Is JC Penney’s Makeover the Future of Retailing?

The stuffy department store chain has become emboldened under new CEO Ron Johnson, with plans for an innovative store upgrade, simplified prices, and a brand polish. Professor Rajiv Lal discusses whether Johnson can repeat his previous magic at Apple and Target.
by Kim Girard

Ron Johnson's latest undertaking has the makings of a perfect business school case study. As the new CEO of J.C. Penney he's charged with transforming an aging department store chain with lagging market share.

The sweeping plan begun February 1 to put cool back in Penney includes new designer brands, simplified pricing that replaces the retailer's constant sales and coupons, and an updated store design that promises to make one think more of Apple's high-touch emporiums than a typical department store layout.

“J.C. Penney is in a very tough spot.”

In fact, the apple does not fall far from the tree. Johnson (HBS MBA'84) comes to Penney after more than a decade of leading Apple's retail effort, where his innovations included the Genius Bar. Johnson is also credited with making Target chic. This makes his launching of the new Penney one of the most intensely watched experiments in the future of retailing, as the industry grapples with how to entice shoppers away from their keyboards and back to the sales floor.

Johnson could make his plan work, but it won't be easy, says Rajiv Lal, the Stanley Roth, Sr. Professor of Retailing at Harvard Business School.

"J.C. Penney is in a very tough spot," Lal says. "If you ask people today what J.C. Penney stands for, you don't get a particularly compelling answer."

Once a staple for everything from bed sheets to children's clothing, many shoppers now associate the 110-year-old brand with a bygone era of paper catalog shopping. Penney's sales have lagged in an increasingly fierce retail environment, with stores such as Walmart vying for customer dollars on the lower end, Kohl's and Target jockeying for the middle market, and Macy's and Nordstrom reaching for the upper-middle end. JCP reported a December-quarter loss of $87 million, with revenue falling year over year by 4.9%, to $5.42 billion.

Johnson, who took over in November, is revamping Penney's 1,000-plus stores to target "all Americans." Standing out in the crowd, making the pricing scheme work, and reinvesting in the company despite razor-small margins are all part of his challenge, Lal says.

Pricing It Right

Retail pricing is a high art, and Johnson is starting from scratch at Penney, replacing frequent sales—the company had 590 of them in 2011—with "Fair and Square everyday pricing."

When outlining the plan in January he called the company's former strategy of offering items at a high initial price and then marking them down weeks later "insulting." He also eliminated coupons, something Macy's did in 2007, only to reverse the decision after unhappy customers snubbed the store.

Nearly three-quarters of everything at Penney is usually sold at 50 percent discount from list price. The new model is based on three prices: the everyday (at least 40 percent off), which kicked off February 1; month-long values, based on themes like back-to-school and Valentine's Day; and "best prices," which are clearance sales. In addition, Johnson decided to end all prices in "00," instead of 99 cents, and exclude the suggested retail price of a product on the tag in favor of just one marked-down price.

"I think that on the consumer side this has simplified pricing, which makes a lot of sense," Lal says.

“All department stores either rise or fall on their ability to execute a strategy.”

Penney will be able to move more merchandise off the floor faster, Lal adds, quickly making room for fresh items. This strategy could bring customers into the store more frequently and buying when they find a compelling piece of merchandise, rather than waiting until the next sale.

Still, Penney's pricing plan is risky. "Every day prices will not be as low as the biggest discounts that [the company] once offered," pricing consultant Rafi Mohammed wrote in a recent Harvard Business Review blog. "Instead, its pitch to consumers is why play the 'wait for the rock-bottom price' game when Penney offers 'pretty good' prices every day?"

Aside from pricing changes, all retail stores are under intense pressure to create item assortments that cannot be found elsewhere. "We complain that every department store is the same," Lal says.

Some retailers are already fighting this perception, observed Lal and coauthor Jose B. Alvarez in Retailing Revolution: Category Killers on the Brink. TJX Companies—parent company of T.J. Maxx, Marshalls, and HomeGoods—is well positioned because it "fostered a differentiated treasure hunt that is highly productive. Macy's [has strengthened] its already wide-ranging assortment of unique items. Nordstrom's private label has always been a respected part of its offer."

Town Square

Johnson's vision is to make the shopping experience as easy and enjoyable as buying a smartphone at an Apple store or sipping a latte at Starbucks.

