J.C. Penney’s Problems Are Larger Than Just Pricing
By on February 8, 2012. 

JC Penny Logo
(All Images Courtesy of J.C. Penny)
 

Last month, J.C. Penney announced plans to end the barrage of sales that the company promotes every year in their department stores in favor of everyday low pricing. CEO Ron Johnson, formerly of Apple, has the unenviable task of turning around the stodgy and tired retailer, which ran an astounding 590 promotions in 2011 alone, according to the L.A. Times.

The AP interviewed Johnson, who plans on introducing Apple Genius Bar-like services for pre- and post-purchase support, the details of which are still under wraps.  The retailer also plans to introduce 100 specialty shops within the store.

 

Ron Johnson - JCP CEO
(J.C. Penny CEO Ron Johnson)
As exciting as it was to learn about the Apple-like changes that will be coming to the 110-year-old retailer, the company still hasn’t confronted many of the core issues with the shopping experience. As a long-time J.C. Penney shopper, I can identify the specific problems holding the retailer back.

An Inconsistent Service Experience

J.C. Penney doesn’t incentivize skillful customer service. Associates with 25-years of service are oftentimes staffed alongside less experienced workers who possess a different understanding of customer service and the department store shopping experience.

JCP could excel in this area by encouraging personal shoppers and consultants, but they’re missing the opportunity. Consumers want to know how to mix and match items and JCP can be one of the few clothing retailers to provide this assistance.

Poor Merchandise Blend and Style

The retailer provides good value and pricing, but ignores the more obvious problems of poor merchandise combinations and styles. While J.C. Penny can compete with its traditional and formal clothing, an understanding of newer styles seems to escape the company’s fashion buyers.

In menswear, JCP forgoes the more fashionable pocketless, slim fit dress shirts for more traditional dress apparel from their older, private-label Stafford brand. Instead of slim dress pants, the company relies on the mass-market Dockers brand.

Many younger shoppers, in particular, are lured to specialty mall stores for these items instead. But let’s just play devil’s advocate for a moment and imagine that specialty items like these are too costly for J.C. Penny to source.

In that case, the retailer has a major opportunity to lure shoppers back to their stores through a renewed focus on basic clothing. Let’s face it: nobody sells value-oriented, solid-quality basic t-shirts, jeans, and underwear. Within the mid-market, competitors such as Gap have failed to keep pace. J.C. Penny has an opportunity to get shoppers back into their stores under the guise of “quality basics for less money” and keep them there with a better, more appealing merchandise mix.

 

New JCP Store Entryway
Poor Quality of Materials

Quality of materials is extremely poor and inconsistent, attesting to a lack of quality control.

From a men’s clothing perspective, the quality of cotton used in men’s polo shirts has been on the decline. Additionally, the stitching and sizing of shirts and pants has been flawed, inconsistent and sometimes lopsided. These defects have become more obvious over time. I’ve even seen pieces of clothing that were different shades of the same color because of dyeing problems.

Not Listening to the Customer

Customers have noticed these and other problems for years.  I know; I worked for J.C. Penny briefly in college.  And I still hear about it every time I’m in J.C. Penny buying clothing.  There should be a direct line of feedback from customers directly to management and fashion buyers.  More importantly, management should figure out how to entice customers to come back to the store (a la Target and their limited-time designer clothing lines).

Poor Technological Infrastructure

It’s not enough to put out a touch screen computer for associates to use and say you’re up-to-date with technology.  Consumers are much more engaged with the buying experience and expect retailers to play along.  They’re relying on smartphones to comparison shop with online retailers in store. They’re looking to see the same products both in store and online, at the same price.  Additionally, they’re looking for added convenience.  For example, why hasn’t the company offered one-hour ordering in-store or access to the main inventory computer from anywhere on the floor for its associates?

New JCP Store Mall Entrance
Competing With Itself

The catalog business is so last century. So why is JCP still relying on publishing gargantuan-sized catalogs every year? Everything is online! Keeping the catalog business is like putting a sign out on the front lawn saying, “We’re a tired old retailer! Come shop here for granny clothing.” The entire buying experience, even for rural buyers (towards whom the catalogs are geared) can be replicated much better online than through a catalog. Dump it, and dump it quickly, JCP.

Frankly, it’s a tough task to serve the middle market in the retail clothing industry. The competition is fierce and customers demand both quality and value. But sized up against competitors like Kohl’s, there’s an utter lack of innovation within the industry. That’s where JCP can succeed.

The department store model isn’t broken, but approach to the business is. Unlike Sears, JCP still has customer loyalty in the area where it counts. Hopefully, under the direction of a new CEO, the century-old retailer can stay relevant to a new generation of shoppers.

 
Additional Resources & Notes
Bobby is creator and host of 2 Minute Finance. Check out the about page to learn more about Bobby.
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