There was a lot of song and dance by Ron Johnson, the new CEO of JCPenney and his crew in New York announcing the new JC Penney or JCpenney as it would be called now. Read “The 6 Ways Ron Johnson Plans To Transform JC Penney Into 'America's Favorite Store” to get a dope on what was discussed. This has generated a lot of good discussion on what Ron should do. Some of the views below:
So, is there anything JCPenney could do to turn around its fortunes? Sure, it could try closing down underperforming or “brand wrong” stores, it could acquire a growing, hot retailer like Francesca’s Collection, or it could spin off its new deal with Martha Stewart into smaller, Martha-branded stores. Notice that all these options are addressing the real estate albatross, which requires either unloading bad real estate or investing in new locations. It’s unclear whether the company has the appetite or resources to do either. I always thought Ron Johnson was a curious choice for JCPenney. He’s a visionary leader with a track record of success generating growth by building new stores. Target was underpenetrated in the US when he was there, and the Apple Stores didn’t exist before he launched them. He’s not a turnaround expert who has experience with tired real estate locations located in B and C quality malls. I’m reminded of an old quote from Warren Buffett: When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
“‘Radical’ is hardly the word I’d choose to describe JCP’s plan to step back from constant price discounting,” wrote James Tenser, principal, VSN Strategies. “Even ‘innovative’ would be a stretch. If it tries to stake out a ‘we’re the cheapest’ position in the apparel/home goods market under Mr. Johnson, I think JCPenney will not fare too well. But if it uses its pricing to reinforce an image of consistently good deals on consistently good quality goods, it can win and keep some fans.”
David Slavick, a retail consultant who formerly headed up Sears Holdings’ loyalty marketing, sees potential in moving to EDLP if coupled with a frequent shopper program that rewards the chain’s best customers.
“JCP is the most aggressive coupon retailer next to Bed Bath & Beyond. Every day, the store is on sale with 20% off coupons, incremental savings for credit cardholders and ‘private’ savings events,” wrote Mr. Slavick on RetailWire. “I don’t see how EDLP will change the dynamic and help them move more apparel or make the store a more compelling place to shop than Kohl’s or Macy’s.
“Buying St. John’s Bay or other private label clothing at JCP with a strong price/value relationship is what causes me to shop the store — plus incremental savings with deep discounts exclusive to me through my credit relationship. The JCP Points program is a bore. What you get for what you spend is not compelling. Personalized benefits for best customers is what ‘should’ be next. Time will tell.”
Gene Hoffman, former president of Kroger and former president of Supervalu, quipped that Penney will be weathering the marketplace now with a “good but leaky unbrella.”
“The ‘best’ is the enemy of ‘good’ … and the best EDLP model already exists. Give me some energized excitement, JCP!” he wrote.
My 2 cents for JCPenney:
1. Think Local – Support locally owned businesses, this will give you a visibility of building local communities while on the same hand give you a differentiator over your national competitors.
2. Exclusive Brands – Look around, spend some time understanding what adults and kids are buying and make that exclusive to JCPenney.
3. Transform internally – This will be the key with all the changes being planned and the rate of transformation will have to be much faster than educating buyers of the transformation.