September 30, 2022

J.C. Penney’s Chief, Ron Johnson, Announces Plans to Revamp Stores

“We want to be the favorite store for everyone, for all Americans rich and poor, young and old,” Mr. Johnson said at a meeting with about 700 investors and media members. “This isn’t your favorite department store. Our ambitions are much higher. We want to be your favorite store.”

J. C. Penney has been struggling as shoppers turn away from midtier department stores and malls. In November, its sales at stores open at least a year fell 2 percent, and in December, same-store sales rose 0.3 percent, both well below industry averages.

From 2006 to 2011, “J. C. Penney has had the worst performance among peers,” a Barclays Capital analyst, Robert Drbul, wrote in a note to clients.

Mr. Johnson said Penney would turn to a three-tiered pricing structure: regular prices, monthlong special prices and clearance prices.

Currently, Mr. Johnson said, 72 percent of Penney’s revenue comes from products sold at a discount of 50 percent or more. The company is currently repricing all its items to fit within the three tiers. For instance, a T-shirt that was priced last year at $14 but sold closer to $6 after promotions will now be priced at $7.

It will not adopt an everyday low price strategy like Walmart’s, the company said, meaning it will not focus on always having the lowest price versus competitors.

Mr. Johnson said the company would simplify its sales events to 12 a year. In 2011, Penney ran 590 unique promotions, he said, and the average customer visited just four times.

“So customers ignored us 99 percent of the time,” he said. “At some point, you, as a brand, look desperate if you have to market that much.” He will move to monthlong promotions, on which Penney will spend $80 million a month, he said. And instead of mailed fliers, the company will have a 96-page magazinelike circular.

Penney also announced a new spokeswoman, Ellen DeGeneres; a new logo (a red outline of a box with a blue box containing “jcp” in the corner of it); and a new designer partnership with Nanette Lepore, who will create a line of clothing for teenagers.

In an interview, Mr. Johnson said there were no plans to close stores.

“Why would we go close stores when we haven’t gotten the whole concept right yet? It doesn’t really make sense,” he said. “Now we’d love to be in malls that are all thriving, but the truth is not all malls thrive.”

J. C. Penney has more than 1,100 stores in the United States. More than 60 percent of Penney stores as of 2010 had been built in the 1980s or before, according to Barclays Capital.

Over the next three and a half years, Penney will divide its stores into 100 unique shops, to try to give a specialty-store feeling to the floor. “When we want a great product today we go to a specialty store — we might go to J. Crew, we might go to HM, Uniqlo,” Mr. Johnson said.

Mr. Johnson also said he would create a “town square” in the middle of each store that will offer services, along the lines of Apple’s Genius Bar.

Mr. Johnson declined to provide details, but said that the town squares would “dramatically enhance the experience of going to J. C. Penney, because there will be services that you can enjoy before you want to buy, as you want to buy, after you’ve bought.”

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