Put yourself in the shoes of a giant that’s shrunk by more than half your size and you’ll understand what we’re dealing with here. With so much negative press about JCPenney, what’s really going on? I began to wonder this very question myself and knew it was time to investigate. I wanted to make my experiment feel exactly as if I had just been put in charge of directing this turnaround. I knew in order to succeed with this I’d have to dive deep to discover their past and where it all started all the way up through their rise, steady growth, and eventual fall. This will give a more rounded perspective surrounding the current state of JCPenney and its future… For this, I thought it only right to examine their current status by going undercover to talk with managers, employees, customers, and stakeholders alike to grab the data needed in order to provide a solution to help JCPenney succeed again. The original Golden Rule Stores
JCPenney got its start more than 100 years ago from the ideas and work ethic of one James Cash Penney (Must have been some character in those parents). At the age of eight, James was put to work to earn his keep in a family of 12. Undaunted, James went and sold livestock to make money until the neighbors complained about the noise. With some money saved up from his livestock venture and assisting at a local dried goods store, James Penney bought a Butcher shop which taught him a lot of the early skills necessary to succeed in his next venture. The butcher shop fizzled out, but James’ true passion shone through and he found himself as a manager of a local dried goods chain. His experience all throughout retail gave him sound enough knowledge and backing to buy into a dried goods chain, known then as the “Golden Rule Stores”. His involvement with the chain helped propel the growth of Golden Rule Stores to 30 stores by 1912 doing over $2,000,000 in sales. At this point, J.C. moved the company to New York to be closer to the merchandise manufacturers, and in 1914 JCPenney’s flourished. With over 500 stores now in operation JCPenney quickly began to scale up its operations while keeping the model simple; smart advertising, good products, and affordable prices. James Cash Penney stayed with the company to help it grow to see over 1500 stores in his lifetime, dying at age 95. In his lifetime James created one of the largest and most successful retail brands of the time. Not only did they grow their retail foot presence to several million sq. ft. but he was also able to open numerous other lines within the brand.
At the start of the century, and most of the way through, JCPenney was rolling. They had a retail business doing $20 million a year by 2020 and were entering a new expansion as the anchors in a lot of malls. This trend of malls expanding led JCPenney to have its foothold on an average sized store nearing 200,000+ sq. ft. Around this same time, JCPenney was making some big moves with it’s footprint in retail. With their acquisition of General Merchandising Company, JCPenney now had a large format department store brand which sold appliances, sporting goods, garden merchandise, restaurants, and beauty salons. This format eventually expanded as we’ll explore. In the beginning of 1963 JCPenney began their expansion in the catalog business, distributing initially through 200 stores, using Milwaukee Catalog Distribution. At the same time, JCPenney completed stores in all fifty states and opening a 250,000 sq/ft. megastore in Puerto Rico. A lot of expansion and a huge portfolio of stores created a wildly successful retail operation, which had later in the 1960’s purchased Thrift Drug. The addition came from one of their first entries into the store-within-a-store concept, popular throughout JCPenneys history. It was in 1973, JCPenneys did over $5 billion in sales with 2,053 stores and 300 full line establishments. Their stores had always been cash only, but in 1979 the VISA card was accepted at all JCPenneys stores. The introduction of VISA being accepted was the chain’s first real entry into the technology aspect, almost 23 years after the introduction. It is unclear whether this affected the growth positively or negatively but in 1983 JCPenney discontinued appliances, hardware, and auto center departments as well as selling off their automotive centers to Firestone. This was also interestingly enough the very first time JCPenney introduced a computer type device to shop from called the Viewtron Videotex. Their demise had begun, but it wasn’t over.
