Current J.C. Penney CEO Ron Johnson must have spent a lot of time with Steve Jobs when he was at Apple because it appears as though he too has the power to create a "reality distortion field." The question is whether he has the same ability to make everyone around him believe and then create results that match his grand vision. With yesterday's announcement of J.C. Penney's "transformation" plan, customers, employees, vendors, competitors and others will get to find out.
"Just like Apple, we're going to learn that the best days aren't in the rear-view mirror, they're right down the road," Mr. Johnson told Advertising Age. "I believe the department store is the No. 1 opportunity in American retail. And this isn't something I decided last June when I took the job. This is something I decided 10, 15 years ago."
Mr. Johnson outlined three key initiatives to remake the department store chain including "fair and square pricing," "Main Street merchandising" and new marketing initiatives.
"Pricing is actually a pretty simple and straightforward thing," Mr. Johnson told The Associated Press. "Customers will not pay literally a penny more than the true value of the product."
According to Mr. Johnson, the majority of Penney customers have only been buying items when on sale so the perceived real value of the goods sold is much lower than the chain's everyday retail. With the new initiative, Penney's sale prices, typically about 40 percent lower, will become the everyday price on goods throughout the store.
To keep things simple, Penney will also reduce the number of promotions it runs. Mr. Johnson noted that Penney ran 590 separate sales last year even though the average customer shopped the chain only four times a year.
"I thought to myself, 'This is desperation,'" Mr. Johnson told The Wall Street Journal.
Now, Penney will run only two types of special discount events: Month-Long Values, and Best Prices, which always happen on the first and third Fridays of every month to make room for new items.
"We want customers to shop on their terms, not ours. By setting our store monthly and maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us," Mr. Johnson said in a statement.
Penney is also set on "reinventing the in-store experience" and to achieve that the company is launching its Main Street initiative with the entire store merchandised in a series of 80 to 100 brand shops such as the deal recently announced with Martha Stewart.
"Some may call it crazy, but I don't think there is an alternative," Mr. Johnson was quoted by the Journal. "In an internet age where you can have exactly what you want with one keyword, people won't tolerate big stores. You have to break it down for them."
The chain will also feature its Town Square section at the center of the store offering services that "customers will enjoy before they buy, while they shop and afterwards." The section, which will be at least 10,000 square feet will offer rotating attractions such as free hair cuts one month or free food in another. Penney said the Town Square "will merge the physical and digital worlds, assuring the physical retail stores' vital role as the centerpiece of retailing's future."
Finally, Penney introduced a new red, white and blue logo and its new spokesperson, Ellen DeGeneres.
Michael Francis, president of J.C. Penney, said in a statement, "We are redefining the J.C. Penney brand so we become a store for all Americans, by offering an experience they cannot get anywhere else."
- CEO Ron Johnson Outlines Blueprint to Make jcpenney America's Favorite Store - J.C. Penney Company, Inc./PRNewswire
- J.C. Penney gets rid of hundreds of sales - The Associated Press/Google
- J.C. Penney to Change Prices Amid Revamp - Bloomberg News
- J.C. Penney revamps strategy to include major markdowns - Los Angeles Times
- J.C. Penney Chief Thinks Different - The Wall Street Journal
- JC Penney Reinvents Department-Store Retailing - Advertising Age