J.C. Penney stores will be overhauled and streamlined, adding 80 to 100 so-called brand shops, or stores-within-stores, to be located along a new "Main Street" that replaces the confusing, endless racks common in department stores.

JC Penny logo

Brands will include the ubiquitous Martha Stewart and Nanette Lepore's "l'amour nanette lepore" line, a budget-friendly teen boutique. Existing brands including IZOD, Liz Claiborne, and The Original Arizona Jean Company will receive refreshed displays. Add to the mix an American themed red, white, and blue logo, an as-yet-undefined "Town Square" space in all stores, and the naming of talk show host Ellen DeGeneres as a company spokeswoman, and the ingredients are moving into in place to create a buzz around the brand.

The store-within-a-store concept promises to provide Penney with the unique merchandise it needs to stand out and attract new customers. But it can also be tricky to execute. For example, if Penney allows too much leeway to the individual store-in-store brands on how they display and manage their merchandise, it could subtract from the overall shopping experience that Johnson is trying to create, says Lal. Overall brand control includes everything from how the merchandise is sold to the way employees interact with customers.

"If [Johnson] is able to control the shopping experience it's a much more viable strategy," Lal says.

Will It Work?

Johnson has "painted a picture that is very reasonable," Lal continues, but it will take about three years to gauge whether he's succeeding.

This August, the company will begin updating all stores with new merchandise. Two to three in-store shops will be installed monthly over the four-year plan. The Town Squares, which will likely be used to provide shoppers with complimentary services (free ice cream? haircuts?), are scheduled to debut in 2013. Johnson expects the transformation to be complete by 2015.

"All department stores either rise or fall on their ability to execute a strategy," Lal says. "These are great ideas, but the ability to execute day in and day out, and keep employees motivated in such a large organization where stores are spread over such a huge territory" will make or break the plan.

About the Author

Kim Girard is a writer based in Brookline, Massachusetts.
    • Anonymous
    The penny will never catch up with Macys.
    • Anonymous
    Another case study too look at: Talbots vs Ann Taylor/Loft, Chicos/White House | Black Market
    • Gary Pifer
    • Founder, Historix Branding Group
    I get the Red, White and Blue American theme
    and the town square in their logo. But I hope they did
    not spend much on it. Well I guess if Macy's can make
    the North Korean Red star work anything can happen.
    • Judy SChierling
    I am a former associate with JCP, worked for the company for 9 years and loved doing my job, the people
    that I worked with were like family and totally were on the same page. This included the management.
    I like the new JCP logo, the ads on TV and the stores are
    looking great. Keep up the good work.
    • Anonymous
    Stopped in JCP this weekend - I liked the revitalized look -starting at the front door with the monthly logo theme. Sales associates are buying in, indicating the customer will get the better deal all the time, versus some of the time. There seemed to be quite a few shoppers, though I think it will take some time for people to really get the hang of shopping with no discounts/sales. I have to say, I'm more inclined to shop there, versus chase the sale for my home goods/kids clothing...we'll see how other departments develop. When one considers the savings of sale management (printing/signage/postage/personnel) 540 time a year, there could be significant savings!
    • lou solomon
    • manager, Manufactor
    I belive JC Penny will loose money with the new Makeover the Future of Retailing?

