
A Truly Depressing Visit to JCPenney - 1337biz
http://www.slate.com/articles/business/moneybox/2013/03/jcpenney_ron_johnson_came_from_apple_to_reinvent_j_c_penney_and_ended_up.html
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cs702
This article over-generalizes from one visit to a single store without
providing sufficient information to judge whether the author's conclusions are
valid for all or most of the company's stores.

According to the company's recent presentations to investors, over the next
few years JCPenney is converting its locations from traditional department
stores into 'mini malls' with small independently-operated stores and a 'town
square' with amenities like coffee shops. Recent data provided by the company
shows that those stores that have been converted into the new format are
generating TWICE the sales per square foot of stores with the traditional
format.[1]

The author doesn't say if he visited a really old off-mall store, or an on-
mall store that has not yet been converted to the new format, or an on-mall
store in the midst of converting to the new format, or a store that has
already been converted to the new format. How can he generalize without
specifying which kind of store he visited?

Shame on him for not doing his homework.

\--

[1] See slide on page 41 of this presentation: [http://phx.corporate-
ir.net/External.File?t=1&item=VHlwZ...](http://phx.corporate-
ir.net/External.File?t=1&item=VHlwZT0yfFBhcmVudElEPTQ4NTA2NTh8Q2hpbGRJRD00ODUzMDk=)

~~~
brucehart
I think their "mini mall" strategy is interesting, but I have my doubts if it
will work beyond being a novelty to buyers in the short term. If a brand is
strong enough to support having its own store, why wouldn't they just open up
a store in the adjacent regular mall and cut out the middle man?

~~~
bunkat
This mini mall department store strategy is actually prevalent in Taiwan.
Basically there is a big department store with a bunch of these mini-stores
inside of it. The big difference in Taiwan is that when you want to purchase
something you purchase it at the mini-store - they are all completely
independent operations. I'm not sure if the idea translates as well when the
stores aren't independent, because then you are right that getting their own
storefront might make more sense.

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jmduke
Man, this is kind of a poor article, down to the insinuation that Ron Johnson
was the dude who decided to include in-store WiFi. (I say this because the
Sears and Nordstrom in my local mall both have free WiFi, and whether its a
good thing or a bad thing it certainly isn't causing JCP to hemorrhage money.)

I haven't heard much about Ron's attempts to actually change the retail and
storefront look or offerings compared to his attempts to change consumers,
which I think is much loftier. The shop that the author describes sounds
identical to a JCP store from five years ago -- and sounds identical to all of
its competitors today.

I think a much more cogent point (that the author was flirting with,
assuredly) is that consumers don't go about buying clothes the same way they
go about buying technology. JCP's strategy is to appeal to the _rational_
consumer -- the consumer who sits down and makes a pro-con list for every
prospective purchase, the consumer who divorces themselves from such petty
things like cheap heuristics and the innate pull of a "THIS WEEKEND ONLY!"
sale.

Those consumers might employ such strategies for a $1500 laptop (or a $500
phone), but probably not for a pair of $50 khakis.

~~~
ebbv
Installing WiFi may not cause JC Penney to "hemorrhage" money but with 1,107
US stores if you assume a best case cost of say, $500 (and I think that's
really optimistic) per store to make WiFi available to the public that's still
$500k down the tubes for next to no benefit.

I'm sure the decision was based on this idea that they want people to shop on
JCP.com while in the store, and if they can't get a cell signal, obviously
they need to have WiFi. But still, the whole thing strikes me as poorly
conceived. If I'm in the store, how about making my experience shopping at the
store as good as possible and not tell me to pull out my phone to make it
work?

~~~
jmduke
Don't get me wrong, I'm not saying WiFi was a brilliant move or anything: I'm
saying that it's not JCP-exclusive, it's not particularly important, and
there's nothing pointing to the conclusion that it was Ron's idea or decision.
(My money's on the bet that it was in place before he took over.)

