It’s no secret that the world has been expecting Ron Johnson, the new CEO that JCPenney hired away from Apple, to start sprinkling some iPhone pixie dust on its bath towels, bed sheets and Middle American fashion. The new executive has finally pulled back the curtain on the sweeping overhaul, which include new corporate identity, complete with new logo, new pricing, new marketing, and of course, new merchandise.
Speaking to an audience of investors, Johnson and new President Michael Francis, the former Target CMO wooed by Johnson back in October, say they intend to “reimagine every aspect of the company's business.”
First on the list, the duo says, is getting rid of the constantly-on-sale culture and pricing that has long characterized JC Penney (and to be fair, most department stores.) By some reports, less than 1% of Penney's sales has come from full-price items, while 72% resulted from items discounted by at least 50%.
So beginning Feb. 1 and employing Ellen DeGeneres -- who worked at Penney as a teen -- as a spokesperson, it will roll out what it is calling Fair and Square Pricing. Products will fall into one of three categories: Everyday, regular prices; Month-Long Values, and Best Prices, sale items which will always happen on the first and third Fridays of every month. "We want customers to shop on their terms, not ours,” Johnson says in prepared remarks. “By maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us."
“It’s a great idea,” Jon Hauptman, a partner at Willard Bishop, a retail consultancy, tells Marketing Daily. “The previous pricing strategy was clearly not working, and this kind of hybrid [everyday low pricing] strategy will give it credibility it doesn’t have now.”
It also plans to reconfigure all its stores. A Main Street will include “80 to 100 brand shops, rather than the confusing and seemingly endless racks common in department stores today,” it says. And a Town Square will replace the traditional retail center of a department store “with a series of services, which customers will enjoy before they buy, while they shop afterwards.”
New brands will include Martha Stewart (despite legal wrangling between that brand and Macy’s) and L'amour nanette lepore, as well as ongoing partnerships with Izod, Liz Claiborne and The Original Arizona Jean Co. It expects to have 30 new and transformed brands by fall 2012. Store updates are set to begin in August, it says, with two to three shops installed monthly. The Town Square concept, it says, should make its debut in 2013.
Still, observers say JCPenney is facing an uphill climb. “I applaud the plan to differentiate itself,” John Moore, a marketing consultant and head of Brand Autopsy, tells Marketing Daily. “But it’s one thing to redesign the store, and quite another to redesign a company’s culture. Johnson comes from Apple, staffed by passionate, knowledgeable, upbeat people. But teaching people to resist the urge to constantly discount merchandise is going to be a big challenge.”
And while the change in pricing “will remove barriers now preventing some shoppers from giving Penney another chance,” adds Hauptman, “they have to find ways to differentiate themselves and prices won’t do it. They will have to win by assortment.”