    I my self and friends will no longer shop at JC Pennies due to the new structure. People like to see deals / good advertisement.
    • L. Smith
    • Owner, LSA Research
    I visited a Penny store yesterday with a friend to see the new look. I liked the simplified pricing and noticed some of the merchandise was upgraded. Not enough yet to attract me as a shopper but the Main Street concept is great and I think it has the potential to change the shopping experience greatly. If the new strategy is implemented as planned, I am likely to shop at Penny again.
    • Anonymous
    I actually hit rewind on my recorder last night to see the new JCP commercials with Ellen. With the advertisements, and this article, I'll check out JCP. The changes sound like a good move.
    • Mike McDonald
    • CEO, The McDonald Group
    NK department store in Stockholm is a major emporium attracting 12 million annual visitors to its vast colection of top brand stores within a super store, beautiful ediface. JCP is a weak attempt to mimic NK on a micro scale but without the solid drraw of top brand shops like Ralph Lauren, Nike, etc. JCP is homespun stuff with second tier face cards.
    The four Ps of the Marketing Mix are out of whack at the new JCP. And the department store business model is passe.
    Product is not unique but a grab bag of designer shops that do not build a core brand because it's a hodge podge of others' names.
    Price will fail because it won't be predictable as the author states above. Apple, with its closed loop vertical integration and tech/design has superior brand differentiation to support a premium price. JCP won't be able to clearly stand out as low priced with so-called EDLP; someone will always have a better deal. Consequently, there will be in no man's price land at JCP.
    Place. A unique shopping experience may be in the offing but will be hugely expensive to execute and maintain. Will require substantial real estate investment in top locations.
    Promotion. Ellen DeGeneres as spokesperson creates buzz but is it broad enough to appeal to a significant market size?
    An attractive logo is not a strong enough platform to support a weak business model.
    In today's over-stored, competitive retail landscape what is JCPs USP and compelling, differentiating strategy?
    • David Gravelle
    • Subaltern, Gravelle Branding/Marketing
    His Target experience is the most analogous to Jacques. Target was a wallpaper brand that got a lightning strike brand makeover and differentiated itself from WM without leaving the category. If he can do that with a cumbersome battleship like JCP, poems will be written in his honor. The trick is a distinctive brand platform carried out in merchandise and the shopping experience.
    • Anonymous
    I am really excited about JCP's new strategy and approach to advertising. I think this will be beneficial to them as customers begin to change their perception of the company and start buying more from it.
    • Anonymous
    I think JCP is forgetting the old adage, " You can't be everything to everyone". I think targeting "All Americans" is risky business. What happened to niche marketing?
    • Daniel AJ
    • Consumer
    ""We complain that every department store is the same," Lal says."

    Yes and no. It depends on the item. As a consumer, I don't care that XYZ Pasta Sauce is only available in XYZ stores. But for higher priced items, like when I go mattress shopping, and the same products are labelled differently at different stores, I get irate. This is done to prevent me from comparing prices., it is done to stop competition on price.

    Similarly, "exclusive" partnerships between, say mobile phone networks and mobile phone brands, stink. If I can buy the mobile phone "abc 5000" only from one network, my appetite for said model shrinks a lot.
    • Anonymous
    Couple thoughts:
    Logo appears to have been done by the Gap logo folks, and that was a bust. Lame attempt to tap the digital logo zeitgeist.
    And I remember seeing a Business Week cover in my home in 1966 with a story about the "new" JCPenney; and it seems I see the same story every few years.
    After 30 years in specialty retailing, it's amazing how often outsiders come in to announce a whole new approach to pricing; they love the theory and it never works UNLESS it's the by-product of excellent product selection and merchandising.
    That's my final thought--no one seems to be talking about "the goods." Imagine Mickey Drexler at this task and that's ALL he would be talking about. So, I'm not impressed....
    • Denise
    The fresh marketing and advertising campaign is a real head-turner. The brochures and television spots make me want to visit a JCP again (after maybe being in one store in the past 15 years). I look forward to it!
    • Anonymous
    Some good points raised here. However, theres an innumerable number of challenges to make this work. And upgraded marketing and advertising is a two way sword: if you advertise it, you better be ready to back it up once a consumer hits the store. Product is #1 in retailing, and JCP lacks here. No coordinated look across the store. Johnson's spending hundreds of millions hiring a small group of people particularly in marketing and related functions. But just to name a few challenges that remain unaddressed are:
    1. How will he change the culture of a stale company with 5000 HQ employees, 1100 stores with their employees?
    2. 100 substantive brands is a nice sound bite, but has anyone even potentially ID'd contenders? Martha Stewart is hardly ground breaking (to say nonething about litigation with Macy's). There are some interesting labels that could be accretive to JCP business and sales, but the majority will be "new" lines from existing players. Eventually, this becomes akin to shopping for a mattress; each retailer wants "unique" products to differentiate and avoid price competition, but reality is that it's the same product with a different label and stitching.
    3. Imagine 100 boutiques circling the town square. Johnson wants common fixtures (to his credit), but each boutique will press for something different to stand out. This becomes a visual merchandising nightmare for both store employees and customers. Sometimes a customer wants to shop by label/brand, but sometimes she wants to shop by classification. If I am looking for better denim do I have to cross-shop 10 or 20 different boutiques? Will the boutique (shop within shop) sales people be motivated to help me cross-shop, or will they be "trained" as brand experts with an incentive -- direct or indirect -- to have me buy from their boutique? How do you manage so many boutiques, with different product classifications, price points, sales associates, etc but keep the JCP shopping experience coherent and satisfying? Neiman Marcus and Saks face the issue of balancing "brand" specialists versus category specialists (eg, dresses) with far fewer distinctive bou
    tiques and with sales associates who have far more training and far higher earnings potential versus JCP.
    4. Johnson wants to keep all 1100 stores open b/c all are profitable at store-level (four wall basis). But thats a HUGE number of stores to re-design with dozens and dozens of different formats -- in mall/off mall, store sizes, layouts. Terry Lundgren spent years integrating the May Dept Store nameplates into Macy's, and he was converting about 325 stores, most all of which were in much better shape to begin with relative to Penney's.

