Macy's Quietly recognises That JCPenney CEO Ron Johnson Might Be On To Something

JC Penney

Photo: Business Insider

JCPenney CEO Ron Johnson has been bashed by analysts, employees and pundits alike since embarking on his turnaround plan in January. After all, the numbers have been pretty concerning.But there’s one way that he’s being vindicated: his shop-in-shops.

JCPenney is transforming itself into a collection of 100 shops within its large department stores. 

And he has some numbers to back it up. So far, the shop concepts are rocking 20 per cent higher comps than the rest of the store.

Shops aren’t new, but blanketing a department store in 100 of them is, and it’s a bold idea.

And now, Macy’s has quietly signaled that Johnson may have something here. 

JCPenney’s archrival recently announced that it signed a deal with athletic apparel retailer Finish Line to open branded shops in 450 of its department stores.

Look at Macy’s quietly acknowledging that Johnson could very well be onto something and that they don’t want to be left behind,” writes Brian Sozzi, chief equities analyst at NBG Productions, in a note this morning. 

Sozzi also points out that it’s a smart move by Macy’s. 

“Also Johnson is focusing on apparel, Finish Line deal gives Macy’s a nice early point of differentiation, especially for back to school 2013, in the shop in shop war,” he writes.

Why does the shop concept make sense? 

Sozzi explains:

For the department store:

  • Adds a brand name that may not have been in the store previously.
  • Adds a wow factor to the shopping experience.
  • Brings higher margin sales opportunities.
  • Offers a way to combat online (the hope is that consumer trades price for experience).

For the brand:

  • Less analysis needed for site selection; instant access gained to top locations.
  • Savings in the capital spending budget.
  • Drives brand awareness that could spill over into the brand’s stand-alone stores and online.

NOW SEE: Huge Photos Of JCPenney’s New Concept Shops >

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