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Where Should JCPenney Invest $1 Billion?
JCPenney announced plans to invest $1 billion through 2025 to further improve the customer experience and operating efficiencies after making “significant progress” in turnaround efforts in 2022.
“JCPenney is on strong financial footing and is steadily increasing relevance and frequency with our core customers,” said CEO Marc Rosen last week in a statement.
Rosen previously told the Wall Street Journal that the chain is renewing its focus on budget-conscious, middle-income shoppers with affordable fashion and housewares after previous management aimed wealthier and younger with trendy items and major appliances. He told the Associated Press last week that he believes JCPenney can fill a niche by offering lower prices than department store competitors while delivering a better service experience than off-pricers and online sellers.
JCPenney emerged from bankruptcy proceedings in December 2020 in a sale to Simon Property Group and Brookfield Property Partners. Shortly after that, Rosen was appointed as CEO to help in restructuring. Rather than trying to attract new customers, he aims to sell existing shoppers more.
As part of its self-funded $1 billion in investments, JCPenney’s more than 650 stores will receive brighter lighting and fresh paint. Checkout stations will be centralized, associates will receive mobile devices to gain better access to product information, and new POS sale systems will likewise enable better inventory reads.
Online, investments will be made to help JCPenney’s website and mobile app improve search functionality and product details, product reviews, and customized recommendations. Merchandising tools and supply chain operations upgrades are expected to help JCPenney fulfill orders faster, reduce delivery times, and better optimize local assortments.
On the product front, JCPenney’s beauty department has been revamped with an emphasis on inclusive brands following the defection of Sephora to Kohl’s. Also being emphasized are dress-up categories such as dresses and men’s suits as well as collaborations with designers and celebrities. National brands such as Forever 21 have been added, and private labels overall are being better defined.
Operationally, maintaining in-stock levels of basics like jeans, white T-shirts, and sheet sets and elevating messaging around the chain’s value proposition are priorities.
Beyond coupons and deals, JCPenney’s goal is to help customers better understand the value of the company’s products. Rosen plans to combine the deals with JCPenny’s loyalty program and mobile app to “help customers understand up front what they are paying.” Rosen told WWD, “It’s about making sure the customer understands the value we provide.”
Discussion Questions
DISCUSSION QUESTIONS: How confident are you that JCPenney’s repositioning efforts are on the right path? Where should JCPenney prioritize investments?
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Steve Dennis
President, Sageberry Consulting/Senior Forbes Contributor
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
After years of being starved of investment, the $1 billion of expenditure at JCPenney is to be welcomed. However, let’s be very clear – many of the things the money is being spent on are long-overdue upgrades of retail basics such as lighting, decor, and essential digital functions. Most JCPenney shops are in a terrible state and need improvement simply to survive. So, as much as this is a positive step in the right direction, it will not transform the business. For that JCPenney will need to dig much deeper and look at other aspects like brand, product, and pricing. And to put all of this in context, Target is investing around $5 billion in its business this year.
This is a significant investment and an encouraging sign for JCPenney as it slowly finds a path forward. CEO Marc Rosen appears to have a good handle on the critical priorities, but while a billion dollar investment is impressive, JCPenney has lots of places it needs to invest the money. Prioritizing where to spend will be key. Updating store lighting, paint and POS are all important, but these investments while needed, alone won’t drive the business forward.
“Rather than attracting new customers, he aims to sell existing shoppers more.” Since 2016, the average JCP shopper has aged from 51 years old to 60 years old. The core demographic is 55 to 65. Target’s core is 35 to 44. Who has a future?
Visualizing Neil’s description of a JCP store suggests the job in the store is more than paint and lights. Product Life Cycle is a proven theory. JCP is well beyond maturity and has been in decline for years. It is time to milk what exists.
A JCPenney success story would be great, and committing to invest $1 Billion over the next couple of years shows a lot of confidence. Offering top-notch service and value pricing will not be an easy combo to pull off, though. They really need to focus these investments around the customers: enhance their journeys by adding products and services enabled by an inspired workforce.
A simplified process and enabling technology will insure a win. Also consider RFID with faster check out, drop-and-go returns, Geiger counter product locator, and greater real-time inventory control. These will transform the customer experience. The time to do these things is now.
If my math is right (and my store count), this investment represents about $1.5 million per location. A lot of the improvements represent blocking and tackling…Retail 101…choose your own cliche.
When a company needs to invest in the basics like paint, lighting and improved in-stock levels on basics, it tells you all you need to know about JCP’s faded position in the marketplace. There are other, fresher-looking brick-and-mortar competitors out there, from TJX to Target.
Penney’s has lost dramatic market share to stronger brands for some two decades that offer greater value and convenience (off-price retailers and discount mass merchants, most notably). The plans outlined address under-investment and gaps, not things that will cause them to win, grow, keep and generate high NPS scores from enough profitable customers to possibly make a difference. This is a plan to buy time on the part of their owners. Yet another timid transformation from a retailer that’s been sleepwalking through the revolution. Dead brand walking.
Yes, Steve! Dead brand walking.
If anyone can make this project work, it’s Marc Rosen. The task is daunting, though; creating a new image, and re-animating the customer experience, will be difficult. They may need a sales gimmick (like Kohl’s cash) to complete the job.