    I could go on for hours, but this is an immense task. No matter the advertising, new logo, new pricing, 8-figure apiece new executives, it starts with the product, continues with the in-store experience and can only have a chance at being executed correctly by having complete buy-in at HQ and across the hundreds of thousands of store employees. Those type of true, customer focused, product knowledgeable sales associates don't come at minimum wage or anything close to it. The "plan" is catchy, but that means zilch is JCP can't fill in all the pieces and execute this strategy.

    Johnson apparently did wonders for Apple, but he did have the luxury of having a limited number (30-40 key items) of distinctive, high-preference products, complete control over supply chain and distribution, the margins to pay for superior store personnel and store layout. Contrast that with at least tens of thousands of items (no core drivers ala iPad, iPhone, Mac Book laptops, iPods), 1100 stores with 1101 layouts, a long heritage of operating in a much different environment, and much lower margins to pay for all that needs changing.

    Not convinced that the 100 boutique strategy is right, but kudos for fresh ideas. Just haven't heard yet any realization of the challenges -- especially cultural -- to actually make this work. Customers will give you a chance but if you continue to invite them to a "party" you better be able to deliver. Otherwise you end up with really annoyed (former) customers.
    • Anonymous
    Johnson's talented, but starting out with the Apple product line versus Penney's is a huge difference. Apple was already a popular brand with significant mystique before Johnson got there. Penney's is to retail what Oldsmobile was to automobiles, and despite numerous makeovers that brand eventually died because it couldn't overcome it's dated reputation and image. What Penney's is now proposing to do is change the buying psyche of the public after decades of behavioral reinforcement - a minor task indeed! And are we all so frustrated with "sales," or have we just been trained to know what time of year to buy what we need.
    • Anonymous
    i love jcp
    • Anonymous
    Ron Johnson is a visionary. Wall Street said Apple would close it's doors when the Apple Stores opened. Wrong. I put my money on the man that steps up to plate an takes the challenge. Good luck Ron Johnson. I bet you are going to WIN...again.
    • Anonymous
    I started out skeptical--as a sales hound, I grew to depend on those JCP coupons that saved me more than I typically spent during a shopping trip. I have to say that I am impressed with their marketing strategy (Ellen is brilliant in the commercials) and their simplified approach to pricing. Before the change, I wasn't really sure what the final price would be until I examined the receipt later. I find the new prices to be competitive. From a consumer's point of view, this is positive change.
    • Frank Burke
    • Consultant, Burke & Towner
    The advertising is more centered on entertaining than on sales. It lacks the positioning strategy so necessary to establishing the brand identity. Penney's needs to evolve outward from where they are than to compete in places where they are not.
    • Anonymous
    One area that needs addressed is at the store management level. Store management needs to be able to manage and input local consumer shopping demographics into the overall operations mix. How much authority is granted is another matter. Who's closet to the customer anyways?
    • E Susan Kellogg
    • Professor of Business, Southern Virginia University
    This makeover can work, if the internal culture of Penney's is also changed. I am reminded that GM keeps trying to remake itself, and almost succeeds each time, and then is drawn back into its morass because the culture at GM hasn't changed. Are these changes being "done to" Penney's or are these changes being "done by" Penney's?
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited
    The competition faced by JCP is fierce and to an extent cut-throat. The strategies being planned would not give profitable results in the short run. When you give too much discount some doubts as to quality,etc. arise. "All Americans' won't succumbonly to low costs and this can also not be sustained notwithstanding the likely high velocity of sales due to lower cost. After all, JCP must become a viable proposition and net profits cannot be lost sight of.
    Johnson can also not directly apply his Apple experience in JCP as these are not the same type of business entities.
    • Anonymous
    I'm sad to see the New JC Penney's. Sat. was my Day, For me. I always told My Family if they couldn't find me, Just go to Penney's, That's where I would be. I love shopping there. But Now. I feel Lost, Unhappy. Now when I go to Penney's, It's dead inside, Not like before. I now go in walk around an leave. I have NEVER done that. I'm a 4 bag or more shopper. The price's are Not That great anymore. After about 25 years of shopping at Penney's, I feel like it is coming to an end for me. It's sad. My whole House is done up with JC Penney's. It hurts me, Because Penney's was The Store over All Other's. Thanks Ron Johnson You took a Great Store an made it into a Sear's.
    • Anonymous
