Neimans & Target Abomination

Neiman Marcus and Target released their much-talked-about holiday 2012 collaboration last week. I call it an abomination not a collaboration. This collection of random home and apparel items designed by well-known designers, like Carolina Herrera, Jason Wu, Rag and Bone, Tory Burch, Tracy Reese and Diane Von Furstenburg are poorly designed, low quality and strangely merchandised.  

The packaging is also big-box boring. They could have used high-end packaging to create a perceived value for the jewelry boxes, letter openers, lunch boxes, purses, glasses, dog accessories, etc. Instead they took the discount low-road and dished up the products to please the distribution center, not the customers.

This collection is just excess inventory and hype for Target stores and an embarrassment for the Texas-based bastion of luxury.  Shame on you Neiman Marcus, for putting your gold-plated name on some of the priciest drek I have ever seen. If you wanted to entice the aspirational luxury customer, you could have turned to your vendors to create some special value handbags, accessories, sweaters, tech cases and other compelling giftables. This Target collaboration can’t hold a soy candle to previous home runs like Liberty of London and Missoni. It will confuse and disappoint customers on both of the ends of the spectrum.

This public relations stunt has gone horribly wrong. These strange bedfellows have given birth to some very strange children. 

Products from the Neiman Marcus and Target holiday 2012 collaboration.

Products from the Neiman Marcus and Target holiday 2012 collaboration.

Dix&Pond is the blog of Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies.

JCP Product Report Card

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:

JCP 4th Quarter Product Report Card

Dix&Pond is the blog of Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies.



JCP Report Card – Hope & Change

Visual merchandising is greatly improved.

Visual merchandising is greatly improved.

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.

A top from JCP's fashion-right Mango line.

A top from JCP’s fashion-right Mango line.

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.

There is a good assortment of fresh dresses.

There is a good assortment of fresh dresses.

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.

JCP has well represented the active trend.

JCP has well represented the active trend.

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.

Some compelling contemporary separates.

Some compelling contemporary separates.

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.

Dix&Pond is the blog of Dix&Pond…creative and strategic consulting for retail, wholesale, analysts and investors. Contact us for more information on custom research and reporting.

JC Penney Ante

Update June 19, 2012

The first casualty of the “dream team” assembled by Ron Johnson to turn Penney’s around is out. Michael Francis the former Target exec hired by Johnson as president in October 2011, is leaving the company. Someone had to take the fall. He leaves with more than $15 million in salary, severance, etc., not bad for 8 months work. In May, they reported a 20% drop in sales. I still contend it comes down to great product before illusionary marketing.

May 2012

I wrote this original post in February. Yesterday Penney’s came out with a$163 million dollar loss, which was more than double what analysts expected. The COO said there was a 10% drop in store traffic, 5% drop in conversion and a 5% drop in spending per customer. All of this happened in spite of their recent national ad blitz. In my opinion the cart came before the horse on their “everyday low price” strategy. The exciting, modern ads sent people to see the same old zombie merchandise assortment, without a coupon!

I’m rooting for them, as I applaud their gumption to reinvent moderate department store retail. It will be a challenge in their sector as there aren’t many coveted wholesale brands in their level of the market. Retailers effectively put them out of business a long time ago with their own private label. It all comes down to the product, and they will have to create it.

February 2012:

On a visit to J.C. Penney’s this week,  I was struck by the enormity of the renewal project Ron Johnson (the former Apple executive, new Penney’s

J. C. Penney’s February 2012 Promotion

CEO) has ahead of him. February marks the beginning of the huge new initiative to make this retail behemoth brand relevant. Undoubtedly, he is filled with optimism as he comes from two companies that made their own outsized luck, Target and Apple. These two companies have strong identities and strategies, that rewarded them with brand greatness. Target invented the “hip mass retailer” with their real designer collaborations and cool marketing. No mass retailer had ever taken this approach. Apple has arguably the most dynamic and transformational product line ever created; customers will line up and sleep in the cold to be first to get their new introductions. Ron Johnson is “betting the ranch” that he can transform an enormous, faceless, moderate department store into an exciting retail brand experience.

He started by cutting back endless promotions in exchange for everyday low prices. The jury is out on this strategy for me, as consumers react to a call-to-action by a promotion and love the “art of the deal”. Walmart has everyday low prices, but they struggle in fashion categories such as apparel, as uninspired design isn’t desirable at any price. Will the consumer feel the everyday low prices are simply an inexpensive store, with inferior merchandise?

The store felt more colorful and bold contemporary graphics were placed around the perimeter, defining departments.. They have taken to the airwaves with slick, modern ads à la Target or Gap in their heyday. Do these images promise something that the stores are not yet ready to deliver? See Penney’s website.

A colorful presentation by the mall entrance.

It all boils down to the product. There is SO much apparel in their stores and the consumer can’t be fooled. The problem is that most of it is in-house, private label with meaningless labels. There were pockets of appealing fashion, like the “on-trend” women’s active apparel area. Shoes hit on the dominant trends. Mannequins in the dress department were outfitted with flimsy garments, some with puckered seams. Housekeeping was unevenly clean, very sloppy or absent in some areas.

The best thing they have going for them is still the Sephora department. (I still marvel that they were able to score the sizzling beauty brand.) The long-term strategy is to reassort the store into compelling departments of viable brands. The problem is marquee affordable brands don’t really exist anymore. Over the years, as retailers started making their own insular products they effectively trumped most of the moderate wholesalers. They shut themselves off from the creativity and variety of an open market.

Target’s strategy isn’t new anymore. Real designer collaborations are still a successful way to add authenticity and design credibility to a retailer, that makes most of their own products. There is virtually no way to get credibility without doing collaborations, as there aren’t wholesale fashion brand names in their price points, that create apparel, accessories and home products that consumers crave. When was the last time a 35-year-old woman waited in line for new Alfred Dunner apparel (one of JC Penney’s wholesale brands), like they did for the Missoni collaboration at Target? J. C. Penney will fail if they try to be “Target cool” or safely, mature Kohl’s. I think the opportunity is to position themselves as the “Nordstrom for the mass market”, a fashion department store with some real strength in shoes, bags, beauty, accessories, apparel and home. Nordstrom has the ability to tap the entire creativity of the better and designer wholesale markets. They offer established and up-and-coming brands and punctuate them with their own quality private labels. Penney’s doesn’t have the advantage of being able to access premier fashion brands.

Penney’s is in a game of product poker and the consumer won’t fall for the bluff. They will have to allow real creativity and autonomy to the various in-house design groups. The customer will reward them for a shopping experience that ups-the-ante with some authentic fashion risks and unexpected offerings. It is all about the product.

Dix & Pond is the blog of Dix & Pond Consulting

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