JCPenney’s Global Sourcing Practices

JCP sourcing

In the class, we discussed how global U.S.-based apparel companies have become. The typical business model in the U.S. apparel industry today is “producing anywhere in the world and selling anywhere in the world”. Here is one more example: JCPenney.

JCPenney has been importing products from across the world since 1959. The company’s sourcing organization has eight offices globally aside from its office in Dallas. The offices are in Shanghai, Hong Kong, Korea, Bangladesh, Guatemala, Pakistan, India, and Taiwan.

In terms of its future growth opportunities, JCPenney identifies the following three:

  • Omnichannel: Implementing the necessary tools, processes and technologies that enable us to serve the customer no matter how they’re shopping with us. By creating a seamless shopping experience in stores and online, customers are likely to shop and spend more at JCPenney.
  • Center Core: Strengthening and revitalizing the highest traffic area in the store to become a leading destination for women’s shoes, handbags, fashion jewelry, intimate apparel and accessories, which are anchored by two very strong businesses: Sephora inside JCPenney and the Fine Jewelry store.
  • Home: Restoring our Home store to its previous sales productivity with a compelling assortment of value-driven products backed by a promotional strategy that builds customer loyalty and increases traffic.

(Source: JCPenney’s 2014 Annual Report)

What role do you see global sourcing could play in helping JCPenney achieve these strategic development goals? How do you understand the statement that sourcing is part of a company’s overall business strategy? Do you think JCPenney will likely to source more “Made in USA” products in the future? Please feel free to share your views.

Author: Sheng Lu

Professor @ University of Delaware

20 thoughts on “JCPenney’s Global Sourcing Practices”

  1. Globally sourcing its products could help JCPenney achieve growth in omnichanneling, center core, and home. By producing anywhere in the world, this will make it easier to sell products anywhere in the world. If products are made in China, someone in China might be more willing to buy them because it will not take a long time for that item to be delivered. If JCPenney can source and manufacture all over the globe, than this same effect will happen all over the globe.
    Sourcing globally could help create a better center core in store. Sourcing globally could help JCPenney improve their supply chain management, which in turn could increase their sales and reduce stockouts. This would create a better shopping experience for customers, which would help turn them into loyal shoppers, and help the center core become a high traffic area.
    Lastly, sourcing globally could help JCPenney create a more productive Home department. JCPenney wants to create a “compelling assortment of value driven products” in their Home department. By sourcing globally, this could reduce their cost of goods, while retaining quality, which could increase the sales in their home department. It is important that they develop promotional strategies to make customers aware of this assortment of quality products at relatively inexpensive costs. Home furnishings are not an impulse buy, so it is important that customers who are in the market for new furniture are aware of JCPenney as a retailer.

    1. excellent point! As you see, sourcing strategy is really part of a company’s business strategy. On the other hand, the rising of emerging economies as consumption markets is a game changer–in my view, western fashion retailers/brand have to build regional supply chain to well serve the local needs of these markets.

  2. Global sourcing would allow for JCPenny to focus on their future growth strategy of having a “center core”. With the center core they are looking to strengthen the highest traffic areas of the store. Because they will be producing anywhere in the world, they will be able to achieve the goal of a center core globally. Having a center core will increase their sales and because they are sourcing globally it will also keep their cost of goods down, helping to make a higher profit.

  3. Global sourcing would help JCPenney reach their goals for future growth opportunities. The Omnichannel method is a great idea in my opinion. This will perfect the shopping experience for customers, in person and online. I think its very important for them to work on their online existence because today’s society does a large amount of shopping online. This also would allow access to anyone anywhere in the world, so if they utilize the internet in the right way, they could globalize and grow in other parts of the world.

  4. I think that global sourcing for JCPenney will really help to achieve their strategic development goals. Adding omnichannel retailing will increase their demand, so they will need a great supply chain to keep up with it and that includes having a solid sourcing strategy. Like we learned, outsourcing globally allows companies to get a large quantity of goods produced for a much cheaper cost, which if JCP is going to have a lot of orders, they are going to want. As for the “Home” strategy, I think that JCP and focus on their products that are made in house, like the Wrangler jeans, that are well known around the country to be domestically produced, and that they currently have a good sourcing system in place for those goods. I think that they will end up sourcing more of these “Made in USA” products as other companies try to emphasize on domestic manufacturing and citizens learn the benefits from it. Plus they already know the quality of the JCP domestically produced garments because they have sold them for years now, so all that needs to be done is for the country to start really looking at their tags and make a conscious choice to buy domestic.

