is j c penney stuck with stores?

New York Times’ Stephanie Clifford asked me for reactions to J. C. Penney’s recent presentation about the vision and path forward for the venerable chain.  My comments were featured in her piece as follows:

Denise Lee Yohn, a branding consultant, said that she was impressed with some of his ideas, but that Penney’s physical presence was a limiting factor. “I don’t think the opportunity to do something dramatically different is possible, given their real estate and the realities of retail.”

I thought I’d flesh out my thoughts a little further:

CEO Ron Johnson seems to have accurately diagnosed the chain’s problems with comments like “We have to radically rethink presentation,” and “We haven’t given the customer enough reasons to love us.”  And, among the smart plans he and President Michael Francis outlined were focusing on new/hot brands and launching a new monthly magazine-like book.

But they also announced they wouldn’t be launching a new prototype store until 2014 and projected it would take until 2015 for the total transformation to be complete.   While I don’t question the magnitude of the change needed, three years is a lifetime in retail.

Tectonic shifts in technology will continue to change the retail landscape and consumer buying behavior.  And emerging brands like Uniqlo and H&M seem to be well on their way to making mid-tier department stores obsolete.

Meanwhile I’m dubious that today’s fair weather  investors will be patient enough to wait three years — especially when they’ve got other retail options like Apple whose share price recently soared to record levels after the high-tech giant doubled its profits in one year.   Moreover although J. C. Penney’s shares gained 15% after the company issued a 2012 profit outlook well above analysts’ projections, I question whether it will indeed be able to fund the transformation with cash flow from operations, as it’s promised.

But I suppose the company is stuck with large, expensive, and in many cases less than desirably-located real estate assets.  And as such, it only has so many options to explore and levers to maneuver.

I was bullish on J.C. Penney when I wrote my Brands to Watch in 2012 post earlier this year — and I remain cautiously optimistic.  But I would have like to have seen a more aggressive turnaround timeframe and more ideas about transforming the shopping experience.

What do you think?  Comments open!

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