By George Anderson
There hasn't been anything revolutionary in what J.C. Penney has done in recent years to get its business turned around. In fact, if anything, the retailer has been successful borrowing what works at other retailers and making sure it executed against its me-too strategy.
Consider some of the changes initiated at Penney when Allen Questrom was the company's CEO that are being continued under Myron "Mike" Ullman's leadership.
Penney borrowed a page from Kohl's (which, of course, also borrowed the concept from others) of placing its checkouts at the front of the door instead of locating them within product departments.
The company also brought stores outside of the mall to stand-alone locations. As others discovered, the cost of operating outside the mall is generally less costly and stand-alone stores generate more sales per square foot.
Terry Prindiville Jr., district manager for Penneys in the Twin Cities area, told the Minneapolis Star Tribune, "As we've moved into off-mall locations, our productivity has improved. You simply have less square feet to manage."
Penney also switched to a central buying system back in 2001 to improve its purchasing efficiency and give it more clout negotiating deals with suppliers. Other department stores and competitors in other channels began central buying long before Penney.
Finally, the department store chain, like others, has focused on exclusive brands such as Arizona Jean Co., Nicole by Nicole Miller, nick(it) and Chris Madden to present itself as the place to shop for fashion in clothing and for the home.
While, the company has found success with its exclusive brands, it is not without significant competitive challenges.
As Linda Barck, a consumer from Northfield, Minn., told the Star Tribune, "Penneys is usually my first stop. But Target's gotten a lot better. If I want something quick, I'll go [to Target]. I know their prices are reasonable."
Moderator's Comment: What does Penney's success say about the need to differentiate? What are the challenges/opportunities you see before the chain?
We would suggest that Penney does, in fact, differentiate from the competition and the answer as to how was provided by Howard Davidowitz, chairman of Davidowitz & Associates: "They chose their strategy and they executed on that strategy flawlessly." - George Anderson - Moderator