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Ron Johnson previews JC Penney plan to 'retail different'

updated 11:00 pm EST, Wed January 25, 2012

Publishes two-page newspaper mission statement

Kicking off with a two-page newspaper ad (seen below) that serves as a new "mission statement" for the company that says it is "rethinking and reimagining" its store experience, J.C. Penney Company kicked off celebrations for its 110th anniversary with new CEO Ron Johnson at the helm. Johnson spent 11 years as Apple's Senior VP of Retail and was the key person responsible for the Apple Stores and other concepts, reports his colleague and industry observer Ken Segall.

Johnson unveiled Penney's new strategy and logo today at a series of presentations in New York City. He is doing away with the multiple and confusing series of promotions and sales -- the company had 590 such events last year -- and streamlining pricing to be more consistent, around 40 percent off previous prices all the time. When sales happen, they will be month-long events, and the company will strive to offer "great prices" on items every day. It will also price items in whole numbers, meaning a $20 price instead of $19.99.

Johnson also plans an overhaul of the 1,100 stores in the chain, creating 100 "shops within the store" over the next three years -- a concept very similar the Apple "store-within-a-store" approach that laid the groundwork for Apple's entry into mainstream electronics stores such as CompUSA, Circuit City, Best Buy and Sears before the company eventually launched its own stores. and which the company is still using today. The presence of new Apple equipment and software in traditionally PC-only electronics stores helped invigorate the brand, raise public awareness and generally showcased Apple's distinctiveness, which attracted attention. Johnson has already signed on Martha Stewart and colleagues from Target to help with the makeover.

Johnson revealed that Penney's had relied so heavily on sales that more than 72 percent of its revenue came from items that had been reduced 50 perfect or more, with full-price items accounting for just 0.2 percent of sales. "Clearance" mentality diminished both the value of the products and the lustre of the store itself, he argued. Month-long specials and "best price" markers letting customers know of deals, along with better and more consistent low pricing, would educate consumers that they can find the "right" price on an item anytime they care to visit.

The newspaper ad will be followed by a new TV advertising campaign featuring comic and talk show host Ellen DeGeneres. The debuts signal a new strategy for the chain, where Johnson has been CEO for only the last three months. Penney's has trailed most other department stores even as the whole concept of department stores has suffered a malaise of consumer interest coupled with the lingering economic downturn. The chain currently averages about $200 per square foot in sales, less than its competitors and a shadow of Apple's over $4,000 per retail square foot earnings.

In many ways, Johnson's mission is much the opposite of the work he did for Apple. The company was already well-known for its fairly-frequent bouts of great products, along with a premium price tag -- but had almost no retail presence when Johnson signed up with Apple in 1999. Penney's has plenty of well-established stores and low-priced products, but has pursued bargain-hunters and allowed its public image to fade.

The two page ad, appearing in major newspapers today, starts off by promising to "throw open the windows and let in some fresh air." It concludes the simple manifesto by saying "we're not interested in being the biggest store or the flashiest store. We want to be your favorite store." If Johnson can bring even a little of his Apple retail wizardry to the chain, the company's best days may be ahead of it.








by MacNN Staff

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Comments

  1. makemineamac

    Joined: Dec 1969

    +17

    Good for him

    How wonderful for him to have a challenge like this. I mean, (and I'm a retail guy so I'm overly excited), to be able to walk into a relevant, maybe-not-loved-so-much-anymore retailer and implement a complete change of 'heart' and strategy. That is exciting. Sales that last a month. Brilliant. And out with the $19.99 pricing. We'll see how it all works out, but I'm betting it will be a success.

  1. eizzumdm

    Joined: Dec 1969

    0

    jcpenny

    jcpenny's website is currently bragging that they are in the midst of "the biggest and best-ever crazy and exhausting and totally confusing sale ever"

    Who the h*** is that supposed to appeal to? Is it because I am a guy and do not get it? Do women like crazy, exhausting, confusing sales? No wonder they need a new retail strategy.

  1. blinkin357

    Joined: Dec 1969

    -1

    Wrong spokesman for JCP

  1. blinkin357

    Joined: Dec 1969

    -8

    Ellen DeGenerate

    Using Ellen DeGeneres as spokesman will alienate JCP's long-term, conservative, straight customers. I don't want to watch or listen to this radical woman.

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