Most consumers no longer think of J.C. Penney as a cool place to shop. That is one big reason the chain is in such dire straits. Now what?
I just have to giggle a bit as I read about the latest troubles at J.C. Penney. I mean did anyone with any knowledge of retailing really believe that this once-great merchant would not be in trouble at this point?
In mid-June, the company’s newly appointed president, Michael Francis, announced his immediate departure after only nine months at the chain. Francis was recruited from Target to great fanfare and a hefty $12 million signing bonus, a perk usually reserved for athletic superstars being courted by a New York sports team, aging rock stars and the like. He was charged with revamping the chain’s moribund marketing and merchandising programs.
Obviously, patience is not a virtue at Penney. On the heels of first quarter results that showed a mind-blowing 19% drop in same store sales, Francis’ quick exit only seems to confirm what many already knew: Penney’s new promotional efforts were going nowhere and time is running out.
But Francis, who by all accounts did great things at Target as its chief marketing officer, should not be held responsible for most of Penney’s problems. This is a chain that has made wrong move after wrong move over the years and has managed to take itself out of the collective conscious of mainstream American consumers (read females) over the past decade or so.
As one great retail expert said to me back in the mid-1990s, as Kmart and Sears started their great declines that continue unabated today, once a retailer becomes fodder for late-night comedians you know your are dead in the water.
While company officials will never admit it, some think that J.C. Penney has been in a constant state of decline since the chain decided to uproot its operations from New York City to Dallas in the late 1980s. Not to put Dallas down, but the move, done for cost- saving issues and a change of pace, served to forever alter its corporate image from one that placed a big emphasis on style and fashion to one that—how do I put it—seems content offering a more conservative angle on things.
Say what you want about New York City, it is still the fashion capital of the U.S. and perhaps, along with Paris and Milan, the world. Moving to a city known for its cowboy attire and expecting to remain hot, particularly in fashion where cutting edge is everything, may not have been the best move.
Now it just got hotter for Penney’s CEO Ronald Johnson, a former Apple official who has to figure out a way to re-invent Penney even as its competition gets ready to fling a couple more daggers into its heart. Thus far, Penney has been stressing price as a way to win consumers back, failing to realize that young, hip kids, not to mention their moms, are more interested in how clothes look on them and what their friends have to say than the price tag.
Hopefully, Johnson remembers what he learned at Apple. If Penney is going to survive, the chain will have to somehow get consumers to take it seriously again. That means getting the right buyers in place and getting the right merchandise on store shelves and racks as quickly as possible. Having good price points, at this point, will not hurt either.
Then Johnson should take a page out of Target’s promotional strategy and come up with an advertising campaign that will add some pizzazz to the Penney image. He is going to have to make Penney a cool place to shop and, frankly, he is going to have to do it in a flash and with a very skeptical consumer who simply thinks that J.C. Penney is a chain stuck in the 1980s, not on the cutting edge of retail.
Will Penney become the next Sears/Kmart or shock the experts and rebound? The next few months should be an interesting time at this chain.