  5. Global sourcing could definitely play a role in JCPenney achieving their strategic development goals. Having overseas factories will allow JCPenney to produce at a faster rate and get the product to the customer in a smoother and faster manner. With omnichannel, JCPenney needs to be able to quickly get a product from a store that doesn’t need it as much to the customer that ordered it in a different location. Inventory needs to be planned accordingly as well. Sourcing globally will make this process much easier. I don’t see JCPenney sourcing in the USA in the future because of the price. If they were to start producing domestically, they would have to make sure that their new strategic goals have all been met and are concrete enough to start manufacturing at a higher price in the US.

  6. I think that global sourcing has a positive impact on JCPenny because it reduces their costs of production allowing them to make a larger profit. I don’t see them switching to Made in the U.S. manufacturing because global sourcing has been working for them so far. I do believe that JCPenny should try switching to Made in America products because recently they have not been doing as well where they are losing customers and brand loyalty. If they had a huge campaign (like the Made in America initiative or Crafted with Pride campaign) they could possibly create a new customer base that supports this idea. But for this to work the campaign would have to be well thought out and researched to keep it from failing.

  7. I believe that global sourcing will allow for JCPenney to focus on their goals to further grow and develop their company. Through adding new retailing techniques, they will be able to increase their demand, which will further promote the growth of their company. Additionally, by globally outsourcing, JCPenney will able to order larger amounts of products at a cheaper cost- this will allow them to allocate their excess money towards other areas that may require more attention. In the future, I do not believe that JCPenney should manufacture their products domestically because they have no direct advantages or benefits related to doing so.

  8. I think because JC Penney has been struggling recently, global sourcing could definitely be beneficial to them. It could definitely be a strategic goal that they might not know how to implement yet. Perhaps they could incorporate more social initiatives and community service to bring in more customers and feel as if they too are making an impact in surrounding communities. As long as JC Penney can use this, but keep their prices low, I think their target customer could really respond well. Also, the way I understand the statement “sourcing is part of a company’s overall business strategy” is that they choose to get their materials from oversees as well as have their goods produced oversees. I do not think “sourcing” means domestically, which I know it can mean both, but it is interesting to me that I think of it as international only. My final thought is I do think JC Penney will start to have more “Made in America” products, even though it contradicts what I recently said. I think it could go both ways. But I do think they need to change their strategies!

  9. What role do you see global sourcing could play in helping JCPenney achieve these strategic development goals? Global sourcing could allow for exclusive merchandise, giving JcPenny the shopping destination image they wish to achieve over their competitors.
    How do you understand the statement that sourcing is part of a company’s overall business strategy? Souring allows JcPenny to find the best value products that provide exclusivity and while also alining with the price desires of their core customer.
    Do you think JCPenney will likely to source more “Made in USA” products in the future? Please feel free to share your views.
    Generally no, because their main marketing strategy is about competitive pricing, and many US goods are not competitively priced compared to foreign manufactures. Yet they may carry some items, but more as a promotional event than anything else.

    1. good thinking! A follow up comment on JCP’s sourcing strategy vs business strategy: as a retailer, JCP’s mission is to serve well of its customers and this is how JCP should design its sourcing strategy. On the other hand, I agree that JCP will continue to sourcing globally, because this is how they can take advantage of resources around the world.

  10. Global sourcing will help JCPenney achieve their strategic development goals because it will allow them to sell a diverse range of merchandise at a low price point. Specifically, it will help achieve their goal on revamping their home department, because it will allow them to offer an enticing assortment of merchandise at prices that will please their target market. If JCPenney chose to source more “Made in USA” merchandise, they would not have the resources necessary to sell merchandise at prices that keep their customer base coming back. Consumers enjoy shopping at JCPenney because they feel confident they are purchasing a well-made product at a reasonable price. If the company sourced their merchandise from the US, they would have a smaller option of products to sell and would not be able to sell those products at prices that JCPenney customers find affordable.

  11. I think global sourcing will help the company in many ways. In terms of omnichannel, being globalized will help them run a more efficient supply chain with their suppliers and make sure they have the right product at the right time in the right place. In terms of focusing on their center core and home, it will allow them to offer the correct products for the correct prices that their customers want. I understand the statement that sourcing is essential to a companies business strategy because without it they have no products and the way they source will effect how well or poorly they can do business. I think JC Penney will not be likely to source made in the US products in the future because of the cost and they serve a price-sensitive consumer.

