Dive Brief:
- Retailer J.C. Penney invested $40 million to upgrade its distribution center in Reno, Nevada, in an effort to improve fulfillment and delivery efficiency, the company announced in a June 18 press release.
- The upgrades include the installation of a new computerized induction, sorting and packing system, which aims to accelerate online orders and provide more flexibility for staff, according to the company.
- Last year, J.C. Penney announced it would invest more than $1 billion into its business by fiscal 2025 to improve its supply chain operations, in-store experience and digital capabilities
Dive Insight:
One of the pillars of J.C. Penney’s $1 billion reinvestment plan is to optimize the business’ supply chain, with a particular focus on superior inventory management and a reduction in purchase delivery times.
The Reno facility will now use warehouse management provider SDI Element Logic’s Joey Pouch sorting system, featuring a new packaging procedure and order assembly automation capabilities. According to the warehouse management provider sorter, the system can pick through 10,500 articles per hour.
Despite the addition of automated technology, J.C. Penney said there will be no impact to existing roles, noting it expects the upgrades to “dramatically reduce associate training time.”
“We look forward to experiencing its impact for our customers, associates and company as we honor our commitment to making every day count for our customers,” said J.C. Penney CEO Marc Rosen in the press release. “When we announced our $1 billion reinvestment strategy last year, this is exactly the type of upgrade we envisioned for our supply chain.”
J.C. Penney has been working to turn itself around ever since it emerged from bankruptcy and was acquired by Simon Property Group and Brookfield Asset Management in 2020. However, the beleaguered retailer’s performance has continued to sink, with the company reporting a decline of 8.9% in net sales and an 86.4% decrease in net income in 2024. In its most recent quarter, Q1 losses widened and sales fell8%.
The slower sales numbers have not deterred J.C. Penney’s ownership group. In a Q1 2024 earnings call, Simon Property Group Chairman, CEO and President David Simon said he was “pleased with Penney,” noting the company “is able to produce positive EBITDA even if there's not high sales.”
J.C. Penney isn’t the only department store retailer to be reworking its supply chain. For example, rival Macy’s intends to shutter some distribution centers and rely more on automation as it seeks to streamline operations.