They could spend $5B and it would not make a difference.
Mr. Rosen seems to be saying the right things from a merchandising strategy. There might be a niche for them to focus on brands and offer lower costs. The store certainly needs updating, and a million dollars per store will make a difference. But, focusing on their core customers, I don’t get that. Chasing a declining customer base seems like good money, chasing bad. Unless they can attract more customers from younger demographics, this investment is just putting off the inevitable for a few more years.
The best investment JCP can make will be in product + presentation. Merchandising. Storytelling. Investment in lighting and fixturing is a decade or two overdue, so of course that’s needed. But if that investment doesn’t showcase compelling product and presentation, then it too will be a waste of money. If JCP doesn’t get moving, Primark is going to eat their lunch in any mall they open in. And pretty soon Primark will have enough stores to really put a dent in JCP’s shiny new stores. The clock is ticking.
Wouldn’t it be ironic and perhaps inevitable if they just engineered a merger with Primark, whose original name was Penney’s? Clean sweep with what seems to be a winning combination?
Ironic indeed! In 2016 I watched Primark open one of their earlier USA stores down the mall from JCP in Danbury, CT. I’m guessing that was an incredibly humbling experience for JCP.
From a public relations perspective, JCPenney’s $1 Billion investment capital is a welcome development for a company in dire need of reinvestment. However, considering the size and scale required for JCPenney to drive a successful turnaround and transformation plan, $1 Billion will only scratch the surface of what is necessary to reimagine what this legacy retailer could be in 2023.
Part of a successful business and technology transformation and turnaround plan is to start with the foundational elements. The $1 Billion investment capital will get eaten up very quickly. Especially as JCPenney works on the store’s physical upgrades, invests in technological infrastructure foundational elements, supply chain distribution network, and, most importantly, enhances their talent capabilities.
The most crucial element of turning around any retail business is to have the right product at the right price and at the right time. JCPenney’s value propositions, brand purpose, mission, competitive positioning, and image must be transformed to attract new customers. CEO Marc Rosen and team have their work cut out for them, and the $1 Billion is only the beginning of what they need to make this work.
While the $1B investment is very welcome, and quite over due, it’s more useful to look at what hasn’t been said. Who is the JCP ideal customer? How will this investment shape the shoppe journey for those customers? Most of the identified investment areas are basic things that do not motivate a customer to enter the store. At best, these are areas that, if done right, will keep the customer from feeling like they should leave the store once they enter. Until we hear more about what transformation will be executed in product, merchandising, storytelling, etc. it’s hard to see how this action will make a dent in their falling market share. It’s a good start, but there’s much more that needs to be invested tour turn this around.
It has been a few years now that we have been talking about the re-invention of JCP.
I really liked the initial things that JCP did in their early remodels, but I don’t think it has done anything to define who is their target base, how do I increase that base and what do I want to be when I grow up. In that time that we have been discussing this, other retailers have stepped up their game, in brick and mortar and omnichannel. I don’t know how far $1B will go to solve any or all of that.
$1 billion seems large, but it s backlog of infrastructure of basic overdue improvements. You know it’s a problem when they highlight painting the walls and upgrading the lights. Ultimately, the success or failure hinges much more on holistic customer experience, especially around omnichannel execution that drives long-term brand loyalty and spend capture.
Fresh paint and lights will be nice. Fresh takes on merchandising and positioning are needed more. Here’s a more radical proposition for JCP: Re-brand from the ground up.
For the last 15 years, JCPenney’s has been in a slow death cycle and spending a billion is not going to eliminate the fact that they’re going to die. It’s just going to prolong the agony. The only thing they can possibly do is totally revamp everything to try to appeal to a younger audience. I would love them to follow a Stein Mart model and revive that idea in marketing
Is this really “repositioning”…painting stores and making the website almost as good as other retailers ?? (And emphasizing…men’s suits…HUH??)
The wire service stories were quite candid, landing somewhere between TL2 (Too Little,Too Late) and finally!, so let’s just split the difference and call it deferred maintenance. I’m really not the one to suggest where the money is best spent, but I’m thinking ‘anywhere’, as everywhere could use help.
The $1 billion investment may be too little, too late & not in game changing areas. The questions still plaguing JCPenny are what is its differential advantage & what are its real strengths versus its competitors? Lighting & fresh paint while overdue & necessary are not game changing tactics.
It’s a critical time in the retail industry, especially regarding investing in improving customer experiences as consumer expectations are higher than ever. It is wise for retailers to recognize how customer experience impacts retention, brand loyalty and average order volume as a strategic move to remain competitive in the retail industry. Better product descriptions, reviews and recommendations, and an omnichannel POS system reduce the risk of cart abandonment.
I’m afraid that simply investing $1 billion in revamping the stores and website will not bring back customers for JCPenney or help it reposition itself to boost revenue. Many old businesses are going bankrupt or failing to thrive because they lack the mindset required to appeal to today’s customers. These retailers have no idea what problems their customers are facing and how to solve them.
In my opinion, JCPenney’s investments and efforts should be made in the same approach that start-up companies would. They must think of themselves as a digital native brand, and leverage their massive physical store network as well as their access to vast financial resources. Otherwise, even with billions of dollars in hand, nothing will change for JCPenney unless they adopt an entirely fresh viewpoint.