Recently, retail has made somewhat of a recovery, and the reason is mainly from an omnichannel offering to customers. Allowing customers to shop online, pickup in store or BOPUS as it has somewhat annoyingly become. So far, JCPenney has omnichannel offerings in 1000 of their stores. Though, when I went into a JCPenney in MA the employees mentioned there had only been 2 other customers who have used it. Putting this aside, I was glad to see the company is fulfilling orders from 250 stores, though the number may change this year. Through this network of online and stores fulfilling product, JCPenney stocks 150,000 items available through same day pickup, an impressive amount for the person in a hurry. Knowing this, JCPenney has made movements to improve in-store mobile checkout. This will enable employees to hopefully process orders quickly through online pickup and walk-ins. Part of the problem admits CEO Marvin Ellison is “we have tons of customer data, we just don’t do anything with it” which suggests their ongoing omnichannel efforts will attempt something to use the data more efficiently. One recent way JCP decided to use their data was to put appliance centers within 500 stores around the nation. This will be accompanied by in home “quick-install” services which will cover the appliances and other light home installations. The move here was based on the rising number of 30–40 year old women who are owning homes and buying appliances. It’s amazing to see JCPenney has now gathered more than 1 million downloads on Android alone, and from which you can order an appliance with same day technician to install it. This convenience factor for customers has led to a slow uptick in JCP millenial+ customer base, but their market is still predominantly the 60+ woman who has grown up with JCPenney for years. Tackling this segment with technology does not work as well as with the 30 year old, so JCP has a few things to work out with it’s customer base, one of which is moving their athletic wear more to the front of the store. As Ellison stated “[We are] getting consumer feedback, getting the consumer trends and activewear was coming up quickly ahead of the whole company in sales amount”. With this positive stride in the company’s movement, and some added cash from it’s looming selloff of stores I do feel there are some awesome things that could happen with JCPenney. With this, I will step back from the role of examiner of the company, and into the role of redesigning the company.
In learning as much as I could about JCPenney stores and their journey down the retail road, I have noticed a few things along the way.
Given those few points, there is a lot of information to suggest these are the right areas to look at in order to succeed. My strategy will revolve roughly around these main points, keeping in mind there are only so many resources to accomplish what is needed. The relationship between the brand and how consumers view JCP is super important to keep in mind. This can be thought of as the rule of the ladder in 22 Immutable Laws of Marketing, which states that customers have a certain hierarchy of where they view a company in relation to its competitor. If you are not at the top of the ladder in a certain category, do not try to be the top, and instead, keep the customers that respect your position. This will play an important role in the transformation of the company, while also learning to avoid many other problems by inventing their own category. I do believe the perception of JCPenney is old in the mind of the customer, most especially the millennial customer, which is hard to change. Unfortunately, the company has gone through a few changes to its corporate identity, which has already confused consumers enough. So, with the stores earning one perception, consumers feeling a different way about the company, and an online presence which in no way connects the two, I guess this is the challenge.
There hasn’t been a ton of JCPenney ads lately, at least not where I have come to see ads anymore. This could be a result of lack of funds, or it could simply be they are not advertising on some of the newer and more modern mediums. Yes, of course, this could mean I am not the right target, but I’d still expect to see something. This relates to a larger problem which is that millennials are not jiving with the company. To fix this, I would invest in a few things:
Stores within a store have always been a strength to JCPenney as they have been doing it for a while. This is perhaps one of the staples of JCPenney, meaning it can be the way forward for JCPenney if they utilize it correctly. The other thing this does for the brand is to bring in the stores millennial customers are going to go for. The type of stores that are hot with millennials, and would be open to grabbing some cheaper real estate inside the stores themselves. Some stores I would approach include but are not limited to Lululemon, FiveFour (for an interesting reason), BirchBox, Panera (? It adds to the experience and millennials/older demographic love the health conscience aspect) to name a few. I would ask these brands to come to JCPenney for their own showcase within the stores, as well as a place to distribute from. The two benefits here would be:
This may seem like a drastic step for the still giant retailer, but so far their omnichannel efforts have proven to show results, this would enable a whole new level of distribution. In my research, I discovered the Sephora partnership brought growth in sales of ladies accessories up from 10% in 2010 to 12% in 2015 according to Market Realist, which gives a glimpse at the success it can have if more brands come together. Another peak into this trend is within Target who has expanded their selection of Harrys Razors with a subscription partnership, which I myself bought. Some of the challenges that come up here include the actual setup of the stores themselves, which could be cleared out or left in for a future store within a store tenant. The cool aspect of this is you can test concepts like this very easily. For instance, I would reach out to the companies with a good fit, that also might benefit from the other shops within JCPenney, to create a culture of stores which all benefit from each other. It establishes a new efficient, and experience driven shopping trip. Malls, while they have lost some of their vibe, are still a place to come and do things, besides shop. For JCPenney, it is simply a place to come, discover new products, grab a coffee chat with a friend, while perusing the latest Lululemon fashion, or grabbing a subscription to BirchBox. buy based on the discovery. This then creates a new culture for the customer, which I think will reflect in positive sales because millennials are certainly more about adventure, even when it comes to the shopping experience. First, you would offer this to only five of your locations, and test it over 3–6 months. If it works, you continue the program, and if not, you analyze throughout to figure out what is not working, is it the tenants, is it the lack of our own sales… etc. Assuming a test would prove the concept is working, and even if it wasn’t I would begin focusing on the entire technology environment within JCPenney. How does the customer flow through their phone, through the website, with their interaction on the phone while in the store, how they have ordered products with JCPenney before? Asking these questions I think will help us to determine why, what, and where. Afterall, JCPenney has mountains of data and it wouldn’t take a lot to figure out who and how to bring them in for the new experience.
