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Update on J.C. Penney, from Joe Fresh to Free Haircuts

BY Marianne Wilson

I’ll say this for Ron Johnson: He has turned staid J.C. Penney into the most talked-about retailer in the nation. The company accounted for five of the 10 most-viewed stories on this website in the first half of 2012 (see story). And industry analysts and consultants can’t stop speculating on the chain’s fortunes, in print, on the web and on television.

In a way you can’t blame them. The fact is there is a lot of news coming out about J.C. Penney. Every day seems to bring a new story (or a new rumor). So here’s a recap of some of the most recent developments:

• Joe Fresh, the Canadian cheap-chic retailer, has entered into an agreement to roll out in-store shops next spring in approximately 700 J.C. Penney stores nationwide.

The brand, which is owned by Loblaw Cos. Ltd., operates only a handful of U.S. stores, all of them in the New York metro area. The deal with J.C. Penney provides Joe Fresh with a great opportunity to expand its footprint here not only very fast, but also in a very cost-efficient manner.

“To get this many stores this fast is a real vote of confidence on both sides. It’s a really bold move for a Canadian brand retailer to make in the United States. I would go so far as to say it’s the boldest,” said Wendy Evans, president of Evans & Co. retail consultants in Toronto, in a report by the Toronto Star.

The Joe Fresh shops will be allotted from 1,000 to 2,500 sq. ft. in each J.C. Penney store and the potential for more if it does well, the report said.

• More details are coming out about the branded shops that Johnson plans to roll out, with the first batch debuting in time for this year’s back-to-school shopping season. (The ultimate plan is to have 100 branded shops inside the stores by 2015.) The branded shops will come in three different formats: “boutiques” (the smallest, at under 750 sq. ft.), “shops” and “stores” (the largest, at over 1,400 sq. ft.)

• Denim is the focus of the first batch of shops being rolled out, with the Levi’s, Arizona and Jeans by Buffalo brands get their own niches in some 700 J.C. Penney stores by Aug 1.

The Levi’s shop, as seen in the J.C. Penney store at Manhattan Mall, New York City, includes 11 cuts and 88 washes of jeans and is staffed with Levi’s fit specialists trained J.C. Penney and the denim maker, according to a report by Advertising Age. IPads flank the sides of Levi’s men’s denim bar, with the devices to be used for mobile checkout and informational purposes.

In September, J.C. Penney will open an Izod shop (for men), a Liz Claiborne shop (for women) and jcp shops (men’s and women’s) for its own namesake brand. The plan is to add a couple of shops every month.

• Expect Johnson to give the stores a cosmetic makeover in the way of better lighting and less clutter all around. And the individual shops will have their own fixtures and signage.

• As part of its back-to-school enticements, J.C. Penney’s on Aug. 2 will offer free haircuts in its salons for kids in kindergarten through the sixth grade. For each cut that day, the retailer will donate $1 to the Boys and Girls Clubs of America and 4-H.

The offer continues through August, as space allows.


More As I See It entries.

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JCP flashes some Apple magic

BY CSA STAFF

JCPenney is not dead yet. New shops and free haircuts may help.

Retail pundits eager to write JCPenney’s obituary may want to wait until after the back-to-school season as the struggling retailer revealed several intriguing merchandising moves reminiscent of the tactics CEO Ron Johnson employed during his tenure running Apple stores. And in an unconventional buzz-building, traffic generating move the company said it would offer free haircuts to kids at its salons throughout August.

The most notable of the changes involved the remodeling of the men’s department at 700 stores to create the first installment of a brand shop concept that is at the core of Johnson’s strategy to transform JCPenney. The new brand shop will redefine the way customers find the ultimate pair of jeans and features the largest assortment of Levi’s denim the retailer has ever offered. The product lineup will feature 11 fits and 88 washes with most priced at roughly $40. To allow customers to access an even broader assortment, each Denim Bar will be equipped with iPads.

And in a nod to Apple, the Levi shop will include a Denim Bar staffed by fit experts to help customers find the perfect pair of jeans. The concept is similar to the Genius Bar in Apple stores where devotees of Apple products can receive help and training from experts. Denim Bar employees also will be able to process transactions from mobile devices as is the case in Apple stores.

“The Levi’s brand epitomizes classic American style and effortless cool,” said Liz Sweney, JCPenney’s chief merchandising officer. “We kept this spirit in mind when we envisioned a new way to shop for Levi’s jeanswear inside JCPenney. Now, customers can pull up a stool at one of our Levi’s Denim Bars and work with a specialist to choose from a curated selection of Levi’s jeans that best expresses their personal style.”

In addition to the Levis shop, the company unveiled shops featuring house brand The Original Arizona Jean Co. and a new exclusive brand called i jeans by Buffalo. The Arizona brand has been around for decades and serves as a value oriented brand while i jeans by Buffalo is a premium offering said to bring the latest European trends into a comprehensive collection of sportswear, outerwear, accessories and denim that features quality fabrics and trims, exceptional fits and design details.

The introduction of the new shops could be just what JCPenney needs to restore sales growth following an abysmal first quarter that saw same store sales declined nearly 19%. Expectations are low second quarter results due out Aug. 10 will be much better. The sales impact of the new shops concepts won’t be evident until the third quarter and by that time the company also plans to unveil three new women shops. Next up in September are shops from Liz Claiborne, IZOD and an all new private brand called “jcp” focused on high quality fashion basics.

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Integration continues at Toys’R’Us

BY CSA STAFF

WAYNE, N.J. — Toys"R"Us continues on its path to bring its Toys"R"Us and Babies"R"Us stores under one roof as part of its integrated store strategy. The company announced that by the end of the year it will have opened eight new stores and transformed 13 existing locations to the side-by-side model in 2012. In adding eight new stores and renovating 13 existing locations, the company will create more than 400 new jobs across the country.

"As we continue to invest and build upon our portfolio of stores by integrating Toys"R"Us and Babies"R"Us under one roof, our strategy has provided the opportunity to capture customers at their family’s earliest stage and grow with them through childhood," said Jerry Storch, chairman and CEO of Toys"R"Us Inc. "We are pleased that our customers have consistently embraced the enhanced shopping experience these locations offer, whether they are shopping for must-have toys for the kids in their lives or products for the newest addition to their family."

By the end of 2012, the company expects to operate 204 side-by-side stores nationwide, accounting for nearly 25% of its store base across the country. Toys"R"Us currently operates more than 190 side-by-side stores in the United States.These integrated store formats range in size from approximately 30,000 square feet to 70,000 square feet.

The company first began its integrated store strategy in 2006. In 2007, the company opened the first of its new "R" Superstores, which feature full-size Toys"R"Us and Babies"R"Us stores under one roof and are approximately 60,000 sq. ft.

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