> _If I'm in the store, how about making my experience shopping at the store
> as good as possible and not tell me to pull out my phone to make it work?_

100% agreed.

~~~
schraeds
32% year of years sales drop. One of the only differences the reporter could
tell about the shopping experience offered free wifi that was slower than his
cell service. An example of seemingly arbitrary and, in the eyes of shoppers,
non helpful changes Johnson oversaw. What exactly was your critique?

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jroseattle
Our local JCP was one of the stores that were re-made, entirely. The store was
formally a jumbled disaster, more along the lines of a Marshalls than a
department store. It was blight on the brand, and needed to simply be re-done.

About two years ago, it was refreshed. The clutter was organized, and there
was actually room to maneuver about the store. It was a big improvement.

A few weeks ago, I'm trying to help my daughter find some form of clothing
that was completely necessary for whatever reason. Looking at JCP, we're
searched around in the various departments -- is it here, or there, or maybe
around there? I had no idea. Then, we tried to find someone to help us -- hmm,
nobody around. Well, let's ask at the counter -- hmm, where the eff is a
counter to actually purchase these things? At this point, I called BS on the
experience and we walked out. They literally failed at every possible point in
the entire process.

As I thought about it, and knowing that Johnson was the guy who built the
Apple stores, I came away thinking that the changes JCP made to stores were
entirely physical but the experience hadn't changed. I don't mean to sound
elitist, but the staff at the store was not of caliber in the way I find the
staff at Nordstrom. The products didn't differentiate themselves for me. The
changes came off as superficial.

I hope they get it right because everyone loves a turnaround story, but their
current results shouldn't be so surprising.

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macchina
>Not discounting works for Apple because products become obsolete long before
they stop working.

No. Not discounting works for Apple because it's the only store selling
MacBooks. You can buy pants and underwear at dozens of places that are not
JCPenny. The usual practice is deceptive to be sure, but JCPenny gave up their
most effective means of advertising bargains short of relentlessly juxtaposing
competitors' prices against their own.

~~~
maxprogram
> Not discounting works for Apple because it's the only store selling
> MacBooks.

The only store... along with Best Buy, Amazon, Simply Mac, etc. etc.

~~~
macchina
Fair enough, but it's still a niche market that Apple has near plenary control
over. Indeed, Apple essentially dictates what price other retailers may charge
by keeping the wholesale price high. [1]

1\. [http://www.macworld.com/article/2024257/how-apple-sets-
its-p...](http://www.macworld.com/article/2024257/how-apple-sets-its-
prices.html)

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danso
Growing up lower-middle-income, JC Penney's was a brand I associated with
"kind of luxury", at least better than Goodwill.

Only after living in New York, when a JCPenney installed a midtown flagship
store and was greeted by this NYT article calling it "dowdy" did I realize it
was a low-brow store:
[http://www.nytimes.com/2009/08/13/fashion/13CRITIC.html?page...](http://www.nytimes.com/2009/08/13/fashion/13CRITIC.html?pagewanted=all&_r=0)

Also, speaking of NY regionalism...the Macy's store in midtown does have wifi.
But it's also the biggest department store in the world, apparently.

~~~
jgh
Growing up somewhere without JCPenney I kind of thought the same thing when I
first came here.. I got a pretty nice couch from there at like 50% off when I
moved down to the USA, and the store was actually pleasant compared to a lot
of other department stores. It felt higher-end than Sears or Target. Hell,
even half the Macy's I've visited have been kind of disastrous. Maybe I just
went to a really nice JCPenney.

~~~
maxerickson
It is higher end than Target. Target is the nice box store, J.C. Penney is a
low(er) end department store.

Sears is too weird a brand to invite direct comparison, but it is probably
barely a notch higher than JCP.

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wcfields
I can't believe (well, if you're desperate, a nice big celebrity CEO makes a
good splash) they would turn their brand into this.

JCPenney's whole method, and all mall retail, is the sales prices and coupons
for rewards. I must get a mailing from Macy's once a month, if not every other
week with 10% off. If I was running JCP here's how I'd reinvent:

* Make the sales people dress up, _fitted_ suit/tie, ladies in sleek business atire in most areas, youth/petites follow what they allow at American Apparel/H&M/Gap employees attire. The brand is classic style, JC Penney was there growing up with basic style that translates into casual everyday wear. The sales people reinforce casual, yet approachable authority.

* Make it easy for the shopper, to get into mental space of styles. Formal fades into casual, but the sections are distinct with mannequins highlighting combos. Between have a "style-lab" that churns limited line clothing like Zara. Same stuff won't be there in a few weeks. 'Style' in this sense is very mild. The average JCP customer isn't a risk-taker.

* Store brands. JCP has a bevy of store brands, and these should be highlighted and re-imagined. JCP is now Trader Joes of clothes. Store brands aren't a Levi's (but you have Levi's), but are good enough for the price point.

* Store Card loyalty. This is probably the number one money maker. 0% APR 3 month specials all the time, %2 off everything when you use it, etc...

* Dumb Gadgets for $5 from China should be at the cashwraps. Churn these every month.

I grew up wearing mostly JCP clothes as a midwestern kid and I almost am
banging my head on why this is so hard to understand how a Midwestern Mom shop
and how to build a store that sells better-than-bigbox clothes that range from
Casual to Formal and has a classic, yet forward approach.

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jusben1369
For everyone who thinks doing a startup is hard. THIS is hard. At least in a
startup you have no legacy customers or revenues to worry about.

