J.C. Penney revival plan is disappointing
CEO plans to use his experience at Apple stores to jump-start retail chain sales after declines in two quarters
New York: Before Ron Johnson took the stage to unveil his revival plan for J.C. Penney Co, William Ackman, the chain's largest shareholder, vowed it would be the most important day for retailing in 25 years.
Investors differed, and the shares sank during Johnson's 90-minute presentation. It was a signal that his plan fell short of the excitement that has followed Johnson since he became CEO in June after turning Apple stores into the world's most successful retail operation.
Johnson's strategy for the fourth-largest US department store chain — including fewer promotions, boutiques-within-a-store and hiring talk-show host Ellen Degeneres as a spokeswoman — wasn't the revolution many expected, said Liz Dunn, senior consumer analyst at Macquarie Capital in New York.
"The plan isn't necessarily ground-breaking," Dunn said. "Anyone with a mind could have assessed that there needed to be a change to the stores, pricing strategy and marketing."
Struggling
The 52-year-old J.C. Penney CEO says he plans to use his experience at Apple stores to jump-start a retailer that has posted sales declines for the past two quarters. The entire sector is struggling. Department stores are expected to lose market share this year and generate sales growth of 1.7 per cent, compared with a projected 3.4 per cent gain for retail as a whole.
Investor euphoria reflected Johnson's record at Target and Apple. During 15 years as a merchandising executive at Target, Johnson brought in designers like Michael Graves and helped invent cheap chic.
The strategy transformed the Minneapolis-based discounter into a nationwide destination for accessible fashion. Many retailers copied Johnson's moves.
The late Steve Jobs hired Johnson in 2000 to create Apple stores. The minimalist stores with their Genius Bars and speedy checkouts became a model that has been copied widely.
Johnson's turnaround plan, scheduled to be complete by the end of 2015, borrows from his Target and Apple playbook. One theme: making shopping simpler. Johnson complained that J.C. Penney stores had too many items and sales events. The chain has 400 brands and plans eventually to reduce that to 100, each with its own store-in-store.
The chain will also change its store layout to emulate Apple. At Apple stores, there is an area dedicated to products and one focused on owners of those products that offer services, such as the Genius Bar.
