Former Apple Senior VP of Retail and current JC Penney CEO Ron Johnson took the stage yesterday in New York City to outline the future of his struggling department store chain, a future that looks a lot like Apple Retail.
At the event, Mr. Johnson outlined six areas of focus, what he called the “Six Ps” for the chain going forward:
Mr. Johnson will simplify JC Penney pricing into three categories: everyday, month-long, best-price. Everyday pricing is the standard day-to-day cost of items that Johnson categorized as “competitive but reasonable.” Month-long are sales on select items that will last the entire month, putting less pressure on consumers to rush for limited-time offers. Finally, best-price will supplant clearance sales, with the first and third Fridays of every month dedicated to “best-price” deals that will move desired product off the floor to make room for new items.
With a new logo, Mr. Johnson plans to give the department store chain a look a feel that can be identified without description, much like Apple has become in the past decade.
JC Penney will move quickly to dump underperforming brands while focusing on increasing the presence of well-performing brands and adding new ones. This attitude is similar to that of Apple, which has, during the second tenure of Mr. Jobs’s leadership, never shown hesitation to discontinue products and services that don’t meet expectations.
Further simplifying the strategy of the store, Mr. Johnson will cut the number of promotions the store offers from 590 (in 2011) to 12. Those 590 promotions each cost roughly $2 million and were ignored by 99 percent of the company’s customer base.
Going forward, JC Penney will offer just one highly advertised promotion per month with the hope that by simplifying offers and increasing advertising, there is a greater chance that customers will come to the store at least once per month as opposed to the four times per year that the average customer patronized the store under the previous plan.
JC Penney’s New Logo
Mr. Johnson’s plans for store redesigns are taken directly from his successful experiences at Apple. In explaining the Apple Retail layout to the audience, which is divided into separate sales and support areas, Mr. Johnson laid out his plans for JC Penney to be divided into “Main Street” and “Town Square.” Main Street will be the areas of the store where customers shop, while Town Square will be located at the center of each store and offer customer service options as well as some “truly innovative thinking” that he would not elaborate on further.
Tying in with the company’s new logo and promotions schedule, each month will be given a different color, which will be reflected in product marketing, mailers, and even on the outside of each store with different colored lighting. Inside the stores will be a hundred or so “speciality stores” with their own design and targeted toward specific brands or categories. These “mini stores” will first open in August of this year, with two additional stores added each month up until a targeted 100 per store by 2015.
The end result of all the changes will bring a very Apple-like feel to one of America’s largest department stores. “We want customers to shop on their terms, not ours,” Mr. Johnson told the audience. “By setting our store monthly and maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us.”
As for why he left Apple, Mr. Johnson was quick to point out that JC Penney’s current financial situation is nearly identical to that of Apple when he joined in 2001. At the time, Mr. Johnson’s decision to leave booming Target for struggling Apple was met with the same criticism that he has received since his departure from Apple last August.
Clothing, of course, is not the same as high-margin electronics, so only time will tell if Mr. Johnson’s strategies, which many argue saved Apple, will translate to the vastly different world of department stores.