Ron Johnson was hired in November 2011 as the new CEO to turnaround JC Penney. It’s time for his annual performance review and the results are decidedly mixed.
No doubt, he set a lofty goal to transform a poky middle-income retailer into “America’s favorite store.” He changed the pricing structure from hundreds of yearly promotions to everyday low prices. As I have said before, with all Johnson’s deserved bravado (from his stints at Apple and Target), he can’t change human nature and the love of the deal. Consequently, his sales are in free-fall.
He has had success tidying up acres of monotonous space and carving it into more appealing brand-specific shops. Some areas are downright Nordstrom-like.
My focus of this review is the product-to-date. A retail brand experience has 3 core parts, price, presentation and product. The latter is clearly the hardest nut.
Middle and low-end retailers have to create or partner with vendors for exclusive merchandise to compete with focused specialty retail and better department stores. The wholesale market for branded apparel has disappeared, as retailers increasing filled square footage with their own private label product. Upper-end department stores carry a mixture of coveted wholesale brands and complement it with their own designs.
It is impossible for JCP to create compelling private product across an entire spectrum and cater to a divergent customer base. They are clearly trying to serve two low-income masters, the loyal aging customer and the young growing family. The store experience has big highs and lows, depending on who you are.
Most specialty retailers focus on a category or a defined target consumer. For instance, Victoria’s Secret focuses on creating intimate apparel and beauty products with one taste level. Even though Target is a department store, they have a contemporary vision for all their fashion products. They don’t cater to a range of tastes.
Unless JCP is able to harness the best design talent in the world, they will never achieve product greatness across the board. It is very tough to build and manage a massive creative engine and serve many masters.
They will only succeed if the store experience can supersede “acceptable,” but not exciting product. JCP doesn’t have a soul. It doesn’t have brand authenticity, except Sephora. They are hitting on the big trends but, most of the products feel like lukewarm versions of someone else’s good idea. Average grade C+.
Here is a product report card:
Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies.