NEW YORK — The transformation of JCPenney into America’ favorite store will begin with dramatically simplified pricing strategy and promotional cadence supplemented by an improved product presentation that will allow the 110-year-old company to regain its personality with a new generation of shoppers, according to CEO Ron Johnson.
Johnson presided over an unconventional two-hour investor and media event Tuesday morning at New York’s Pier 57 that was attended by an estimated 700 people. The choice of location, a dumpy waterfront warehouse, was symbolic in that the space was transformed to a bright and airy venue. Attendees were led down a long white hallway with images of the retailers print promotions from the past year into a meeting room with large pale blue screens onto which were projected images of clouds while new age jazz played in the background.
Johnson proved to be quite a showman as he took the stage and offered a compelling recap of how department stores slid from dominance in the 1960’s to where JCP is at today, which is basically a sea of sameness, with no price integrity and an emphasis on private brands that make it seem at times as if apparel is being sold by the pound.
Johnson is out to change perceptions and attitudes about JCP, and the path to becoming America’s favorite store will begin with a dramatically simplified pricing strategy and an equally dramatic reduction in promotions.
Fair and square is how Johnson described the new approach to pricing. The company knows that shoppers don’t begin to make purchases until goods are marked down 40% so that is where going forward pricing will begin. No games, just everyday fair values designed to regain trust with shoppers.
The same philosophy is being applied to promotional efforts where JCP is shifting from a highly promotional strategy in 2011 that saw the company invest $1 billion to promote 590 unique events to 12 monthly events each of which will receive $80 million in marketing support and include a 96-page direct mail piece with a heightened editorial emphasis.
“This new pricing approach and promotional cadence will allow us to change our personality,” said JCP president Michael Francis, the former chief marketing office at Target that joined JCP shortly after Johnson arrived.
The emphasis on monthly events has other benefits as well, according to Francis, because it simplifies store operations and frees up merchants’s time for assortment planning as opposed to constant pricing changes and determining which items to feature.
Longer term, the key element of transforming JCP into America’s favorite store involves a merchandising overhaul that is dependent on “shops” within the stores. Beginning this August, JCP will begin converting departments within its stores to shops utilizing new five foot by five foot modular fixtures that can be stacked or used to create walls. The shops will come at a pace of about two every months for the next three years until 100 separate shops are in place by December 2015.