~~~
saraid216
Well. Not until you get customers.

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fusiongyro
Very interesting. I had noticed a change in their branding but didn't really
know what it entailed.

It just goes to show you that some people, despite rising high in the org
chart, are really unable to understand which parts of their experience
generalize and which parts don't--they can't discriminate the incidental from
the intentional. Probably everybody underneath this guy knew that in-store
wifi would be a waste of time and money, but to him, it was an essential part
of the Apple store's success.

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ChuckMcM
_"So I took the Metro to the Maryland suburbs for a visit to the JCPenney in
the Wheaton Plaza Mall to see if Johnson really is reviving the legendary
chain."_

This is the problem, to see Ron's "vision" you really have to go to one of the
stores that has been remodeled on his "boutique" view, its sort of a mini-mall
within a single store. It does _not_ suffer from having mix mashed things all
around and it does have a more intimate customer feel, but I didn't even
realize that was key to the plan until I read the Economist article on it.

That said, Ron Johnson is in a world of hurt here. Not only does he have to
figure out if he can change what a department store is, he has to convince
people who have been to the store before that its different now. Neither are
easy.

------
micahgoulart
I think the biggest problem Ron Johnson faced is that with Apple, the products
sell themselves and are exclusive to that retail store. Customers come in not
needing to be sold on it... just wanting to see it in person before purchasing
since buzz around the launches and commercials do the selling part.

JC Penney however, does not have exclusive products and customers don't
necessarily come in knowing what they want to buy but might need to be sold on
a product.

That affects pricing as well. Apple can do one price without discounts without
a problem since you can't find their products anywhere else for much cheaper,
mostly just online retailers without sales tax.

JC Penney's products can be found in many other stores and thus pricing needs
to be flexible to draw people in for sales.

Thus the huge drop in sales.

~~~
ajross
Apple products are sold at lots of retail outlets; the Apple Store retail
locations aren't exclusive vendors. It's true they have far more control over
pricing and product presentation than JC Penney, but it's not total.

~~~
saraid216
I wonder how many people actually know that, though. No one I know talks about
going anywhere except an Apple Store to service an Apple product, and no one I
know seems to consider going to another store to buy an Apple product.

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Apreche
When I heard he was taking over JCP I thought it was a really good thing. I am
the kind of person who buys everything on Amazon, but having actual low prices
at a retail store sounded great. Now whenever I needed something in a hurry,
or something Amazon didn't have, I could go to JCP.

I tried to go to JCP twice since Ron took over. Once for a dress shirt,
another time for some drinking glasses. When I went for the shirt, they didn't
have every size in every color. Ended up going to Macy's. When I went for
drinking glasses, again the selection was miniscule, went to Amazon instead.

The number one thing they can do to get me to shop there is to stop selling
crap! Price doesn't matter if you have such an awful inventory.

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tlogan
This is one bad quarter/year - typical WallStreet thinking: no patience for
any change.

JCP like many other retailers are in big trouble. At least, they are trying
something different: the other ones are slowly sliding into nothingness.

~~~
maxprogram
Mistakes have certainly been made, but yes: this is typical Wall Street fare.

When Johnson first started the turnaround over a year ago, he made it clear
this was a long-term undertaking, of at least 3 years, but probably 5 years.
That should really hold true for any turnaround, but especially one of this
size.

The company is only 1 year into the turnaround. It's headlines like this and
investor myopia that gives way to great investment opportunities. Maintaining
a long-term view can frequently lead to making money off of those who don't.

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armored_mammal
Personally, I think the 'no sales' thing could have worked if their prices
were lower. The couple of times I've been in a JCPenney since this started
everything was depressingly expensive for what it was.

It's one thing to not discount, but it's another to not discount while selling
a commodity product for 2x or 3x it's actual value or reasonabl price.

Likewise, I'll concur that the stores still have aesthetic, layout and
lighting issues which are getting ignored.

If they had gone for a GAP-like store aesthetic with prices between ROSS and
Target with a no-discount policy, I think they'd have not had the same
problems.

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jcampbell1
This reminds me of my favorite Warren Buffet line: "When a management team
with a reputation for brilliance tackles a business with a reputation for bad
economics, it is the reputation of the business that remains intact."

