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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406Comments
Sep 25, 2012 2:38PM
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Stop spending money on the slick, square ads and put it back into merchandise that appeals to your original base customers:  women like me who can't find mature petite sizes in almost any other store, and working women and men who don't go to expensive boutique-style stores.  The slick ads are seemingly meant for very young, slim, wealthier folks who could shop almost anywhere else.   JCP and Sears were two of the few options for folks like me.
Sep 25, 2012 2:39PM
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Bring back the coupons.  Customers like to think they are getting a good deal
Sep 25, 2012 4:27PM
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Once upon a time every Christmas present under my tree was from JC Penny.  I endured long lines standing in catalog waiting for those special presents that could be found nowhere else.  I received $10 merchandise coupons.  I shopped the stores for my drapes, my furniture, my tall clothes, my bedding and my kitchenware.  I spent thousands of dollars every year.  I walked long distances from the parking lot to get to the front door.  Suddenly there appeared new management who said this is not the way to do business.  The parking lots became empty, the prices went up.  Suddenly what once had worked for years was no longer a good thing.  Goodbye to the baby boomers who have served you well.  Hello to the anorexia, bulimia, and malnourshed sizes.  If you don't change and change quickly, we are going to lose you forever.  Your CEO needs to be fired.  Your management team overhauled.  I spent 30 years in the corporate world and these people are killing you. 
Sep 25, 2012 2:33PM
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They need to do away with the slick advertising and just sell clothes that young people and old ladies want to buy.  Even with the new low prices, they are still to high for the quality of items that they want you to purchase.  People won't buy if they don't think they are getting a deal. Wake up J C Penny!
Sep 25, 2012 2:49PM
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The quality of the clothing is terrible now! You can see through most of the material because it is cheap. Nothing like what you used to be able to expect from JC Penny's. No wonder why so many people have stopped shopping there. I know I have!
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This guy will drive them into the gorund. I hate to see it. Pennys has been a good store to me and my family for many years. The consumers have spoken. Boot this guy to the curb. I could run the company better than him.

 

Sep 25, 2012 2:53PM
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I miss the old Penney's.  he new clothes are awful.  I don't know who would want to wear them. The cheaper prices reflect the cheaper quality.  It looks like everything is coming from cheapest overseas manufacturers.  Only the little girl clothes department maintains the flavor of the old Penney's.    Looks like I'll be retiring my Penney's charge card soon.

Sep 25, 2012 4:03PM
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Here's the issue:  Major chains like Macys, Younkers, JC Penney, Christopher Banks, and the like have spent their time and money catering to the younger crowd - the ones that have no money.  Meanwhile, the rest of us in the middle age and older (and with the money to spend) are forgotten.  We don't want to shop where our kids want their clothes from because, let's face it, we look stupid trying to dress like a 20 year old. 

 

Until JC Penney can go back to what it was - a store for all generations; I don't see it as making it.  In addition, they're going to have to get to updating their stores - the one near me looks like it is right out  of the '70's.

Sep 25, 2012 2:51PM
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I HAVE QUIT SHOPPING THERE.  IT IS CHEAP STUFF AND THEY HAVE NOTHING.  VERY DISAPPOINTING.

 

Sep 25, 2012 2:23PM
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What was wrong with the original look?  JCP left Petaluma several years ago and now we have another grocery store, which we didn't need, and have to go 30 miles north to Santa Rosa to shop at Penny's.  Their competitive pricing and good products are way above Sears.  Go backa to the original look and you might get the customers back with bells on!
Sep 25, 2012 7:28PM
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I get that they are trying to be "new" and "hip" for the younger generations BUT the younger generations have enough stores to choose from, they are not going to shop at JCP even if they try to entice them in.  JCP would have better luck trying to keep us "older" generations, the same ones who have kept them going for years and years.  I loved the old JCP and shopped there regularly but since they have changed I have only been there twice. TWICE....  I couldn't find anything and what I did find was too "young" and cheap feeling for me.   I loved the coupons and always liked shopping the sales but alas if it keeps going this way this "oldster" will find somewhere else to shop.

Sep 25, 2012 2:48PM
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At one time a pretty good store, but like others decided to raise prices and lower quality.
Sep 25, 2012 4:16PM
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I don't shop at JCP any more - used to be the only place I bought my linens. I looked forward to the sale catalogs and shopped them religiously. The only time I got a new purse was if JCP had them on sale. No more sales, I guess! I ordered from the catalogs constantly but even the sale flyers in the Sunday paper are worthless now.  Such a tremendous disappointment...
Sep 25, 2012 2:54PM
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I noticed they got rid of several cashier areas right away, and the customer service agents I did business with were moved or no longer there, the first thought in my mind was toward christmas and the hassle it will be to shop there with  less registers in the store, my mother complained about no longer receiving the coupons in the mail, so now she hardly shops there at all,
Sep 25, 2012 3:05PM
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You hit the nail on the head: " -- and as a result, lost its old customers."    Just yesterday one of my co-workers said she went there to buy something she had purchased for her kids for years (a store brand of jeans) and they no longer carry that brand.   Johnson may have good ideas, but he has certainly alienated the existing customer base.  The customer base did not go there for the name on the outside of the building as they might with a Neiman Marcus, Saks, or Apple Store.   They went there for the brands and decent quality at a good value and at the same time experienced "entertainment shopping" with the coupons, etc.
Sep 25, 2012 3:11PM
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I like the old adverstiment.  I love the old ads, with doorbusters and $10.00 coupons. The new BOOK ads are not a bargain.  I don't see a "sale" in them.  I miss my old JCPenny's.  I use to love to shop there.  I even had a credit card
Sep 25, 2012 3:33PM
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the problem isn't what the stores look like or coupons. The issue is the QUALITY of the merchandise and the crappy service received.  That's fantastic, the store within a store- but how about being able to find some help and a cash register? What about selling quality children's clothing that don't make my daughters look like street walkers and/or fade or become misshapen after a few washes and wears?
JCP is completely missing what consumers want- which is excellent customer service and good quality merchandise that will last!  Please, tell your children's buyers in Plano to get a clue!

Sep 25, 2012 3:20PM
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I love JC Penney.  I really enjoy shopping there, or rather, I have enjoyed it.  I really don't know who is doing what, but to me getting rid of the coupons and the "sales" have hurt them the most.  People like to feel like they found a bargain.
Let's face it, the current advertising is very UNINSPIRING>  I don't want to see a situation, I want to see what is on sale.  And without a coupon, what is going to make me go there today , tomorrow, or next week. 
Nothing.
Bring back the brands, the sales and the coupons,  all of the changes over the last year were simply a miss.

Sep 25, 2012 3:58PM
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I have always been a shopper of JC Pennys. I do not like their new format. They say they are seeking the younger shoppers that will buy. Big deal--what am I chopped liver? The younger buyers are not loyal. They will stick around for  awhile until a newer store comes along. I consider myself the medium priced shopper. I have enough that I do not have to shop at Walmart and not enough for Norstrams. I also enjoy a good sale. I have a relative that can shop at Norstrans all the time and never, never buys anything on sale. Sorry I am not in that league. Bring back the old JC Penae.
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