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.