It's Deja Vu All Over Again With J.C. Penney

Ugh. Didn't we just go through this and decide this isn't how we wanted to run the business?

J.C. Penney (NYSE: JCP  )  has announced it will open 565 store-within-a-store boutiques featuring exclusive Disney (NYSE: DIS  )  toys, collectibles, and kid's clothes. Ranging in size from 800 to 1,100 square feet, these shops represent part of the legacy turnaround model started by ousted CEO Ron Johnson, who believed these mini-department stores within the broader JCPenney environment would create a mall-like atmosphere that would keep shoppers shopping.

Included in that theme were barber shops where kids could get free haircuts, just like the old days, and free Wi-Fi, just like the, er, new days. Maybe it was Johnson's background at Apple that brought about these changes (though I don't recall anyone getting haircuts while visiting the Genius Bar), but there was a certain incongruity to some of the ideas.

That Wi-Fi, for example, sounds like a cool concept, except department stores are set up for shopping, not sitting around on the Internet. As the company was finally forced to admit, the resource was underutilized. The retailer did away with the Wi-Fi last month in a bid to save some $7 million a year.

Similarly, the boutiques were intended to create spaces for today's modern customer. Along with "shops," as they were called, featuring displays built around brands, there were iPads available for customers to browse through collections, much like you would see if you walked into an Apple store: iPads here, iPhones over there, Macs on the side. And just like Apple employees, rather than standing behind cash registers, Penney clerks would be armed with iPads to implement mobile checkout while the registers would be eliminated.

But rather than dragging the venerable retailer into the 21st century, these moves kicked the chain to the curb with shoppers who felt alienated in this alien, modern store. In the end the retailer gave up on this too, and the registers are coming back.

J.C. Penney, though, is still trying to steal some of the Magic Kingdom's brand halo and equity. The project announced a year ago was first brought to Penney's online store; today, with characters from Monsters University, Toy Story, and Tangled, it will roll into hundreds of physical locations.

While it's being launched with the typical breathless fanfare each innovation has seen -- the Disney Shops "will be a major draw in our kids department" (just like Wi-Fi was going to be a foundational core of the new Penney's) -- there is something to be said for the cachet that accompanies the House of Mouse. And since these won't be generic Disney products found everywhere else, it could be an attractive addition.

Had Penney gone in this direction from the beginning, it might have averted much of the disaster that accompanied the other changes it made. Shoppers didn't need a Levi's boutique, an Arizona shop, and a Buffalo store to sell denim, but a stand-alone Disney store with unique and exclusive items certainly seems smart.

Although critical of many of the moves Penney's has been making, I've jumped off the criticism bandwagon, believing instead the retailer has hit bottom and is now ready for a recovery. A Disney boutique may be just the thing to put a little magic back in its performance.

Winds of change in retail
There was something to be said for Ron Johnson's plan to transform the stodgy department store into a more modern shopping experience. After all, Amazon.com changed the way we bought things, from books to groceries, but there are developments approaching that could crush Amazon, too. The answers to what they are are simpler than you think, and The Motley Fool is sharing them in a free report titled, "5 Secrets to Amazon.com's Future." Inside, we outline critical information every Amazon.com investor must know, so click here now for your free report.


Read/Post Comments (6) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 05, 2013, at 12:03 PM, successb440 wrote:

    It doesn't take a genius to know how to help JC Penney or any other failing retailer. JC Penney is still missing the boat and is acting blind by fear.

    I could turn this company around in 1 year and not require zillions of dollars to do so.

    I feel sorry for JCl Penney because I grew up shopping there and know being on the chopping block is scary.

    Good luck!

  • Report this Comment On October 05, 2013, at 7:29 PM, SVOYER wrote:

    I work at Penneys as a sales associate and since

    the former CEO was fired, the business has increased. I worked today, and we sold a lot of Disney products. I don't think you know what you are talking about. As for the new look of the store, our shoppers love that also.

  • Report this Comment On October 05, 2013, at 8:03 PM, badge3832 wrote:

    WiFi is for bored husbands. It's well worth the $7 Mil

  • Report this Comment On October 05, 2013, at 10:49 PM, boverst wrote:

    It would help if they would bring back some of their name brand clothing they had carried for years like Cabin Creek. Their stores are jammed with clothes, hard to walk in the isles. They need to get back to the basics.

  • Report this Comment On October 06, 2013, at 12:21 AM, TMFCop wrote:

    @SVOYER, I think if you re-read the article, you'll see I actually come down in favor of JCP selling the Disney stuff because it could be what it needs to help the turnaround.

    @badge3832, I don't think the $7 million was going to break them, and they could have done more with it. But I guess when you're scrimping for every penny these days, if it's not helping your top or bottom line it's go to go.

    @boverst, a lot of retailers have successfully done just that and it's probably not such a bad idea.

    Thanks all for reading,

    Rich

  • Report this Comment On October 06, 2013, at 10:49 AM, alboy5 wrote:

    jcpenny is a fun shoping experience.

Add your comment.

DocumentId: 2669301, ~/Articles/ArticleHandler.aspx, 7/25/2014 2:55:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement