However, the discounts came with a high cost and the company realized this sales model would be unsustainable, so it set a goal to convert online customers without sacrificing margin. 

The retailer utilized Metrical predictive AI solutions to improve the targeting and performance of online promotional tools such as pop-ups and paid search. Penney’s also applied Metrical technology to its efforts to convert online sales of items from low-performing product categories that were sitting unpurchased in customer carts.

Performing a cost-benefit analysis, the retailer took conversion revenue and subtracted all associated costs including cost of goods sold, marketing costs, shipping and more to arrive at a net bottom line that the retailer said was triple than what they had experienced prior to using Metrical.

Other efforts Penney’s has launched in the past six months to rejuvenate its business include adding a new menswear brand to its private-label portfoliointroducing same-day delivery with DoorDash, adding merchandise from Forever 21 to its in-store and online assortment, and debuting “JCPenney Beauty” shops in 10 of its stores starting in October 2021, with rollouts planned across all Penney stores by 2023.

The department store retailer is also celebrating its 120th birthday with a new integrated campaign featuring “Saturday Night Live” star Melissa Villaseñor, which includes an in-store and online brand refresh.

Marc Rosen, a former Levi Strauss and Walmart executive, joined the company as CEO in October 2021, saying he was “eager to propel the business into its next era and connect with our customers in new ways.”

“Metrical‘s insights have proven to be valuable in long and short-term planning and we continue to experiment with new ways to utilize them,” said Pratik Kodial, JCPenney VP of marketing effectiveness. “The fact we moved forward indicates we met our internal sales and margin goals. One of the other things that we were looking into is the aspect of customer experience.  I don’t believe customers like pop-ups but what we saw in the context of the Metrical customers and their messaging was no degradation in Net Promoter Score (NPS) which is what we use to measure customer experience. This was quite interesting, and we believe this program is successful.”

 “J.C. Penney is an ideal customer because they continually challenge us to try new things and expand our capabilities,” said Zabe Agha, founder and CEO of Metrical.

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