[credit provider=”Courtesy of JCPenny”]
When Ron Johnson told Steve Jobs he was leaving Apple for JC Penney, Jobs simply replied with “Are you serious?”People have asked Johnson “What he was thinking?” several times since he became CEO of JC Penney in November, but Johnson describes the move as very similar in comparison to his move from Target in the late 1990s to Apple. Target was booming, and Apple only had 3 per cent of the market share, just like JC Penney does now.
Johnson still took the risk, and left Target. He said he likes his odds, and thinks this is the best risk he’s taken yet. On Wednesday, along with JC Penney President Michael Francis at Pier 57 in New York City, he unveiled the new JC Penney, which by 2015 will consist of 100 specialty shops within each store. It’s not a surprise that the stores itself will mirror Apple’s retail stores and the advertising resembles Target’s.
This all begins on Feb. 1.
Johnson’s presentation of how JC Penney is transforming itself began with a voice over by Ellen Degeneres, who recited the company’s new anthem. They’re fine with “growing old” — the company turns 110 this year — but are not OK with “growing stale.”
Johnson broke down the plan into the retailing six P’s: Price, Personality, Product, Promotion, Place and Presentation.
In 2011, JC Penney ran 590 promotions that only brought a customer in an average of four times a year. Each promotion cost around $2 million. And 99 per cent of JC Penney’s potential customer base was flat-out ignoring them.
“Steve (Jobs) would have thought that was insanity,” Johnson said.
Now instead of 590 promotions, Johnson is axing that number to 12.
“They’re called months,” Johnson joked with the crowd of 700 people that took in the morning session to reveal JC Penney’s new plans.
With the new plan, instead of getting people in four times a year, JC Penney hopes to draw them in just once a month. If they’re successful in that, they’d triple their business from promotions.
Pricing is being transformed to three levels: Everyday, Month-Long, and Best-Price.
Everyday prices are the competitive, but reasonable prices JC Penney offers. Month-long prices are sales on select items that last a month.
“We want our pricing to be fair and square,” Johnson said. “If a woman is out of town the week of a sale, that’s not fair.”
JC Penney plans to eliminate clearance sales, because the product itself does not change, the store just needs room for the new items. So the first and third Fridays of every month, JC Penney will offer Best-Price deals, cutting the price of products they want to move off the floor. Stickers on newspapers and TV spots will alert customers to when these Fridays are.
The everyday price will include being marked down about 40 per cent from where it was offered last year before sale price, but the number of sales applied will be significantly less. Before Johnson took the realm, nearly two-thirds of products were sold at a 50 per cent discount.
[credit provider=”Courtesy of JCPenny”]
PERSONALITYBrands such as Target, Nike, General Electric and Shell can be identified solely from their company’s branded symbol. But department stores use mostly word marks, such as Bloomingdales, Macys, Walmart.
JC Penney kept the box or “frame,” as they like to think of it, but redesigned it’s logo once more.
The frame will be used through out the stores and online to feature product.
Johnson also plans to change the personality of the stores.
“As I was joining the team, they toured me through some of the ‘new’ stores,” Johnson said. “I closed my eyes and realised this is a great department store … if it was 1995.”
Along with the new logo, in hand with the 12 promotions a year, each month will receive a colour. That colour will be reflected on the outside of the store with lighting fixtures, in the 96-page booklet JC Penney will mail to its customers and inside the store in the frames and photos.
Through research about American’s shopping habits, it’s clear that specialty stores work. Brands such as J. Crew, Pottery Barn, Banana Republic have flourished, as department stores continue lose their market share.
“In a world where the product we want is just a key-word search away, we’ve lost our tolerance for complexity,” Johnson said.
JC Penney’s plan to combat this includes creating 100 specialty stores with in the department stores by 2015. Starting in August every store will add two specialty stores a month.
JC Penney has already seen directly the success these stores can have through its partnership with Sephora. The Sephora stores with in JC Penney average $600 worth of sales per-square-foot. The rest of the story is a small $200 per square foot, in comparison.
The department store has redesigned its fixtures for clothing to 5 x 5 pieces, that when stacked and place next to each other create a wall. There’s walls will make up the 100 mini-shops that will be inside JC Penney.
Classic JC Penney brands such as IZOD, Arizona Jeans, Liz Claiborne and St. John’s Bay already have plans for their shops in the works. New partners such Martha Stewart and L’Amour by Nanette Lepore will also have stores.
The new pricing creates the need for more variation in the products JC Penney carries.
Francis described it as “editing the content” of JC Penney. Brands that did not perform well will be axed. And others will be added.
Adding Martha Stewart, for example, helps JC Penney expand on it’s month-long promotions. In July if you want to go on a picnic, you’ll go to Martha’s store. And In November when you’re preparing for the holidays, back to Martha.
Johnson freely admits he’s stealing Apple’s floor plans from its wildly successful retail stores.
Apple stores are split in two, Johnson explained. The “Red Zone” is where customers discover new products and the “family room” is where returning customers come to learn something new or fix their products (ie: the Genius Bar).
Within JC Penney these areas will be called “Main Street” and “Town Square.” Main Street will be the aisles that guide you around the store, passing all of the shops. Just like a Main Street in a local town. Town Square will be in the centre of the store, replacing the out-dated jewelry counters that currently inhabit the space.
Johnson was tight-lipped about what exactly the Town Square will be, but he said it contained some “truly innovative thinking” and will be revealed in 2013.
“It seems like change takes place over night, but it really doesn’t,” Johnson said. “Something I learned while at Apple is ‘Every journey begins with just one step.'”