JCPenney Re-brands… Again
Only a year after modifying their Massimo Vignelli-designed logo–in use since 1971–JCPenney are scrapping their old logo altogether for a brand new look. It looks a little like a patriotic lego set to me, though I have to say that it looks cute on the bags and on the storefront. This is, no doubt, part of JCPenney’s major turnaround strategy which is going to feature innovative new pricing and a reduced emphasis on sales and promotions to distance themselves from rival Kohl’s.
What do you think? Does it look cheap or is it an effective re-brand?
UPDATE: I need to do this story proper justice. There are very big changes afoot at JCPenney. Their current CEO came from Apple and was responsible for much of Apple’s current wildly successful retail strategy. They plan on redesigning and renovating all of their stores with a “Main Street” concept with many smaller stores-within-a-store, and standardizing pricing at full dollar amounts and eliminating most sales and promotions. Instead, there’ll be an everyday-low-price model (slashing prices on most goods around 40%) with items becoming marked down as they age. Forbes has gone out on a limb in calling JCPenney the “most exciting retailer of 2012.” Compared to the slow, laggard Sears refreshes under Eddie Lampert, it is true that this dramatic change will at least be an interesting one to watch. It remains to be seen whether it works or not.
jhshifris
January 26th, 2012 at 6:29 pm
What are they trying to do?
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MWorrell
January 26th, 2012 at 7:18 pm
They need to keep the quality up. Target already does cheap hipster, and Walmart does just plain cheap (which means Kmart is pointless). JCP needs to be the store for the masses who want quality but think Macy’s is too expensive.
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johnme
January 26th, 2012 at 9:57 pm
Just don’t take down the mirrored glass entrances at the older stores; the logo would look cool in front of those older stores.
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Koutesu
January 26th, 2012 at 10:04 pm
They’ve begun airing commercials about the new jcp. The commercials show consumers driven crazy by missing yesterday only sales, ambiguous markdowns, and the flood of coupons they get in the mail. The words “ENOUGH. IS. ENOUGH” appear on the screen. They have 2/1/12 as the debut of new jcp.
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Matt from WI
January 26th, 2012 at 10:28 pm
I heard about this during one of those news breaks on the radio earlier today.
Since I still have a local store, I’ll be keeping up with the changes. The price strategy is an aggressive one for sure. You put it best…”Not cheap, but not Macy’s, yet hoping to distance themselves from Kohl’s.”
That logo looks odd though, and with so many older stores still open that at one time bore the “Penney’s” banner (like that mock-up image in this post)….those store facades are going to be looking rather bare.
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Kirb
January 26th, 2012 at 10:58 pm
That new logo is not sufficient for the storefronts. If they really wanted to be cutting edge, they would bring back the only 60s logo…
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Matt Reply:
January 31st, 2012 at 10:24 pm
@Kirb, I agree. The 60′s logo is cool and retro, this new logo is bland.
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Rich
January 26th, 2012 at 11:17 pm
I’m already tired of the commercials. The main street concept only makes sense if they plan to bring back customer service, which has become pretty non-existent in their stores.
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Nordrike Field
January 27th, 2012 at 1:19 am
What are they up to now? This logo reminds me of the ill-fated Gap logo!
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Caldor Reply:
January 27th, 2012 at 1:20 am
@Nordrike Field, I know, it seems fake. But keep in mind this is all coming from the person behind the Apple stores, so it’s dead serious. This won’t be a Lampert-like half-ass effort. They will be very aggressive with whatever concept they go with.
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Nordrike Field Reply:
January 27th, 2012 at 1:31 am
@Caldor, I agree, I mean it looks so… I have no comment I suppose, but you’re right, this guy came from Apple so who knows, maybe Penneys will go from bleah to va-va-voom!!!!
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jhshifris
January 27th, 2012 at 1:33 am
I’m sorry but that logo has to go. I loved the plain Helvetica logo better.
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Matt from WI
January 27th, 2012 at 4:58 am
Another important thing I forgot in my original comment that applies to some malls, specifically my hometown stomping grounds, Forest Mall (Fond Du Lac WI). Unless the mall’s owners (Simon) are prepping another remodel in the coming year or two (highly unlikely…..I’m predicting in 5 years they dump the property off to some other investment firm or REIT….it’s a low-B / high-C tier mall…and big-name REITs are dumping these properties like dead carcass), there’s not enough room above the interior mall entry to make this sign big enough for that ‘jcp’ to be real visible from a distance.