~~~
smacktoward
I'm also reminded of a line from Neil Sheehan's classic "A Bright Shining Lie"
that has stuck with me since reading it:

 _Men who succeed at an enterprise of great moment often tie a snare for
themselves by assuming that they have discovered some universal truth._

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smackfu
Johnson's ideas could work in retail, but trying to implement them in an
existing chain like JCPenney seems terribly foolish. It's very hard to make
meaningful physical changes quickly when you have 1000 stores. It's very hard
to change staff attitudes when they have been working there for years and like
the old setup. And it's especially hard to change customer's attitudes, when
they like shopping in the clearance section and getting a great deal at 60%.

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ebbv
JC Penney's hiring of Ron Johnson seemed puzzling to me from the beginning.
There are parts of the Apple Store experience that are good (being free and
fairly comfortable to look at and try the products for as long as you want.)
But there are many parts of it that are totally awful; if it's busy there's no
lines to get help you just have to kind of crowd around the nearest employee
and wait until they can assist you. If you don't make a Genius Bar appointment
days ahead of time; good luck to you. I worked the Service desk at Best Buy
for years when I was a teenager, so I know a little about what the job
entails, and I have to say the Apple Store experience could be much better
than it is. (Not that Best Buy is any good either.)

The point I'm trying to make; Apple's success was not because of the retail
store experience. So hiring away Apple's chief of retail operations seemed
like a weird move to me. Even with his prior Target experience.

Also, am I the only person on earth who thinks the new JC Penney logo and
advertising aesthetic is not only ugly but looks completely amateurish? It's
like someone saw that clean, geometric designs were "in", and had no
understanding of how to make them actually look good.

~~~
MatthewPhillips
Yeah, I agree with you. The Apple Store experience for people who are there to
just buy a thing is terrible. There is no real "cashier" at the Apple Store so
you have to find someone who will tell you what to do, which if you're buying
a computer you might be lucky enough to buy it off the spot. If it's a iPhone
case or something you might have to go stand in line behind people who are
getting repairs.

~~~
revscat
This was not my experience at all. I replaced my iPhone recently and was in
and out of the store within 10 minutes, despite the crowds. The first guy I
spoke with got my phone from the back and took my payment info right there, no
line whatsoever.

If you go to the Genius Bar to purchase something you're making a mistake. Any
employee can sell you things. (And with the app they have, you don't even need
an employee. Just scan whatever you want to buy, put in your password, and
leave.)

~~~
MatthewPhillips
I've had the same experience at times as well, when the store is not as
crowded. But when all employees are helping 3 people at once, they don't have
the time to stop and checkout your $15 ear buds or whatever and you get sent
to the line. That's why every other store in the world has dedicated cashiers
who just check people out.

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bsg75
Another in the pattern of bringing in executives without _direct_ experience
(retail mall stores) resulting in disappointment. Apple stores and Target are
in the general retail category, but serve a different customer base with
different desires.

Does business (school) teach anything other than a copycat approach? The
increasing rate of failure in business is unsurprising given the complete lack
of imagination.

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amalag
I had high hopes when JCP announced their new pricing, I hate having to go to
a store and find things ridiculuously expensive, then wait for a "sale",
collect your coupons and then buy something for what to me is a fair price.
The quality of the products though at JCP was not so great IMHO.

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qdog
Let's not forget one of the main reasons to buy something not on sale: Size.
If you are average size (like me), you often end up buying stuff not on sale,
because the sale rack is stuffed with 44W32L pants. If I put on about 75 lbs.
it'd be sale items only for me!

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Macsenour
Ignore your core market at your own peril. If middle-aged mothers are your
market, don't scare them away. Us them as your word of mouth marketers.

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beachstartup
i prefer ross. they don't even have an online store...

~~~
amalag
Ross and TJ Maxx are a different category, they get rejects from major
department stores. They can't have online stores because they have no fixed
inventory. If you can find it, you can get great deals there.

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recoiledsnake
HN discussion about the original moves.

<http://news.ycombinator.com/item?id=3522169>

Always a fun read in retrospective.

