By Kevin Meyer
That old retail icon, JC Penney, is undergoing a transformation thanks to Apple. Apple? Yep – JCP's new CEO is one of the guys responsible for creating the Apple Store. Anyone that has been in one knows it is a bit of a different experience. Where else can you pick up a $2000 piece of equipment at the back of the store and walk all the way out without a receipt – because it was emailed to you – with no one batting an eye? Where else can you sit for a couple hours playing with the equipment with no one trying to give you the hard sell? Apple believes that if you help people to use and like the technology, the technology will sell itself.
So now that concept is coming to JC Penney.
The first significant change will be embracing a new pricing strategy, consisting of "fair and square" pricing. It includes three types: everyday, regular prices; monthlong values; and best prices, on the first and third Fridays of every month. To determine new prices across its product range, Mr. Johnson said that the retailer looked at what it was charging and what customers most often paid after numerous discounts. He found that only one in 500 items sold at full price, while 72% of revenue was derived from selling products at 50% off or more.
Ok, perpetual sales are sort of useless. Sounds good.
The strategy will trim JC Penney's promotions to 12 a year from 590. "Steve [Jobs] would have called this insanity," Mr. Johnson said of the sheer volume of promotions. "At some point you, as a brand, just look desperate. JC Penney spent over $1 billion, and the customer didn't even pay attention."
Funny, I have always thought of JC Penney as something of a "desperate" brand – never quite understanding what they stood for.
Working with PMH, JC Penney created a personality and color palette for each month that will be carried throughout marketing, in-store displays and even external lighting on stores. By focusing on one month at a time, Mr. Francis said, JC Penney can highlight important consumer events, such as Valentine's Day, Super Bowl or the Academy Awards.
Ok, ok… I get it. New logo, new store colors, streamlined promotions. All good… except…
What about the product? Advertising does not create value, a new logo does not create value. If your product is valuable in the eyes of the customer, it will sell. Advertising may mask true value to a customer, but just for a short while. Apple has a great store experience… but there are great products inside.
So, Mr. Johnson, is all the glitz to just sell the same old stuff?
Peter Reynolds says
I agree Kevin, there is no value in the brand, the value is in the product.
We have a few Apple iStores in South Africa, but the concept doesn’t always work like it does in the US. Apple has a small following in South Africa. The sales staff in the South African stores generally cannot afford the very Apple products they are employed to sell. So they don’t know the products and lack enthusiasm when asked for advice. There are the displays and you are free to test the products for yourself, but there is no customer service. They can’t help you or explain anything.
Customers generally don’t like being hard-sold to, but they don’t mind being engaged with openly and sincerely. Especially if the sales person is willing to develop the solution from the buyer’s point of view. This is essential if you want to convert them to your product.
Dick Kusleika says
I’m very bullish on Ron Johnson. If he can turn JCP, he has to be the greatest retailer of all time. We’ll see. Two points:
First, there is a lot wrong with JCP. I don’t expect Johnson to fix everything his first day on the job. You might argue that he should have chosen merchandising before promotion, but maybe he’s going with his strengths. It took JCP decades to get where it is, let’s give him a couple of years to right the ship.
Next, I’m not sure merchandising is a big problem. They don’t sell iPads, but not everyone can. Undershirts and hand towels aren’t glamorous, but I still need to buy them and so do other people. Maybe they have a reputation for shoddy merchandise (I’m not plugged into retail) but it’s news to me.
I’ll be watching JCP with interest over the next couple of years. Even though I think you’re being a little hard on them today, keep sharing your opinion. Agree or disagree it’s always a good read.
Mark Graban says
A new logo = lipstick on a pig. They will probably outlive Sears, but that’s not saying much.
Bart says
We’ll need to put thermographic heat strips on the grave of James Cash Penney, founder of the Golden Rule Store, the early version of JCP. He is probably spinning at higher RPMs. Maybe a SKU rationalization will help, but solid service and high value will win the day.