Before 1985 it would have been big enough of a clearance, but it was in ’85 in the first mall-wide renovation, they stripped the interior entrance’s original 1973-era wood facade and showcase windows. The ceiling height was dropped down (to accommodate a ‘step-down’ ceiling pattern with surrounding mirrors and neon) and the signage area wound up being made lower and thus, more narrow from top to bottom.
That still allowed, of course, for the Helvetica logo, albeit in a smaller version from the exterior signage.
The original height was restored in the 1998 mall-wide remodel, but instead of a whitewash wall, they put tiling up, leaving only the same amount of area for the 1985-era sign (still installed to this day).
Like most mall Penney’s locations, ours is a leased store. Better allow a variance in the lease to modify the storefront enough to give enough height to this new logo. Otherwise one won’t be able to tell it’s Penney’s. They’ll just see the big red square, with a smaller blue one with even smaller ‘jcp’ initials in it.
Apple might have had success with their former retail division CEO, I’ll give him that, and also his crazy ‘no sales’ strategy that ‘may’ pay off…..time will tell. But this logo design is going to be ~insufficient~ at some malls without proper changes to leases to allow bigger areas for the new signs.
I say scrap it and break out the old 1960s ‘Penney’s’ logotype for a new generation. No disrespect at all to the man himself of course (his death being the one of the main reasons behind their inducting the ‘JCPenney’ mark in Helvetica back in 1971). I just base it on the fact that many folks (myself included) call it ‘Penneys’.
Kind of like how our H.C. Prange Co. eventually (when building out suburban locations in Madison, and then eventually updating the signage at all locations in 1979-1980 chain-wide) realized people were just calling the stores ‘Prange’s', and thus that logo came into being and in use for 12 (’80-’92) years until the chain’s buyout by Younker’s.
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SEAN
January 27th, 2012 at 9:51 am
I first saw the recently change logo at Roosevelt Field as the 1972 era store recieved a much needed renovation. I must say, what an improvement! Now they are changing the logo again?
JCPenny had a challenging holiday season last year, but this may put them on the right track.
As for Simon & other large REITS, they need to perge themselves of marginal properties. At one time carrieing smaller marginal malls was OK since the top performers would mask the troubled assets. Now mall owners are defaulting on loans tied to these assets & saying to the morggage holders go ahead & take the property, it’s no longer viable for us.
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rob Reply:
January 27th, 2012 at 10:46 am
@SEAN, I JUST HOPE THIS NEW STRADEGY THIS RON JOHNSON IS DOING WILL WORK IN ALL THEIR STORES. PEOPLE HERE IN ROCKLAND CANNOT ACCEPT CHANGE, SO I HOPE THE PALISADES STORE WILL SURVIVE THIS. ITS LIKE PEOPLE ARE HAPPY THAT SOMETHING IS BEING DONE TO NANUET BUT THERE ARE SOME THAT ARE NOT BECAUSE OF THE MALL NOT BEING BE ENCLOSED THERE ARE COMMENTS FROM PEOPLE SAYING THAT JC PENNEY WILL TURN INTO A TARGET TYPE STORE.AS I SAID ITS BETTER THEY ARE DOING SOMETHING THAN A 1,000 STORES FULL OF EMOLYEES CLOSE AND OUT OF WORK..
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SEAN Reply:
January 27th, 2012 at 2:36 pm
@rob, I seriously doubt that the Palisades store is going anywhere.
Like Sears, the issue with Penny’s real estate is the number of marginal stores in B & C level malls & NOT the total number of stores in opperation. If the number of marginal stores & malls decreased, things would be far healthier then they currently are.
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Pseudo3D
January 27th, 2012 at 11:12 am
Ugly. Ugly ugly ugly.
I like to think that that new commercial they have of people screaming is finding out the logo changed.
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sally
January 27th, 2012 at 11:33 am
Can’t say I like the logo, really, but it is distinctive. The last incarnation was not, as most department store logos are not these days, so at least it has that going for it.
