In my post last February about the transformation of J.C. Penney (JC Penney Ante), my greatest concern was their ability to turn the product around. I didn’t doubt they could improve the design, housekeeping and experience of the physical stores; or that they could market the new strategy.
Department stores today are far more complex organizations than they were decades ago. They are now multi-channel and in some cases multi-national organizations. They all produce a good percentage of their own private brands and have to have extensive product development teams. Moderate stores such as Penney’s don’t have much of an open market anymore. There are few moderate brands that have the ability to sell these consolidated behemoths. They were squeezed out over time by the retailers consuming selling space with their own products.
Stores with private brands have to manage traditional merchandising and buying staff and have the ability to run creative design teams. These two functions are polar opposites and have a competitive tension between them. Great design comes from truly gifted and visionary talent. In many companies, it a considered a common trait. Often unqualified merchants are given creative authority over programs with dreary results. In-house design can become too insular, as well. Unfortunately, for the most part, private label apparel is subject to large committees of leadership, all who put their stamp on the offer. Subsequently, they can water down the soup and create brands with stolen or missing identities.
For Penney’s to really transform beyond price selling, they must have the ability to create authentic desirable brands, not generic names with me-too styling. Their true prospects rely on their ability to hire or partner with the best design talent in the industry. This is the Target playbook.
On my recent trip to Penney’s, I saw some real green sprouts of change in the environment and merchandising. The stores are less cluttered, brighter and have better housekeeping. In some areas, I felt like I was in Bloomingdale’s or Nordstrom, but at Target prices. Kudos to them, the place feels younger, more upscale, and alive! Some of the featured fashion was an exciting value. It is a much more pleasant place to shop.
The store is a tale of two cities now. They still are devoting a large swath of the store to Liz Claiborne and other missy product. The missy area is a dead zone for most companies, as they don’t really understand how to address the multiple lifestyles of an aging population. This is a core customer for Penney’s, so it will require real introspection. I have little faith that the upcoming Liz Claiborne concept shop will move the needle. This brand has been rehashed for years. (Formerly Liz Claiborne, Fifth and Pacific changed their name and sold their ailing namesake.) It will be an enormous challenge to give this line an appealing and authentic personality. They are also banking on Izod, Levi’s, Buffalo and their in-house basics for third quarter apparel introductions. This is hardly an exciting apparel roster, ditto for the upcoming fall Royal Velvet home shop.
I am much more intrigued with upcoming home introductions from Jonathan Adler, Terrance Conran, Michael Graves and Bodum in the home area next year. The current home assortment is painfully mainstream.
Sephora is still their ace card. I give them credit for their large department of trending active wear, big selection of dresses and pretty tops. The Mango department is hip and enticing. All important handbags are uninspiring, but shoes hit on most of the trends. The fine jewelry department is very old school. They will be introducing accessories by Betsy Johnson, Vivienne Tam and Lulu Guinness for fall. There are also some very cute kid’s clothes. Young families will be core constituents of the new Penney’s.
Target and Kohl’s should be very worried about Penney’s transformation, especially Kohl’s, if Penney’s get the missy area on track. The new Penney’s has the potential to be a low-end Nordstrom. So far I see hope and change beyond my expectations. Stay tuned.
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