  12. I think global sourcing could really help JC Penny implement all three of their growth strategies; Ominchannel, center store and Home. Global sourcing will only optimize JC Penny’s product offering and help maintain a low price point. In recent years JC Penny’s has seriously struggled with customer retention due to shifts in their selling strategies however I think an increase in technologies would greatly help their commerce site, which is majorly important at this time to allow JC Penny to reach a broader market. The idea of a center core is also an excellent strategy in that all of the most sought after goods in a centralized location would allow customers the most convenient experience and call for greater sales. And third the development of their home line would revamp JC Penny’s reputation and either bring in new customers or reassure old cutovers JC Penny is a quality and value driven store with all of their products which I believe is an important trait of a department store. For stores that lack in one area of their product offering it is usually obvious and leads you to believe they are just as capable of cutting quality in other departments.

  13. With JCPenney’s determination for future growth opportunities, global sourcing can play a great role. They already import products from across the world since 1959, but they can expand this even more to sources they have not reached yet. They can find areas where productions can be cheaper and also then get familiar with the area and expand their physically stores even more throughout the globe. Sourcing will always be apart of the companies overall business strategy because this is the way they get their products that in the end can be reached to the customer. Due to their high volume of imports I believe that they will continue to import and will not likely source more Made in USA products. Global sourcing has been apart of their business strategy for so long that it would be costly for them to turn to Made in USA items. Eventually down the road they can begin approaching Made in USA products, but it will be a slow long path that they will be headed down.

  14. I think global sourcing would allow JCPenney’s to reach its’ objectives in terms of growth opportunities, specifically Omnichannel. Macy’s is known for their Omnichannel integration and they have been very successful with the implementation of that strategy. Considering JCPenney is already “producing anywhere in the world and selling anywhere in world,” I believe they will be able to adapt an Omnichannel integration without a problem because they have stationed offices in multiple countries, therefore they are exposed to the technologies, processes, and ideas of those countries in which they are located as well. This allows JCPenney’s to create the “seamless shopping experience” in terms of reaching their customers in the best possible ways through available platforms.

  15. Being that JC Penney has been having a difficult time maintaining growth and adapting to the changes of the retail market, particularly the decreasing importance of the quintessential “department store”, I believe global sourcing will have a high amount of importance in their future growth plans. To begin, I believe that in order to begin to gain popularity with current consumers, JC Penney is going to have to be very price competitive with current thriving retailers. In order to do so, and based on our learnings in class, it is easy to assume they will outsource a majority of the products they manufacture. Moreover, the blog states that the two main “core” businesses for the company included Sephora and Fine Jewelry and although neither is within the T&A Industry, both are produced and manufactured through outsourcing. Based on the comment by JC Penney executives I believe that the company recognizes this idea and will follow this philosophy in sourcing their home goods as well. Particularly when you focus on the fact they want to continue to be “value-driven” The more interesting concept to me will be whether this strategy will help the company succeed, or have very little effect on their downward slump.

  16. I understand that JC Penney has been having problems with changing their retail market but they should really start sourcing their products globally for their own benefits. By globally expanding their sourcing and production efforts, they will make it an easier access to their consumers by selling their products anywhere in the world. By sourcing from any location, it allows consumers to be more willingly and opened to purchase their products, which will increase their manufacturing. They need to improve their supply chain management and this will completely help them in doing so. Customers would be more interested in their products especially their home department which they hope to approve, since they want to make more valuable products. Overall, it is in their best efforts to source globally because they could expand and increase their sales (even in their home department).

  17. I think JCPenney’s global sourcing plan will help them improve and reach their goals, especially since they are not doing so well. JCPenney is known for their cheaper prices through coupons. Consumers look for this and expect great deals before even entering the store. Having “Made in the USA” apparel, will only increase their prices. Their target market, the lower class, will not like the increase of price and will look elsewhere for them. Finding a few manufacturers globally will decrease prices since manufacturing is much cheaper abroad. Having only a few plans will also decrease the price since JCPenney can buy more quantity from one manufacturer and get a discount.
    JCPenney is focusing on their home department, and global sourcing will definitely help this too.

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