Millennial shoppers driving growth at JC Penney

Victor J. Blue | Bloomberg | Getty Images

Sure, millennials love Amazon. But the generation's increasing spending power is also fueling sales growth at a less obvious retailer: J.C. Penney.

The recovering department store on Tuesday detailed plans for its fall men's apparel lineup, which "caters to millennial guys." It includes the addition of Russell Simmons' Argyleculture collection, and an expansion of the Ecko and Michael Strahan labels.

"Young men, ages 25 to 35, are driving big growth at J.C. Penney," John Tighe, the company's chief merchant, said in a release. "This demographic has a lot of spending power and is very opinionated about the style and fit of his clothes."

Tighe's comments follow similar insights that the Penney's team shared with analysts last month. The chain's emerging customer base — which it's labeled the "modern American mom" — accounts for 45 percent of its sales and growing, management said. On average, this shopper is 33 years old, female and identifies with more than one culture.

"She visits more frequently and spends more with us than the average customers," Mary Beth West, Penney's chief customer and marketing officer, told analysts.

"She is today and will continue to be a key driver of our sales."

The company is catering to these shoppers, whose spending skews toward beauty and children's wear, through its expansion of Sephora beauty shops and a focus on kids' apparel. It's likewise launched a plus-size private brand specifically for millennial customers, called Boutique Plus.

Penney's isn't the only department store targeting millennials, who will account for a larger piece of consumer spending as they age. Macy's last March launched a redesigned, high-tech floor for these shoppers in the basement of its Herald Square flagship in an attempt to woo millennials.

In addition to J.C. Penney, dollar stores are also grabbing millennials' attention. Dollar General CEO Todd Vasos said on an earnings call earlier this year that female millennial shoppers account for roughly 12 percent of its shoppers and 24 percent of its sales.

Penney's is targeting comparable store sales between 3 and 4 percent this year, despite falling short of that range in the first two quarters. At its August meeting with analysts, the retailer said it expects to generate compounded annual comparable sales growth of 3 percent for the 2017 to 2019 period.