As more retailers lean on e-Commerce to increase sales, J.C. Penney (JCP) is transforming physical stores by including new customer-facing interaction options for consumers of all ages. In a recent webcast from the company, titled: “JCP Analyst Day: Comments and Q&A About The Shops With Ron Johnson,” the CEO of JCP explained the new JCP store concept, the decisions behind it and initial consumer feedback.
Johnson said his goal at JCP has been to transform the business model, not improve it. For years JCP employees “have been working hard to compete well,” he remarked. “We have had great leaders…but lost market share.”
The CEO declared that eventually the industry’s promotional model will run its course: “Stores are about merchandise, and in order to win, retailers must reinvent content, service and the store presentation,” he said. That’s why JCP is transitioning “from a promotional model to a ‘specialty department store,’” Johnson revealed. “We plan to reinvent the way that America shops through a whole new retail interface and new experience.”
Creating America’s Favorite Store
JCP plans to create “America’s favorite store” by implementing customer-facing connections such as name brand shops; larger, more interactive aisle spaces; and seasonal promotions. The strategy includes three key store concepts ― shops, street and square ― with shops at the heart of the concept.
Rather than view the store as a space filled with racks of merchandise, JCP will create individual shopping spaces, or shops. Upon entering a JPC store, consumers will encounter 17 different shops, and eventually will experience as many as 100. Johnson compared the new approach to iPhone marketing: “Apple may have created the screen and technology that runs the mobile device, but what customers love most about the iPhone are the apps. Similarly, the boutiques at JCP are creating a whole new customer interface.”
The shops at JCP will be “pure,” he said: Consumers in the Disney shop, for example, will feel as though they are in an actual Disney store. Everything in the shop will say “Disney,” from the employees and how they are trained to the signing, hangers and hangtags, said Johnson. “If they don’t, we’re not being authentic.”
Technology Frees-up Real Estate For Increased Customer Engagement
To gain the street effect, JCP is expanding merchandise aisles by five feet, an investment that costs the company approximately $2 per square foot. With the additional real estate, JCP can incorporate inspiring activities, such as displays, or provide refreshing cups of coffee. “Because we’ve moved to new technology, we now have more free space,” Johnson added, and can replace unused real estate such as bulky check-out areas, with customer conveniences such as comfortable seating.
JCP has yet to create the details for the square concept, but, according to Johnson, the goal is a “large, dynamic seasonal space” that will change and refresh two and a half times faster than shopping mall spaces to keep concepts new. “The square will be one of the biggest spaces in our stores, and will include unique seasonal items, beverages and light food, as well as engaging customer experiences.”
It’s all about building a relationship with the customer, noted Johnson: “We’re not selling stuff, we’re transforming retail.”
Feedback From Skeptics, Neutrals and Supporters
Based on customer comments from skeptics, neutrals and supporters, JCP has validated the new store concept as a positive outlook for retailing. Research was based on five groups of these three shopper segments. Each consumer was given a 90-minute tour of the new JCP model then asked about pre- and post-tour perceptions.
Several keywords noted by shoppers prior to their tour of the new concept were:
No high-name brands; and
Following the tour, shoppers shared more positive remarks, such as:
Cohesive staff; and
Likely to increase purchase rates.
“Nicer” Stores Don’t Equal Higher Prices
Pricing and quality are a huge part of the customer perception, Johnson noted. He said that since pricing is so important to JPC shoppers, a big concern was that if the new stores were “too nice,” consumers might associate the improvements with increased prices. The goal for the new JCP concept was to “enrich life” for consumers, including those on lower income budgets. “If we can get that across,” he said, “that’s magic.”