A Tale of Two Stores

        

Hindsight is 20/20 - Pics courtesy of Wikipedia

Preface/addendum
I didn't realize when writing this that Ron Johnson was the turnaround artist who did wonders for Target.  In essence, I'm comparing two Ron Johnson efforts -- one that succeeded beautifully and one that flopped.   As you read along, you might ask yourself why a strategy that worked so well at Target was such a disappointment at JCP.   -- blogSpotter, 4/24/2013

by blogSpotter

I’m actually at home, typing today’s blog article. Hail storms are in tonight’s forecast and I don’t care to play hail dent roulette with my cars.  I’m watching a Family Guy from its first season, noticing how differently the characters were drawn 14 years ago.  But I digress ..

TWO STORES

Unless you’ve been living on a desert isle, you’ve heard of the trials of JCPenney, the American department store that has recently lost a billion dollars and experienced a year over year sales decline of 28%.   JCP (as they now call themselves) hired away Apple’s Ron Johnson to be their CEO in June 2011.  JCP had already been struggling to become hip and relevant – the hope was that Ron Johnson would visit the chic, trendy minimalism of Apple Stores on the staid conservatism of JCP.

Obviously a high end electronics store is hard to compare with a department store – I’ll stand away from that apples-versus-oranges comparison.  Penney’s (in its previous life and nomenclature) was an American tradition in the same mold as Montgomery Wards and Sears.   It offered similar merchandise with value pricing, frequently serving as an anchor at popular shopping malls.  It was no-frills and no big surprises, but gave middle-American bargain shoppers a place to save money.  In the 1990’s and 2000’s, there was a sort of retrenchment – many mall locations closed and were replaced by stand-alone stores in popular shopping strips.    The new stores shed quite a bit; gone were such things as furniture or lawn and garden.   The stores more closely resembled Kohl’s with a heavy emphasis on clothing and bed linens.

JCP still comes across as a store for middle-aged yentas – looking maybe for a scarf, a table lamp and a pair of slacks.  It calls to mind such Texas traditions as Beall’s, Steinmart and Horchow Finale.  A new JCP opened in 2011 at Timber Creek plaza here in Dallas.  I strolled through the whole store and was personally underwhelmed.   Its extreme emphasis on women’s clothing and frilly house wares fairly restricts its audience to women.   The addition of upscale labels (Polo, Levis) still does little to combat my feeling of being out of place.  I really can’t imagine what would draw me back even with coupons and sales prices.

For contrast, the store I’d like to mention is Target – a chain which is making profits and expanding aggressively.  I must preface, Target is one of my favorite stores.   It carries many name brands but its store brand (e.g., in food and clothing) is hardly shabby.  The stores are colorful, clean, brightly lit and stylish.  The furniture is a pretty good knock-off of things you might find at West Elm or Crate & Barrel.  It has an in-store “Apple Store” to rival the Apple Store.  Let’s not forget that it also has Starbucks. Here are things I see at Target, absent or lacking at JCP:

• Groceries
• Furniture
• Lawn and garden
• Home electronics
• Toys
• Hardware

Target also offers value-minded people the Target RED card which gives an additional 4% savings on anything purchased with it  (on top of any sale prices already registered).  Not only does Target offer a wide range of wares, it gives a permanent shopping incentive to the bargain-minded (i.e. cheap people like me). JCP is wise to bring back the coupons, everything considered.

COUPONS

JCP was so intent and impatient to become Nordtstrom Lite, it momentarily forgot its value-oriented customer base.  JCP hoped that its "every day low prices" as hawked by Ellen DeGeneres commercials would be value enough.  In truth, doing away with coupons and sales did away with many of the customers.   I realize that my analysis here is armchair quarterbacking   -- we can all make the same kind of post-mortem remarks on someone’s missteps.   I think there’s some validity to it here.   

  

CONCLUSION

I’m not a marketing whiz and can’t explain this or that.  Radio Shack has always amazed me – selling overpriced items a year out of date.   Sears these days is a dark depressing tour through a shabby, Spartan space that looks like a thrift store. How do they stay in business?   Why haven’t they taken any notes from more successful competitors?  

I actually think that Ron Johnson has a good idea about where JCP needs to go – the stores do need to be reinvigorated and brightened up.  His store-within-a-store concept has worked well at Target.  I think his problem was miscalculating the departure point rather than the destination.  I hope for the sake of JCP and the local Dallas economy that something is worked out without the sale or dissolution of the whole company.

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