March 7, 2012,
By David Gill
"We're fine with growing old, but we're not fine with growing stale. We want to be young and vibrant again."
So said Ron Johnson, who took over as CEO of J.C. Penney last November, in a presentation to financial analysts in January--an event very reminiscent of the shows that the late Steve Jobs, Johnson's former boss at Apple, would put on to introduce new products such as the iPad. Johnson and Michael Francis, J.C. Penney's new president, offered a vision for the 110-year-old department-store company that is intended to breathe new life into its operations and merchandising.
This vision involves a total overhaul of J.C. Penney's pricing, promotion, brand image and store format. Components of the strategy began rolling out on Feb. 1.
Speaking to HFN after the conference, John Tighe, senior vice president and general merchandise manager of home, said the home department will have a whole new look once elements of the strategy fall into place. "We will be rethinking a lot of things that we do in home," Tighe said.
Johnson said J.C. Penney will transform its stores' layout over the next three years to one focused on shops. By 2015, he said, there will be 100 shops in each J.C. Penney store.
One major shop that will arrive next year will be the Martha Stewart shops, part of the agreement between J.C. Penney and Martha Stewart Living Omnimedia announced in December, which will be in about 600 stores nationwide beginning next year. Tighe said there will be more shops to come. "We envision shops by product category, and we could create shops for international brands, too," he said.
The shops will be part of the new format that will also feature Town Square, a central area in which services and other yet-to-be-determined offerings will be provided, surrounded by Main Street, where the shops will be located. The new prototype will be introduced in 2014, and all of the stores will be reconfigured to the new format by the following year.
Also part of the new J.C. Penney is a pricing strategy called Fair and Square, which sets three types of prices: Everyday, which offers consistent pricing for each day; Month-Long Values, which gives shoppers low prices on products they need to buy in that particular month; and Best Price, which offers customers the lowest prices on products on the first and third Fridays of each month.
Regarding this strategy, "we'll follow the playbook Ron described," Tighe said. "It will help us in home by allowing us to offer great prices every day."
The new promotion strategy, which ties into the pricing, aims to reduce the number of promotions J.C. Penney offers from 590 in 2011 to 12, one for every month of the year, with each month's promotion focused on products customers are likely to buy in that month (back to school in August, holiday merchandise in November and December, for example).
Tighe also said J.C. Penney's overall new look will help its relationships with its home vendors. "I see our vendors more involved in the concepts involving product development and layout of the department," he said. This will, in itself, bring a new dose of energy to the home area. "The vendor community is dying for us to do well," Tighe said.