    Today was the end of and Era. JC Penny's changed its dress code to jeans, t-shirt,and clean tennis shoes. R.I.P. the tie and dress shirt, good-bye to dresses and panty hose , and farewell to high heels and dress pants. You will all be missed dearly imagine having a lady in a t-shirt and jeans no makeup or perfume fit you in a bra. Now someone like this giving advice on how to wear a prom dress ad what shoes to wear with it. Mr. Ron Johnson slow down. Think before you jump out there you seem to be losing a sense of reality. JC Penney's is a department store . We used to give customer service. What are you trying to create a mini Wal mart or a mini Target. Your ideals are strange for a middle class department store. May be you ought consult with the people who work for min wage at your store . We need our jobs and we take our jobs serious. you seem to have surrounded your self with a bunch of yes people who
    are afraid to tell you that you are moving in the wrong direction. I would love for you to come and work with me and you would see what 7.25 per hour will get you.
    I am one of your employees . I
    get 7.25 per hour and give 100 percent after 20 years.
    • Luciano Paskevicius
    So far the only image we have seen about this new look is the logo , that not only isn't appealing, (a square with letters?) but also tell us that the name of the store now is JCP, no more penney's?
    To me the new look begins wit a strikingly beautifully design logo that makes you want to see more, click on it, share it.
    • Anonymous
    I am actually a JCPenney employee who is extremely unhappy with the new JCP store. As far as I can see, the new business model of the store appears to be "MAKE THE CUSTOMER HAPPY, NO MATTER HOW UNREASONABLE IT IS TO COM PLY WITH THEIR SENSELESS EXPECTATIONS, AND AT ANY AND ALL POSSIBLE COST, BOTH PHYSICAL AND EMOTIONAL, TO THE EMPLOYEES." I, for one, do not apreciate the EXTREME disrespect with which we associates are treated by the demanding, insensitive and mean customers who refuse to leave the store after we have closed, and then hurl insulting remarks at us because we look sad not to be able to leave at anything close to our scheduled time. We are also extremely disrespected by our managers, who refuse to schedule enough employees, resulting in frantic, angry, over-worked associates who are being asked to do triple the work for, oh, $7.50/hour. We are expected to get customers to sign up for credit cards, and do
    online ordering, PLUS now folding, cleaning out and cleaning up fitting rooms trashed mercilessly by rude customers who are allowed to take as many items of clothing in to try on as they like, with no associates to police the area, resulting in vandalism, theft, enormous piles of clothing jumbled up inside out, ripped, and dragged on the floor with no regard for how long it will take for us to clean up after them before we are allowed to go home. I HAVE HAD IT. JCPenney, go to hell if this is how it's going to be from now on.
    • I. S. NDAO
    • Junior Consultant, Senegal
    Why does JC Penney start with a general concept and image when many consumers don't know what it stands for?
    I think it's wiser to start with a precise concept and image in order to set up the core meaning (mission and delivered value) of JC Penney in consumer minds and target a specific segment of Americans, before extending to something more and more general and targeting "All Americans".
    Then at the same time, gathering in-store partners around that core meaning of JC Penney.
    • Anonymous
    Unfortunately we see what the quick fixes have done to our economy. JCP was attached to world wide quality in years gone by and that is what sold their products. I have had products purchased from them for years and was a very loyal customer. Today, with everything made in China, we do not care about quality and the quantity is trash...All the products of Target, Walmart and the like are trash because there is no standard by which things are made in the manufacturing industry. We the consumer have to re-purchase the same items every year. Sure it is less expensive, but we have to buy the same thing the following much are we really saving? JCP may not have been updated, but its quality used to be Excellent...The abolition of the Catalog was a HUGE MISTAKE...If is not broke don't fix it!! Everyday these new business with their trash goes out of business...because they sell trash.
    • Daniel
    • Consultant
    I wish to add to my prior comments published anonymously in reader comment #16. In that bit of commentary, I spoke of a multitude of factors that Johnson faces as he tries to radically transform JCP and make it a top destination for many American shoppers. Here I want to focus on just a few points: Johnson's call to streamline management, reduce layers and act like a 'start-up", plus the urgent need to get his rank-and-file employees (both HQ and store) on board and bought in to his grand strategy. Looking in from the outside suggests that he may be a bit oblivious to the need for employee buy-in while simultanously building up one of the most expensive executive management teams in retail, to say nothing of his peer group. I will address the dichotomy between words and actions in regards to streamlining management layers first.