The next part of this plan is the technology which would make it all possible. Clearly, JCPenney has been struggling with the technology portion of this for a while now, so I would want to get a more firm grip on what’s happening right now. From a first perspective I would work on:
My solution to the age crisis and large amounts of data would be to input this all into a system like Epic Commerce, so it had the full data of past purchases, emails, phone numbers, product, categories etc. and created the logic behind it so that every time someone was on my website it would be taking notes, and eventually, when they took the right action, I would notify them with something that would help them convert more. Something like, hey thanks for shopping with us last year (if that’s how long it’s been), we’d like to present a new JCPenney style we think you’d like (present products), and oh by the way, you are only 2.5 miles away from a brand new redone store which has some great new ways to discover such as Birchbox and Lululemon. By presenting this customer, and many different customers all declared through any number of millions of combinations with the dataset and logic based commerce, you can activate customers without having to invent entire new systems to do so. This would enable the segmentation and product recommendation to happen in real time, person to person, with the most relevant information to them. This would extend to the JCPenney website. First off, the website design would be stripped down and totally updated to present relevant information right up front, with a larger formatted site, and easier navigation. I would get rid of the more annoying ads, and simply already have the right products presented to them, with the location services already delivering products available nearby for pickup. This is how a woman likes to shop in modern times, let the products find her.
How amazing would it be if JCPenney put together a web of products available?If it included all products from all their vendors operating within the JCPenney stores and through the marketplace? This really extends the idea of stores within a store and completes the transition to your own market. With this in effect by extending the logic based commerce system to allow separate accounts to join their product set in, there’s a very simple transition to opening up any size marketplace, quickly and all based on logic to sell consumers through. The plan would be to build up the in-store presence of other stores within JCPenney while refining the JCPenney brand to sell only the products we felt most strongly about, and outsourcing (by insourcing) the stores selling through JCPenney locations. Once these stores were in place, the combined attractiveness of a marketplace for consumers to come in through the store, add products via smartphone to their cart, and checkout with a finger. This is the future of commerce and would forever change the perception image for JCP. Now, the marketplace would be managed by the brand selling, which would maintain the product count and location for each popup shop, but enabling the tenant to still run their own shop through it. For consumers, it would be a JCPenney marketplace app (perhaps spun off as it’s own name) which would allow the shoppers to buy from all vendors through one app. Simple, convenient and new.
To help the stores within a store, and help the brands on the marketplace, JCPenney could roll out a way for these vendors to actually sell through their logistics system as well. This is a way to leverage and make money off the logistics system in place already within JCPenney which helping the stores within a store. Perfecting the supply chain to deal with this would be a whole ‘nother issue, but over time the supply chain can be automated and effective for in store operators to handle online orders from the stores. What you have now is a convenient place for new brands to still get exposure, and band together for operating smoothly, while grabbing new customers for all people around. In addition to this the idea would be to provide this marketplace of real estate, which other brands could place their store. Whether this be a coworking space or whether this is an Etsy seller who wants to pay for the space, as long as we can fulfill the space, JCPenney could allow them, through the marketplace to select a location, view the details, and pay for the ongoing use. Sort of like a retail AirBnb is how I’ve thought about it. Now, despite not having a huge budget for all this, I know I could keep the costs down, and effectiveness up using logic based commerce. With the marketplace in effect, the next step would be to scale out the initial steps.
Scaling up this operation would require a simple plan to look at the numbers and determine which stores it performed well in, which areas are in the most demand for retail space, how customers respond to the marketplace, and how well brands find it to place their product within the store and on the marketplace. This is not something I would attempt if I didn’t know the right technology to do it with. That being said, its the change JCPenney would need to see in order to get back to the wildly successful days of later years.
If you have any questions or comments on this piece or any others, please leave a comment. Likes and shares are always appreciated :-) If you are in the position of wanting to know more about the technologies or ideas presented here, email a specialist@Orkiv.com.