American Living launch largest ever for JC Penney
NEW YORK, Feb 11 (Reuters) - Forget testing the waters. J.C. Penney Co Inc (JCP.N) is jumping in with both feet this month with American Living -- the biggest merchandise launch in the department store operator's 105-year history.
The massive collection, developed by Polo Ralph Lauren Corp's (RL.N) Global Brand Concepts exclusively for Penney, will include men's, women's and children's clothing, shoes, handbags, bedding, towels, window treatments, luggage, furniture and swimwear.
Penney Chief Executive Myron "Mike" Ullman said American Living products, which are arriving in stores through the month, could mark the largest single introduction of a brand in retail history.
"This is probably the most extensive single roll-out of any single brand ever," he said in an interview.
While a retailer often introduces a new brand in one category, like women's clothing, and slowly expands it, Ullman said "we're opening in virtually all the categories within the first year."
But American Living is hitting stores at a difficult time. U.S. holiday sales rose at their slowest pace in five years, investors are increasingly worried about a U.S. recession, and consumers are showing signs of fatigue.
Undeterred, Ullman said the economic environment will not alter the launch. "We don't believe it has a material effect," he said.
CASUAL AND WHIMSICAL
Penney announced plans for American Living last February, giving Global Brand Concepts responsibility for designing, producing, marketing and advertising the brand.
It has not released financial terms of the deal, but Ullman said that with Ralph Lauren's 40-year track record, he was not concerned with its ability to handle such a large project.
The line has a country-living, Americana-feel. It does not bear a "Ralph Lauren" label, but the designer's influence is unmistakable. The line includes signature Ralph Lauren pieces like polo, oxford and rugby shirts with the American Living logo -- an eagle holding an American flag.
To extend its country-living feel, American Living products are displayed in Penney's stores on special fixtures and shelves painted as white as a picket fence.
Ullman calls it "casual and whimsical," saying it should appeal to customers looking for traditional, classic items.
Retailers like Target Corp (TGT.N), Macy's Inc (M.N) and Kohl's Corp (KSS.N) have all developed exclusive brands to draw shoppers to their stores in recent years, but Ullman said American Living goes beyond being a brand.
He calls it a "concept" because its merchandise stretches across 40 categories, with estimated annual sales of $1 billion eventually, playing a critical role in Penney's future.
American Living is being introduced through about 600 stores, online and catalogs. To highlight the products, Penney, which runs 1,067 stores, is building separate American Living shops within many of its new stores, similar to the approach it took in adding Sephora cosmetic centers to its locations.
Penney wants the line to entice shoppers to spend more in its stores and attract new ones. It will roll out an extensive marketing campaign that will include airing commercials during the Academy Awards TV broadcast.
TOP END PRICING WHILE CONSUMERS BARGAIN HUNT
But the brand, being introduced as the U.S. economy falters, will face hurdles.
The products will be priced at the top end of what Penney sells in each category at a time when consumers are looking for bargains, and it will have a heavy emphasis on home goods at a time when the U.S. housing market is faltering.
At a store in Queens, New York, a linen shirt was $60, a cocktail dress was $90, and a men's blazer was $315. Some of the items were already on sale, with a pair of women's shoes marked down to $39.99 from $50 as part of a sale in the shoe department.
Ullman said the line will have a "promotional element," but he is not worried about the prices: "We're not talking about luxury price points here."
He also said that while Sephora products are some of the most expensive that Penney sells in that area of its store, they were some of its strongest selling items at Christmas.
Although the housing slump has suppressed sales of more expensive items for the home like furniture and window coverings, Ullman said other parts of Penney's home business, like towels, "are actually quite strong."
Despite Penney's optimism, JP Morgan analyst Charles Grom said the timing of the launch could be difficult.
He said ultimately American Living "will be a strong addition to JCP's product suite, but it may take time to refine the prices," he wrote in a research note. (Editing by Richard Chang)