    Johnson and his ever-larger team of highly compensated C-level executives are making a bit of a mockery out of his charge to "de-layer" the company, make it more nimble and act like a 'start-up.' Retailing is a complex business, but one is hard pressed to find another retailer (with no significant international store prescence) with as broad an executive management team as does the new JCP; this "act like a start-up" company has a senior executive group that includes a CEO, a President AND a COO (three separate positions) plus a seemingly ever-growing number of functional C-level officers including finance, merchandising, marketing, technology, HR, and EVP's of real estate, private label, strategy, store operations -- excluding 'The Square', which has its own dedicated EVP reporting directly to Johnson -- plus two or three more that I have missed and the result is an incredibly large, fat and expensive executive management team, all of whom received ext
    remely generous sign-on packages including upfront multi-million dollar cash signing bonuses (unusual for retail) and multi-million dollar restircted stock grants with short three-year vesting schedules. In addition, few if any of the new gang are going to relocate to Dallas. Why? As JCP puts it, there is so much work to do across the company's 1100 stores in addition to traveling to meet with domestic and international suppliers, that there is no need for anyone to relocate to the Company's Home Office. The JCP BOD seems blind to optics: when you announce to your employees and the world that you are bringing in a new management team committed to a radical remake of the company -- one that will benefit all stakeholders -- it is a bit disengenious to then state that none of these critical people need to actually live near the company. How do you convince your remaining employees that this new group is really so committed to the casue when you don't require anyone to move
    ? Coupled with the rather outlandish pay packages, the end result may serve to signal that the new team has a rather short-term commitment to the company, its future and its people. No relocations, way above-industry average cash signing bonuses, and stock grants with a short three-year vesting schedule, no serious "claw-back" procedure to recapture these enormous payouts should management fail in its efforts -- these combine to call into question what the real long-term commitment is to wage an unrelenting campaign to radically transform the way this company does business. The underlying commitment of senior management, especially one that's comprised mostly of new talent, should be beyond the realm of any possible question. But the optics don't support that. Both the Board and Johnson (who isn't relocating either) know better. Why allow even the slightest doubt to exisit?

    When the CEO is shooting for lofty goals, proclaiming the need to make dramatic changes and cost cutting to survive, spending $135MM+ on new management, while simultaneously laying off close to 15% of HQ staff, slashing store personnel and revamping store employee payroll hours largely to cut out employee benefits, a picture begins to emerge of a leader and a Board who are not at all in touch with the remaining HQ employees, or the store sales associates, many of whom receive minimum wage.

    In my original post, a listed but a few of the challenges that lay ahead for JCP under Johnson. At the top was the question of how he will change the culture of this company both at HQ and across the 1100 stores. The strategy so far seems to be two-fold: lead rallying crys for the surviving troops, while simultaneously instilling a sense of fear amongst those who remain. Unless Ron & Co think they can manage the new "turn JCP into a mini-mall of shops & transform into a landlord" strategy by themselves, this matter is in need of serious and immediate attention.

