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JC Penney sales down, retail experiments flopping or slow growing?

As JC Penney continues seeking to “reinvent retail” under their CEO who is willing to experiment, are the experiments working, or are slumping sales proof that new concepts are flopping? Let’s take a look.

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.

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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.”

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Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

2 Comments

2 Comments

  1. YouMeThey

    October 13, 2012 at 6:56 pm

    Johnson is to blame for unhappy former customers, mega profit losses and the gradual disappearance of a great middle class family friendly store. He has decimated it with his failed pricing scheme and personal agenda. I walked thru our local JCP store in August to get to the parking lot and it was dead. Dead?! in August? When other retailers were crowded with the back to school shoppers?
    All I saw were stray sales associates gazing sadly into space; probably wondering where they were going to work after the store finally gives it’s last gasp.
    Get rid of Johnson and perhaps a fine company established long ago by a very fine man can be saved. But as long as he, or his kind of ideas are in charge,
    count the rest of us out.

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