Is JC Penney's new look a failure?

The man who redefined Apple's retail space is attempting an overhaul of the floundering department store -- but analysts and investors aren't convinced.

By TheWeek.com Sep 25, 2012 1:25PM

woman swiping a credit card copyright Rubberball, Mike Kemp, Rubberball, Getty ImagesOver the past year, JC Penney (JCP) has embarked on a grand mission to boost its lagging sales and redefine its dated brand. But its first major bid to be the next great American retail space is facing a setback. 


Last weekend, investors reacted to a sneak preview of J.C. Penney's new look with disappointment, sending the retail chain's shares tumbling and sparking concern about its long-term sustainability. 


The "new J.C. Penney" is spearheaded by Ron Johnson, the brain behind Apple's (AAPL) wildly successful retail makeover in 2001. Under Johnson's guidance, J.C. Penney will embrace a "stores in a store" model that will see brands setting up mini-stores on Penney's floors. 


Though responses to Johnson's model have been generally positive, there are many people who doubt he can achieve the total brand makeover he's attempting, which aims to attract younger, higher-income shoppers. 


After all the hype, does the new J.C. Penney stand a chance?


Johnson's plan is dead in the water. After plenty of hype, the sneak peek of JC Penney's new look "failed to inspire confidence" in Johnson's grand vision for the chain, says Sapna Maheshwari at Businessweek. Johnson's model store was impressive looking, but it's just one store; the real challenge will be "to replicate it in 700 stores" across the country, and even then, it's not clear that sales will improve. The consensus among the analysts who got a taste of the new JC Penney was mixed at best, and it will be an uphill battle back to profitability, with plenty of pitfalls along the way.


The model is a diamond in the rough. The "experts" scoffing at Johnson's plan are the same ones who predicted Apple's demise "because other retailers like Gateway were failing," says Carmine Gallo at Forbes. Johnson beat the odds before, and with JC Penney, he "has a very real chance to successfully re-imagine the customer experience yet again." Johnson's forward-thinking plan is "still in the first inning," but his comprehensive knowledge of contemporary shopping habits will eventually lead him to accomplish his "audacious yet captivating goal."


His plan isn't bad, but it may not work for J.C. Penney. "It might just be easier to launch an entirely fresh and new department store from scratch, rather than attempt to drag a 110-year-old brand into the future," says Brad Tuttle at TIME. In its bid to transform its "old lady image" into something sleek and modern, Johnson has thrown out the store's old coupon-based pricing system -- and as a result, lost its old customers. And even if the "epic transformation" pushed by Johnson is possible, there's a serious chance that it won't be in time: As J.C. Penney sales (and stocks) continue to decline, it's clear that "the much hyped transformation just isn't occurring quickly enough."


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Tags: AAPLJCP
406Comments
Sep 25, 2012 5:55PM
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The advertising flyer alone is a turn off, it doesn't interest me to go into the store.  We are losing all of the great "department stores" that many people enjoyed shopping and finding decent quality goods, and JCP was one of the last ones in existence.
Sep 25, 2012 5:54PM
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My family has been dedicated to JCPenney's since my grandparents were young, so they have seen all the changes. Whether the changes were positive or negative they gave feedback to the company and felt that their voices were heard. For years now we have been unhappy with the quality of clothes going down, unfashionable styles, and the need to juggle coupons on top of discounts on top of clearance to get something at a low price. When I missed out on a coupon I really missed out. But now there is no need for it! The look is modern, JCP has kept the good brands, and given basic low prices...I was shocked when I went in to see the changes. Inviting displays, clearly marked prices no mass confusion of discounts. If anything while looking at the prices and brands offered, I felt like a fool for paying so much higher before at the same store and elsewhere! I am so pleased, and even my parents and grandparents appreciate the honesty, cleanliness and appealing styles of the store. Its going through growing pains yes, but it's worth it. The obsession people have with coupons is ridiculous, when the prices are already there for the world to see. The "winning" part of the savings game shouldn't be just who has the most coupons, but price, value and quality. My family will continue to be JCP supporters.
Sep 25, 2012 5:50PM
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I worked for JC Penneys in the late 80's early ninetys in upstate New York as a fine Jewelry associate highly trained earning a commision of 10% on every iece I sold . We were all proffesionals in every department and dressed up and treated and paid with benifits and were concidered and upscale store. We went by the Golden rule that the original ownerfounded. Pennys was a class act . Now the employees get 1% commision (come on really) mimimum wage ( you get what you paid for)  are you now a Kmart or are you Pennys. I will continue to shop at Kohls. My advie  back about twenty years and buld from scratch!
Sep 25, 2012 5:49PM
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The customers are stupid, thinking if they have a coupon it's a better deal.  I'm 75 years old and do not miss the stupid coupons.  Just go in buy what you need no hassle and a low price.  What don't they understand about a LOW price.?

