The big day – post Thanksgiving Black Friday shopping – starts a holiday shopping season that makes or breaks many retailers’ year. Black is likely a better description of most retail leaders’ moods, as their market environment has only gotten harder year after year.
From the days of Sears being the only store or catalog in town, we have moved to a world where the consumer is king. Expectations are merciless, prices are transparent, and consumers benefit from intense competition on-line and in-stores.
Success will only come to brick-and-mortar retailers who have a clear view of their target customer, offer a brand promise that is relevant, high value and hard for others to copy, and create in-store experiences that make it worthwhile to go to the store.
JC Penney (JCP) is a best-case example of what not to do. It added appliances—and subsequently lowered its outlook (LINK).
When new JCP CEO Marvin Ellison was at Home Depot, introducing appliances as a category worked. The addition made Home Depot an even better one-stop solution to home improvement and new home needs. At JCP, appliances are a diversion with high opportunity costs.
Ellison sees appliances as a solution to declining JCP home goods sales and as a welcomed non-seasonal category. But he will need to do a lot more than provide some square footage in the store and a deal with appliance suppliers to not carry inventory.
To be authentic in appliances, JCP will need a service force as well as experienced salespeople. The best sales and service talent go where the customers are – not a category start-up. It will need categories that shoppers also want to shop for when they buy appliances. For example, Sears sells appliances, because shoppers are also getting their lawn supplies, hardware, tires and heating and cooling solutions. Even if JCP secures appliance revenue, profits will be hard to come by as the category is so competitive.
What would I do instead as CEO of JC Penney? Follow the best practices of winning retail brands:
Omni-channel. JCP has moved in this direction.
Create a focused target market. Instead of appliances, JCP should use the space and dollars to double down on the far more attractive part of Ellison’s transformation strategy: clothing focused on hard sizes. Stylish and plus sizes are two categories that often do not intersect. Stylish, short and oversized is even harder. Large shoe sizes, tall men, tall 10-year-old girls whose moms do not want them to look like a teenager… all are opportunities for JCP.
For JCP to pull off these strategies, its models, marketing and services must match the brand. Personal shoppers, style sessions, on-line tools where you try on an outfit on YOUR body. All these services would make sense for JCP. This focus would lead to an advertising campaign like Dove’s, focused on real people with real bodies. I’ve been waiting for a non-premium retailer to invest in training store associates so they could help you quickly locate what will work for your specific body type.
Create experiences in the brick and mortar store on-line cannot offer. Were JCP to offer hard-to-find clothing, then in-store trial becomes important. A brand promise – “designed for you, not the models” could embrace all size people. The Sophora Inside (cosmetics bar) strategy that JCP is advancing is a natural complement to its clothing strategy, as is a revamping and modernization of its hair and nail salons. Hold a fashion show each weekend. Create stores-within-stores, as Nordstrom is doing to showcase brands pointing to where fashion is headed. PetSmart added a pet spa. Urban Outfitter is opening pizza restaurants in some stores. How about affordable massages and tailoring services at JCP?
Reward loyalty. Airlines do it with frequent flyer miles and status that buys better seats. Costco does it with membership fees in exchange for great value. Nordstrom offers points and early invitations to a terrific anniversary sale. Restoration Hardware now provides better pricing for members. Once a brand gets the other stuff right, they add a rewards mechanism to support loyalty.
What should JC Penney do in your view?