US apparel and home furnishings retailer JC Penney saw its shares sink to an all-time low on May 12 after it reported weak sales in its first quarter results. The company is in the midst of a major restructuring, aligned with its focus on a more digital future, and has had to shut down 138 stores in the US.
Much of that digital transformation is being driven from the the sprawling campus of Manyata Tech Park in Bengaluru. JC Penney is almost absent from the US ecommerce sweepstakes, led by the likes of Amazon and WalMart.
Much of that digital transformation is being driven from the the sprawling campus of Manyata Tech Park in Bengaluru. JC Penney is almost absent from the US ecommerce sweepstakes, led by the likes of Amazon and WalMart
The company, which has little brand recall and no presence in the Indian market, has taken over four floors in the tech park, of which two are operational. From here it is running its first-ever global in-house centre (GIC), which started operations last August. The GIC not only carries out backend operations because its cost effective, but also work that required highly skilled resources and has a high impact on metrics such as revenue.
Rivals WalMart and Target already have significant back office operations in Bengaluru.
The GIC houses JC Penney’s “pricing and promotion engine” for its ecommerce business and is going to play a crucial role in helping it sell products back in the US — online.
I visited the tech park last week to meet Michael Amend, JC Penney’s executive vice-president for omnichannel based in Dallas, US, who was on a five-day visit to India to spend time with the Bengaluru team. Talking about the company’s operations here, Amend says, “One of the big things we did here is that we recently rebuilt our pricing and promotion engine. Obviously, for a retailer, pricing and promotion lies at the heart of selling merchandise.”
“One of the big things we did here is that we recently rebuilt our pricing and promotion engine” — Michael Amend, JC Penney’s executive vice-president for omnichannel
Along with Amend are JC Penney’s top India executives — Snehil Gambhir, managing director of JC Penney, Bengaluru, and Dhritiman Saha, senior vice-president, digital.
The new pricing and promotion engine is called Project DELPHI, and it allows the company to react more quickly to make intraday price changes in response to internal or external dynamics. The company is currently in the process of rolling out the project.
The GIC has built a system for order routing, which will decide in real time what’s the fastest and cheapest way to fulfil orders made by customers online. This order routing system, which will be implemented in a matter of weeks, will enable every store to start shipping goods, thereby turning each of JC Penney’s 1,100 stores into a mini distribution centre.
The new pricing and promotion engine is called Project DELPHI, and it allows the company to react more quickly to make intraday price changes in response to internal or external dynamics
Another feature the GIC is working on is an artificial intelligence-based site search technology to offer products that are relevant to individual online consumers even as they type the names of products they are looking for. Data scientists at the centre form the core of the company’s bet on big data-led machine learning and mobile-driven traffic.
Amend gives an example of data analytics working for JC Penney. For instance, it recently started focusing on B2B sales of towels, bedsheets and other linen items to the hospitality industry. The move was spurred by insights it gathered from big data. “Although private brands contribute to over 50% of the sales and are growing, data analytics revealed that a large number of the orders were for products in the hospitality space,” he says.
The Bengaluru centre is also the hub for development of the android version of the company’s app. The project also entails integration of wallets for payments.
JC Penney currently has over 300 employees in Bengaluru and plans to hike it to 900-1,000 by 2018.
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