Sep 25, 2012 5:49PM
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I think JC Penny has it right now.  Are there fools out there that have to be tricked into buying something with a sale price?   Are we that stupid that we tell ourselves that we have purchased something more expensive with a great sale price deal.  I want to live in the real world and pay for what an item is worth, no more, no less.  I think as women, we are smarter than this to make ourselves believe we need coupons and a big sales tag to makes us feel better about a purchase.
Sep 25, 2012 5:42PM
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I love the old Pennys and love the coupons.  I wish they would go back to old format.

 

Sep 25, 2012 5:38PM
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I worked at Penneys in the early to mid 80's and I used to shop there all of the time.  I went in a few weeks ago to buy a pair of jeans and couldn't find anyone on the floor to help me find the brand that I wanted.  I walked out without buying anything.  They need to go back to basics and cut out trying to be trendy.  James Cash Penney is rolling over in his grave. 
Sep 25, 2012 5:37PM
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Just finished reading all 386 comments about JCP. Here's the bottom line. JCP was started by a Christian man w/ Christian values & philosophy.  Hense a blessing from above was upon it. This morality code brought in a certain demographic of loyal customers. The new management has NO MORAL CODE that it follows.  In fact it is a immoral code. Hense the blessing is removed. There is quite possibly a new spirit over the store now.  The place is empty. Loyal workers were fired. People obiviously are feeling a negative spirit. So obivious by all the negative comments.  Even the music changed. You see and hear it in most of the comments, give us quality clothes at reasonable prices. Give us sales, coupons & bring back the online catalogues. Give us service, service sevice. I guess I've been out of touch w/ the Homosexual advertising.  NOT THAT THERE'S ANYTHING RIGHT W/ THAT! Why appeal to the 3%?   As a Christian pastor I would never enter a JCP ever again & I will let my people know about the changes of philosophy too!

Sep 25, 2012 5:35PM
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The biggest mistake Mr. Johnson is making is getting rid of all the couponing.  Shoppers like a deal (Look at Kohl's for instance) and like to bring in the coupons, Penny's is no Apple Store.  I liked to shop there until they started all these crappy upgrades which are not bringing people into the store.  The new brands don't impress me either. 
Sep 25, 2012 5:34PM
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I hope they fail big time because of their pushing the homosexual lifestyle on their customers.See the June JC Penney 
catalogue I believe it was page 17,where they portrayed two gay guys, for fathers day, with their"children".It made me sick to
see those poor kids in the clutches of those two pervs.I couldn't believe Penneys would do that. A family store for what? 100yrs
or so,& old Ron Johnson promotes that.  Me & tons of people I Know won't darken their doors ever again,till they apologise & 
change their ways.& I'm sure there are 1,000s of other people just me that have quit shopping there.I spent $5000 there last
year.......Never again
Sep 25, 2012 5:30PM
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When JCP has a 'Made In USA' model, I will buy there.
Sep 25, 2012 5:25PM
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the Only hope left for JCP is to change the name of the store, do an entire makeover to more trendy and essentially do a start up with thousands of stores.  Watch your buyers and inventory which was purchased from these buyers and keep everything trendy.  Otherwise, It's goodbye to JCP.
Sep 25, 2012 5:24PM
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Forget it! JCP is toast and all the glitterazzi plaudits can't make a silk purse out of this sow's ear.
Sep 25, 2012 5:22PM
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Please bring back the old JC Penney. I rarely go there anymore because of what Ron Johnson did. He may have meant well, but his concept is just not going to work for JC Penney. I miss all the coupons and sales almost every week. It's just not the same since he took over.
Sep 25, 2012 5:22PM
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The old JCP was my go-to store. I loved going there and finding the same clothes as at more expensive stores, but at lower prices. But the "new" JCP is confusing! So I bought this electric frying pan via catalog just before the switch. Got the frying pan, and the first time I used it, as it was heating up, the teflon started bubbling. I took it back into the store. I found the same pan, but at the "new low price!" of $8 more! I had to argue to do a swap and not pay the extra money. And don't get me started on this 2nd Friday of the month thing! I guess that's when they have the month's lowest prices of all. Something like that. As if I have time or inclination to calendar in when I'm going to JCP. No thanks....
Sep 25, 2012 5:15PM
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I have come back to shopping at JCP!  I love everything about the new format!  No complaints here!
Sep 25, 2012 5:11PM
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Just went shopping this afternoon at JCPenney found shirts that looked Great, have great style and great price. So far OK by me

.

Sep 25, 2012 5:10PM
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I am very tall and JCP use to carry real tall slacks. I believe they were called Ultra Tall. Now I looked online and they have nothing stylish in Ultra tall . 
Sep 25, 2012 5:06PM
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I use to shop there for my sons back to school clothes , but one year we went he didnt find anything he liked ,so we started shopping a khols for my sons clothes . my son eric use to not want to go any wheres but jc pennys every year . havent been back to pennys since 2009.

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