    I also questioned the need to keep all 1100 stores open (regardless of 4-wall profitability) since this makes implemetantion of the new strategy that more difficult (Terry Lundgren, CEO of Macy's, regarded as amongst the best in the industry, spent about three years transforming around 300 May Department Store nameplates into his national Macy's vision). As in most industries, some variant of the 80/20 rule applies, where a disproportionate amount of your sales and profits come from a core group of stores (typically labeled in retail as "A" and "B" stores). While Johnson is betting the entirety of the company on his new strategy, why in the world would he want to put the effort into transforming the "C, D and worse" stores? While I don't know the particulars of individual store locations including owned versus leased real-estate and physical store plant, I would guess that this 100-year old company would have its share of owned real estate. Al
    so don't know the relative performance of owned versus leased stores, but you get the point: relative chance for success would be both higher and less costly if Ron & Co focused their efforts on the 500-600 stores that are highest in productiviity and profitability. Plus with board members including Ackman and Roth, JCP has its own team of real estate gurus who could maximize stakeholder value by having operating management focus on the potential winners while they focus on liquidating unproductive assets.

    While JCP is not reporting monthly comp store results anymore, all indications point to sales sliding much more substantially than expected. Many shoppers still are ignorant of the new pricing policy. It's dangerous enough to make a complete and utterly ubrupt change in pricing policy across all stores on one day (February 1st), but the 'cutesy' TV commercials and monthly brochures do a poor job trying to convince customers that the new strategy is meaningful. Coupled with an unconvincing and limited merchandise assortment and ever more disgruntled store employees (who are your real "touch point" with most of your customers), and what you have left is likely poor business results for at least the next 2-3 quarters (and perhaps much longer), a disillusioned employee base, lack of new customers and the loss of lots of former customers who won't give you a 3rd and 4th try.

    My 2 cents: pay more than lip-service to your employees, for you will certainly fail -- independent of the brilliance of the strategy -- without them on board, re-think the breadth of the plan (focus on top 500-600 stores), and recognize when you have to make a tactical retreat in order to win the war. After all, we are all human. Sometimes strategies don't work. Great managers learn from mistakes and adjust tactics and strategy accordingly. And finally to the JCP BOD: your responsibility actually includes 'corporate governance' -- force your (very) high-priced talent to put some skin in the game, and make them relocate (even if they rent)!!
    • Anonymous
    I am a former Visual/Merchandise Supervisor who was let go after 9 years of service. New management came in to slash and burn and 3 supervisors were let go because their positions were eliminated.

    I was replaced with the Training Supervisor, who must have known my job better than I did. I made the store money with my marketing and display experience and was excited to be a part of the new program. Bitter, maybe... but I can tell you that the customers were excited with the sale events and merchandising practices.

    I don't think the new strategy will work at all, because customers came to expect a certain shopping experience with Penney's and it is gone.

    Nothing in my opinion will match the "It's All Inside" campaign. It's been replaced with "It's All Inside If You Can Find It". Good luck with that.
    • Anonymous
    Jcp is screwing themselves! Yes to prices on the floor are good. But they have no right to say they are "fair & square". They may be fair on prices. But the changes have come on strong with how well they treat the people who work for them. An older lady has worked 40 hours a week for almost 20 years & was laid off right before she was eligible for retirement. No one is working off commission anymore. They are expecting everyone to work for minimum wage with no chance of a raise for a year. People in the salon are taking pay cuts up to 500 or 600 a week. not a good move in my opinion. It's not fair to their associates.
    • Alice Whitehead
    • Anaylyst, Local government
    Mass merchandising isn't the same arena as buying an Apple or Starbucks latte. Johnson has violated the supreme rule of retailing-- know your customer. Longtime loyal JCP customers are leaving in droves (myself among them). Johnson has changed their suppliers and gutted the quality of their merchandise with the new pricing strategy, so consumers are actually getting cheaper goods for only slightly less. Johnson's response is that the consumer needs more education (i.e.-- the consumers are ignorant and they are the problem, not the CEO). All this while slashing staff for profitability.
    Hopefully JC Penney executives won't be as ignorant as Johnson believes his customers to be.
    • Nathan
    • M.E. lead associate, Jcpenny
    Most of this is true you do have a lot of very valid points in hear it is well written and completely acurate a lot of the way these new shops are going to be built is in the hands of individual stores and teams in stores. Most jcpenny store are being given creative control as far as the way the shops are being designed. Whether it be in some of the smaller stores or some of the bigger stores; most of the jcpennys are gonna have thier own different ways of changing thier stores around to fit the new layouts and design strategies.
    • Anonymous
    I like the changes even though my position was eliminated. My issue now is customer service has dramaticly dropped. Never seem to see a leader and lots of associated standing around talking not assisting. Now that the survey only enters you in a drawing you may only get the negative comments. And my last few experiences have been just that...terrible!!
    • Dennis Bookshester
    • Retired CEO
    Excellent ideas as long as Revenue and earnings plan for 2012,13, and 14 R realistic and will B met. Can't imagine making LY sales while attempting to smooth out
    • Anonymous
    Interesting, "Sell the brand product, but to leave the customer with the brand JC Penny's shopping experience as the key factor that sticks!!"
    Ah truly this is brand marketing strategy of "creating a brand within the brands".....
    • Rochellailee
    I have been a customer sense I was born, and I am 48 years old. I love coupons and the culture diverse clothing line set up. My son is 26 and the other is 18 we all are Jc Penny's babies.. Rochellailee Williams from Austin,Texas
    • Anonymous
    When I think of JC P I think of my Grandmother and polyester ...that's Penny's . Ladies that smell of Chanel no.5 and wear polyester pants suits...makes me miss her :(
    • Anonymous
    As a current employee, I can say that the majority of us, including myself, are HIGHLY UNDERPAID, considering all the work we do (Sales Support Associates).

