JCPenny has been a staple of shopping malls across the country for decades, but lately the firm has struggled to keep sales up. In response, the retail giant hired Ron Johnson as their new CEO (details can be found here). Johnson was responsible for the design of the Apple Retail stores, and his expertise will be used to create a new retail space within JCPenny's stores as well. Now, Johnson will begin creating smaller "Shops" within the larger stores that are based on certain brands (for instance the Levi's Store). Shops will also offer couches and wifi to create a hangout environment, and finally the store will no longer offer periodic storewide sales. Instead, they will focus on providing consistently lower price points.
Although the company has said the first stores to implement the new strategy have seen improved sales, I think this example illustrates a mismatched product and strategy. Other retailers like Apple and Starbucks have embraced similar strategies that transform their retail space into hangout spots, but these are very different types of products. In both cases, hanging out in the store is tied directly with the products since you are either drinking Starbucks coffee or using Apple products to browse the internet. Although you force this strategy on a clothing store like JCPenny, you can't force the customer to interact with the product. Instead of being a showcase for your product or allowing customers free trial, you spend a fortune to renovate stores without the benefit that the other companies gain.
The fact that JCPenny has looked to update a stale in-store experience is commendable, but like always, action needs to be paired with honest analysis about your product. If the strategy doesn't complement your product, then it isn't the best option. We'll see how this investment pays off over time, and also if it sparks other clothing retailers to adopt this aggressive strategy.
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