New strategy is a breath of fresh air for JCPenney

3 Comments | This entry was posted in Retail Companies, Retail Trends

I don’t know Ron Johnson, JCPenney’s new CEO; I’ve never even met the man in passing. Like most of you I know a bit about his background with Apple – and before that, with Target — and I was as shocked as the next person when he was named chief executive at the 110-year-old department store chain.

This morning I attended JCPenney’s Fresh Air presentation where Johnson, along with Michael Francis, the company’s new president, discussed where the department store is headed. After two hours of listening to their plans for rethinking, repositioning and reimaging the JCPenney we know today, I have to say I’m impressed, impassioned by the prospect of long overdue change and – at the same time — impatient with the nearly four-year blueprint outlined.

Among the changes that stand out most will be those around pricing, promotion and personality. On the pricing front, Johnson insists that coupons, doorbuster deals, 20, 30 and 40 percent off and hourly pricing are things of the past at JCPenney. The new strategy, dubbed “fair and square,” consists of three kinds of pricing: everyday prices, which he describes simply as great prices everyday; month-long values, which consist of the most desired products for that month being offered at a single sale price for the entire month; and best prices, items marked way down that will be offered every first and third Friday.

“We think it’s time to reclaim our price integrity,” Johnson says, admitting that the legacy strategy made the company look “desperate. We’re committed to regaining consumer trust.” Prices have been restructured to be more in sync with the actual prices shoppers have paid for items. So, for example, towels that were priced at $10 in the past – and actually sold for a little more than $3 — will now be priced at $4 every day. Ballet flats, priced at $40 in the past, will now be sold for $30. On a month-long promotion, the price would drop to $22; when they need to move the goods out the door, the best price would be $15.

Promotions will be scaled back considerably – from 590 in 2011 to 12 between February 2012 and January 2013. Believing that the customer “lives in a monthly cycle,” JCPenney will rotate promotions on a similar schedule, spending $80 million per month. Ultimately, the goal is to get shoppers in the store once a month.

As to the third front, Francis discussed the reinvention of the brand’s persona. The logo, which has been housed inside a box of some sort for decades, has been reinvented. The box is now more of a frame, and the JCP logo resides in the upper left corner. The design was created to telegraph a new view and to showcase the following attributes: honest, simple, relevant and distinctly American.

Product changes will be ongoing over the next few months, with more overt shifts expected to begin in August. Johnson hints that items will be “less basic, more trend-right – and well-priced.” Look for more partnerships with well-known brands, including recently announced link-ups with Martha Stewart, Liz Claiborne and Nanette Lepore. Beginning in August, JCP will start transforming the store with the opening of in-store shops at a rate of at least two per month. Plans call for building out the shop concept over the next three-plus years, with the goal of having 100 unique shops when the transformation is complete. Inside the shops will be new fixturing and a more precisely edited assortment of product. Soon to exit stage left are rounders jammed with items that Johnson and company admit did little to showcase product.

Finally, Johnson and Francis envision a new spin on the final “P” – place. The blueprint calls for two distinct areas in the store – Main Street and the Town Square. Main Street refers to the perimeter of the store where the shops will be housed. The Town Square, situated in the center of the store, will be a place that “makes the shopping experience better.” Exactly what that means isn’t likely to be known until the first re-imagined store opens next year.

The changes begin February 1 – or 2-1-12 — and will be ongoing for the next four years, says Johnson, who equates the rollout with the time it takes for most students to complete a college education. The ultimate goal is to become America’s favorite store and, while he admits it’s a lofty objective, Johnson also perceives it as an extraordinary opportunity.

Can Johnson make it happen? Will the partnership that Johnson and Francis had at Target be the secret to making this work? Will lightning strike twice? Too soon to say, but I can tell you this: the presentations I heard today were a detailed blueprint for change and a breadth of fresh air in a sea of same old same old. Johnson, clad in tan slacks and a pullover sweater, seemed approachable and forthcoming. He didn’t shy away from the obvious elephant in the room: his relationship with the Apple brand and how it does or doesn’t correlate with where JCPenney is headed in the future. There were no promises for the financial community, but there was an overwhelming sense of the commitment that he and Francis bring to the endeavor.

The department store business has shown signs of renewed life over the last few years, but there isn’t a retail expert or enthusiast who would say things are great. Change is good. Change is long overdue. And while as a journalist I bring a healthy amount of skepticism to the table, I feel pretty good about what the future holds for JCPenney – even if only half the plans outlined today come to fruition.

Posted in: Retail Companies | Retail Trends and tagged , ,
Share:

3 Comments

  1. avatar Dennis Eichler
    Posted January 26, 2012 at 12:33 pm | Permalink

    Their new screaming ads are a turn off. I think their pricing is a short gain to increased sales In the long run in order to make margin to pay expenses they are going to have to cheapen the overall products. The reason Macy’s is doing well is their standards are high and their pricing is fair. The brands are well known so the consumer feels they will last longer thus a better investment.
    The CEO does not really understand soft goods and it is very evident. He is willing to turn JCP into a Walmart for the quick dollar but this will never beat out Kohl’s, Macy’s or the others. The real spending consumer buys products from 1. Quality-40%, 2. Service40% 3. Price20% and in that order. If you hang your hat too heavily on Price you will suffer.

  2. Posted January 30, 2012 at 7:45 pm | Permalink

    This feels pretty new and desperately needed to me in this market. From the over abundance of flash sale sites to the rise (and some would argue) fall of groupon and it’s competitors, it seems to me that Johnson is actually thinking out of the box and into the future of retail. How many coupons and discounts can the market bear? From a consumer perspective shopping is now unclear and the wait until it goes on sale mentality has been driven home. Running a business on margins like those of Amazon is not prudent nor is it sustainable. It’s nice to hear about a big box forward thinking idea to limit the emphasis on discounting and instead increase the customer experience. I am interested to keep tabs on the new strategy.

  3. Posted February 10, 2012 at 2:53 pm | Permalink

    I am very impressed by the new approach – was in my local (Minneapolis) JCP this week and the store looked great, the pricing simple and compelling. And if you’ve been following the Ellen issue this week, their FB page is on fire with comments of support from women. Sample comment: “JCP, I have shopped at your locations a few times. However, after standing firm in your decision to not only hire but KEEP Ellen as your spokes person, well JCP you now have a customer for life. I will happily make you my first choice in clothing and home goods. I am proud to stand behind a company that supports equality, and does not back down from bullies!!! Good Job!!!”

Post a Comment

  • Posting Policy

    NRF welcomes intelligent discussion and debate from our community. We do insist that all comments must be expressed in a mature and civil tone of voice. Individuals posting rude or otherwise inappropriate material will lose their access to the discussion.

    Thank you,
    NRF

    Note: While anonymous comments are welcome, they are also moderated and may not be posted immediately. If you don't see your comment, please be patient, as it will be reviewed and posted soon if appropriate. Please do not post your comment a second time. Thank you.

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>