    We did all the dirty work. Cleaning up after everyone, including our co-workers, and our super lazy sales associates.

    I like the new merchandise and brands, and the low prices. (The majority of the Clearance items are extremely low, and they are always going down each day/week).

    Customers don't realize that they don't really need the so called sales or coupons since there are considerably low prices everywhere.

    I don't like the fact that customers can return merchandise anytime, anywhere, for whichever would be shocked to see the things the customers return and use excuses like "it didn't fit,"we don't like it," "it's the wrong color" and so on....and it is OBVIOUS that the item is all stained, ripped, damaged and SMelly!!! and some purchased over 10 years ago!!

    and i must say that customer service has gone down because not enough people are being scheduled...employees are not quite happy

    Dear Ron, I recommend to personally talk with the people that work in the stores. I'm sure that you will get LOTS of valuable feedback from all of us, both good and bad.
    • Anonymous
    Penny's in Butler,Pa looks awful with no Christmas decorations. I will not shop there as it has no Christmas spirt
    • Anonymous
    I have been a long time JCP shopper , I used to go there at least 12 times in one month, needless to say that since the new changes I've shopped in there all of about 4 times in a year and that was just to get my teenage kids clothes for school. They don't say to me shop, it says duck and run. The layout is the worst and the clothes they sell out here I wouldn't dress my grand mother in . They wanted to upgrade the store, wonderful, just don't charge your customers for the upgrade we didn't ask for. I've canceled my account with them j
    ust this month. By the way, I saw the interview he gave when he first started making changes and I didn't appreciate him saying he's going to teach people how to shop! I do that just fine on my own. He should learn what the people really want before he can teach anything.
    • Anonymous
    I agree with the comment on the employees in jeans. The store is unable to brand or qualify itself as an affordable trendy store when the employees are wearing old jeans and oversized t-shirts. This was in a Chicago-land store that had many of the new layout features. The dress of the sales people diminishes any improvements to the store layout.

    In addition, I imagine that when you allow employees to dress so causally they do not buy new clothes as often - I know I wouldn't. Thus reducing employee sales purchases, which I am sure used to count as a high percentage of sales.
    In addition, I imagine that when you allow employees to dress so causally they do not buy new clothes as often - I know I wouldn't. Thus reducing sales purchases at the store through the employee discount program.
    • Anonymous
    Why are ALL the clothing racks "packed like sardines"? And the clothes sizes [X-Sm - EX-Lg?] never in order? Looks like the they are taken from the warehouse rack and grabbed by the armsfulls and then stuffed onto the in-house selling racks. Sorry you did alway with the JCP St. John's line. Always looked like a million bucks and didn't have to pay $345.00 for a pair of blooming jeans! There are still of number of us who dress conservatively & elegantly and not hoochie-moma! The only thing I purchase now with my JCP cc is the costume jewelry when its on Sale!