Former J.C. Penney CEO: Sales Have 'Become A Cancer'
WASHINGTON (dpa-AFX) - Allen Questrom, the former CEO of J.C. Penney Co. Inc. (JCP), told CNBC that sales have become a cancer for department stores that are increasingly out of touch with millennial customers and Generation Y shoppers.
Questrom told CNBC's "Squawk Box" on Tuesday that department stores rely too heavily on the baby boomer customer, noting that the brands and aspirations of these customers are quite different from those of the millennial customer.
Questrom also said sales cannot be the only driver of business, it can only be a part of it. In addition to sales, products, presentation, excitement in the stores, and salespeople who understand the needs of the customer are all required by department stores to attract foot traffic.
Department stores must increasingly focus on Internet retail to boost profits, even as online businesses like Bonobos and Warby Parker have realized the need to include brick-and-mortar stores to their businesses, the ex-corporate chief said.
"I think stores will always be around, they'll always be the majority of the business, but the retailers of the past have to understand how to utilize the Internet and they also have to understand who their customer is today. It's different than it was 10, 20 years ago," Questrom said.
Questrom served as the chairman and CEO of J.C. Penney from September 2000 to December 1, 2004, where he substantially improved the department store chain's financial performance and competitive position.
According to Deloitte's 31st annual holiday survey of consumer spending intentions and trends in October, 50 percent of the survey respondents said they plan to shop online for gifts, beating discount/value department stores, which ranked as the second best destination for gift shopping.
The National Retail Federation or NRF has predicted online sales during this year's holiday season to increase between 7 and 10 percent over last year, to as much as $117 billion.
Copyright RTT News/dpa-AFX
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