Can J.C. Penney Really Be Transformed?

If you haven’t done so, I suggest you watch former Apple stores head Ron Johnson’s presentation about the “transformation” he plans to bring to J.C. Penney. (Here’s our summary.) It’s persuasive. It’s well thought-out. He is personally engaging, with an undeniable low-key charisma. And it’s hard to argue with his central contention that department stores run too many sales—Penney’s ran 590 in the last year—and that too many price changes and discounts confuse and annoy consumers (although Amazon seems to get away with it).

Still, I’m reminded of the former head of a major U.S. jewelry chain who, a few years back, tried to remake the mall jewelry business. As with Johnson’s critique of the state of the department store, no one quibbled with his central contention—that the U.S. mall jewelry business had become too price-oriented and too unexciting with too-similar product. Yet his strategy didn’t work—and, to be fair, that was in part because it was launched during a severe economic downturn. But if you talk to vendors, they complain the new direction moved the brand too far away from what customers expected of it. When you are known as a place for off-price “mall” jewelry, it’s hard to change that perception overnight.

Promotions often come across as schlocky, but there is a reason that stores run so many of them: They work. Retail executives will tell you if you want to move product quickly and in bulk, cut prices, run a sale, and promote that sale heavily. And it’s worth noting that Johnson isn’t moving away from sales completely, just repositioning them and slashing their number.

Johnson’s other ideas include a “town square” inside Penney’s, which would offer services like haircuts. He also plans to divide Penney’s into “brand boutiques.” In a sense, he is turning J.C. Penney into a mall within a mall. Now Johnson has an amazing track record as head of the Apple retail division. But that was built that from scratch. As the useful blog Brand Strategy Insider notes, changing the perception of an existing brand is not always easy to do:

People become attached to the identities of well-known brands. When they are comfortable with a given identity, they don’t want it changed. Changing brand identities is risky business, not only because it has the potential to reduce brand recognition, recall and key associations, but also because it could cause customer dissatisfaction.  

That’s not to say, the blog notes, that brand change is impossible: 

Brand identity can and will evolve over time, but usually it does so incrementally so that the new identity is a refreshed extension of the old identity. In this way, one does not lose the recognition and positive associations that existed with the previous identity. Consider brands like Betty Crocker…Quaker Oats, KFC, Xerox and Morton Salt, they changed significantly over time, but only a little bit at a time

Revolution is hard. Evolution usually works much better. As Brand Strategy Insider notes, the best brands are good listeners. No one at Penney’s should forget that.

Not that I think it’s bad Johnson wants to overhaul J.C. Penney. His ideas are definitely intriguing. But let’s hope he isn’t trying to accomplish too much too soon. 

JCK News Director