A Truly Depressing Visit to JCPenney | Hacker News Reader

A Truly Depressing Visit to JCPenney

slate.com

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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...

Sample size of one! That's reporting. Just like the New York Times review based on a single drive with the Tesla.

This just reflects the dilemma of the "new" JCPenney. They have a new brand strategy, but can only roll out physical changes slowly. So I go to my local mall and the only differences in the store are new signage and nothing on sale anymore. Is that supposed to be appealing? Is it any surprise they lost sales in those stores?

I thought the important part of the "no-sales" strategy was to have lower prices every day. Author doesn't mention it. Doesn't seem like such a bad idea?

What might be happening is the same squeeze that happened to (now lower-end) stores like Sears and Kmart as well ... they can't compete on pure price against Walmart, Costco, et al. They can't move into the high-end because of historical baggage and lack of credibility, etc.

And of course, the retail world has changed. Much business has moved online, and the widening gap of rich and poor (and their associated tastes), are a double-whammy to the solar plexus of the midrange retailer.

Shoppers are pretty jaded about retailers telling them they have "low prices every day". OTOH a sale where it really does cost $10 less this week than last week is concrete evidence.

I think you pretty much nailed it. It looks like Johnson's strategy is to go after the customer that is more focused on experience, and less on getting the absolute bottom-dollar price. I think that has potential, but it's going to take a sharper eye than mine to identify the correct "experience" elements that will draw in that niche.

What's odd is that this is JCPenny. As a brand, JCPenny is starting from the opposite end of the spectrum. That is to say, JCPenny shoppers aren't traditionally "experience" focused. We grew up poor. Pretty much all of my dress clothes growing up were Stafford (JCPenny's house brand), because they were inexpensive. My sister is a stereotypical frugal accountant; she's a JCPenny shopper.

If JCPenny's goal is to convert their current customer base to an experience-oriented shopper, they're doomed to fail. If their intention is to attract new, experience-oriented shoppers, they might succeed, but they've got a tough road ahead.

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?

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.

You can find these types of department stores in Japan: http://www.japan-guide.com/e/e2072.html

This 2011 article about JCP's new strategy also discusses Japanese department stores: http://knowledge.wharton.upenn.edu/article.cfm?articleid=281... (ctrl-F "Japan")

If you're selling $200 jeans (Diesel), you probably want to control the experience down to fine details. But if you're selling $40 jeans (Arizona, Urban Star), smaller presence is cheaper and allows for faster iteration.

I agree. I happen to know the Wheaton Shopping Plaza he's talking about and that whole mall is pretty run down. I doubt JCPenny would choose that location for their experimental new store design.

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.

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?

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.

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?

schraeds your account has been dead for 11 months :(

It's very possible that JCP want to have their stores Internet enabled for other reasons, and thus the ability to offer Internet to customers is just a side benefit of that at (possibly) no additional cost.

> 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?

Not everyone in the store is there to shop. It could be a competitive advantage to have these non-shoppers urge the shoppers they go with to go to JCP instead of some other place.

Also, it is possible that giving Internet access to shoppers is easier/cheaper than making the experience in the stores as good as possible. If I want to comparison shop, for example, I wouldn't trust information given to me by the store I'm in, I would pull out my phone.

The premise is that the stores already have wi-fi for store operations, e.g. those inventory control computers with built-in bar scanners, price-check kiosks, and maybe even something like Nordstrom Rack's "you can check out anywhere in the store by going to our team in green" mobile checkout.

Then you slap guest wifi on top of this on a separate SSID, and throttle its bandwidth use to something appropriate, it's dirt cheap, and will attract people to the aforementioned coffee-shop-style lounges.

THEN if you want to get FANCY you use one of the new-fangled wifi analytics tools like Ekahau or Nearbuy to track frequency of repeat visitors and generate heatmaps and whatnot:

* http://www.nearbuysystems.com/products/in-store-analytics.ht...

* http://www.ekahau.com/solutions/retail.html

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.

>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.

> 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.

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...

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...

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.

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.

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.

I had the same experience reading the article. He mentioned Penny's target market being thrifty shoppers in the lower middle class and I wondered when the middle class started being able to afford Penny's.

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.

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.

Well. Not until you get customers.

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.

"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.

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.

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.

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.

I don’t think this is true for all visitors to Apple Stores. A good percentage of Apple Store shoppers do come in knowing exactly what they want to look at or buy—the category you’re describing—but I’ve seen a lot come in to browse and taking up quite a lot of staff time with questions. For example, they may know that they they’re interested in an iPod, but they have not necessarily made a purchase decision or know which one to get.

I think what the commercials and buzz around Apple products (and the fact that the Apple Store is the place to find a full selection of Apple products) is to convince people to come into the store in the first place and look around.

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.

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.

It's complicated in this case because he has a grand vision for change... but also has made some mistakes in his changes, like the pricing debacle. The fact that he is still CEO at all shows that someone has faith in him... 30% revenue declines are pretty terrible.

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.

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.

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."

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.

Nice and pithy, and good advice for investors. What's the strategy for the management team themselves, though? Give up on the business with a reputation for bad economics? Let it run itself into the ground? I have to imagine there are turnaround stories, though perhaps fewer and farther between.

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%.

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.

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.

Or you could order online for pickup in store, and skip most of the shenanigans.

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.)

Agreed.

Any employee can take a sale from anywhere in the store and have your receipt emailed to you with a push of a button. On top of that they have dozens of employees.

I can't imagine a faster checkout system.

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.

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.

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.

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!

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.

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

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.

HN discussion about the original moves.

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

Always a fun read in retrospective.

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