Major changes at a big box retailer
Long-established retailer, JC Penney, has undergone some radical changes since Ron Johnson took over as CEO. The company has done away with coupons and sales in favor of a “fair and square” pricing model where prices are just lower overall rather than piquing and plateauing along with a sales cycle. Devoted coupon-clippers and those who enjoy the thrill of a sale haven’t responded in favor of the new changes; in fact, there’s been a 10 percent drop in store traffic. And as an avid JC Penney fan, even I’m not so sure that the new direction will send shoppers running back.
“What we’re doing is re-positioning our company into a specialty department store,” said Johnson as he describes his plans to turn the store into 100 mini-shops featuring brands like Martha Stewart, Disney and Joe Fresh.
This approach is similar to Target, however the red-and-white retailer only implements a few shops when it runs “The Shops at Target,” whereas JCP would be demarcated by numerous brand-centric stations in the store.
Departing from the department store tradition?
Department stores generally have the connotation of being a place where families go to shop and this strategy seems to be moving away from that. While department stores do typically have similar brand items grouped together, they generally have like items, such as jeans or blouses, grouped together so that shoppers can peruse, select and go.
Branded mini-shops force the buyer to go from brand to brand to find what they need which cuts down on shopper convenience in favor of branding. There has been some outcry over the new strategy, but the concept is doing well in pilot stores, such as the Valley View mall in Dallas, Texas, so perhaps it will fare well over time.
As far as doing away with sales and coupons, Johnson stands behind his strategy saying the mistake was taking away the word “sale” and using phrases such as “best price” and “fair and square” instead. Wording does play a huge role in branding and if I happen to pass by a store and see a sale sign, I’m more likely to go in.
Johnson concedes that JCP will revisit the wording discussion, which may result in better sales for the company. Perhaps it’s an argument of semantics: the word “sale” drives foot traffic into the store, but in the same token, lower prices should encourage sales.
At any rate, I hope JCP finds the balance and strategy that is necessary in order for them to stick around. Johnson still has faith that things will change for the better; as he says it: “We’re going to reinvent retail all over again.”