This change in strategy hopefully also means that I’ll be getting less….inbox harrassment…from JCP. They have my email address because I shop online there sometimes, and oh my goodness. Every other day is their BIGGEST SALE EVER. They’ve started going directly to my spam folder because I get so many I can’t even be bothered to read them. I’ll be very happy to see this change. Your marketing is meaningless when you saturate me with it.
But I do shop at JC Penney, even if I don’t read their emails anymore. Most of the clothes I buy at Target are utter crap, and nothing seems to fit right at Macy’s and Kohl’s is usually mobbed. As a consumer, there is room for JC Penney in my life.
The amount of pink I see in that image up there kind of worries me, too – “pink” screams “we want youth!,” and though I’m only 33, my gut instinct seeing that picture is that this is a store for women in their 20s and teens. Even though Apple stores have bright, open entryways and are full of slick gadgets, I don’t feel too old to shop there. Nothing about that JC Penney entrance up there tells me that this would be a good place for a grownup woman to buy professional but not terribly expensive work clothes, though. And that is what I mostly go to JC Penney for. But maybe they don’t want to be the company you go to for sensible work outfits. That is kind of a boring label.
(Also, I’ve never called or thought of it as “Penney’s,” but I do know what store people are talking about when they use that name.)
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linda Reply:
February 3rd, 2012 at 1:45 am
@sally, I know what you mean about the pink, it is certainly different from their regular decor. However, it is my understanding that the store will set monthly and be decorated with a new color every month. It’s February, hence the pink
I’ve just been to the store today and I must say it is a massive improvement from before between the new graphics and monthly color sets!
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Mark Reply:
February 4th, 2012 at 9:48 pm
@sally, The color pink is base on marketing/presentation for monthly event. As for Febraury is Fushia (a color between pink and purple). Each month have different color. For example, March is orange/melon color. Don’t know exact color terms, but i had seen the color for each months this year (2012).
As for most people talk about the new logo is ugly. i know it their opinion, but understand why Ron Johnson choose this logo. To make it simple and clean. For example, logo like Apple, Target, Shell, Chevron, Nike, Superman, etc. There more information online, why Ron Johnson made this change/transformation.
FYI – i am associate of JCP (aka Penney’s). All the information i provide are made out to public. (JCPenney’s website).
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kris devereux
January 27th, 2012 at 2:30 pm
TRAINWECK it’s a BAD idea i think this will be jcp’s deathkneel
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Gary Nelson
January 27th, 2012 at 5:17 pm
I think the logo would look much better on both sides of the store entrances rather than over the top like how it’s displayed in the picture. I think they should look into redesigning every mall store entrance by making the entryway higher, eliminating that dead space where the “JCPenney” logo would normally go.
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Matt from WI Reply:
January 27th, 2012 at 5:34 pm
@Gary Nelson;
I never thought of this. I still am not too big a fan of the new logo design, but if stores were reconfigured where the entryways went from floor to ceiling, and the signs were affixed to one side (the other being re-opened up for a display case….like how the old stores in the ’60s and ’70s used to have on both sides), it would make the signage more legible in situations like that of my local Penney’s which I detailed above, and really open up the store’s space more.
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Bart
January 27th, 2012 at 6:14 pm
The new logo is awful!
Most department store logos are rectangular & horizontal. If they insist on using a square logo they should at least ditch the red frame and just use a larger blue square with JCP.
I still think the 1960′s logo was the best one ever.
This looks like the designer just threw this together and convinced the management to approve it by a talking a lot of gobbley-gook about negative space and clean modern lines.
What were they thinking? Can they not SEE??
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Nitek Eteknin
January 27th, 2012 at 11:05 pm
JCPenney just completed opening a spate of new stores while extensively renovating others. I can’t wait to see how concepts such as a linear ‘Main Street’ and increased number of vendor shops will function in an environment designed a racetrack layout.
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STEVE
January 28th, 2012 at 12:56 am
I really have the feeling this is going to be a major failure. Success with the Apple store does not = success in the department store field.
The new logo just doesn’t work as it would have to be huge for the “jcp” to be seen from a distance. The logo introduced last year was a nice refreshment……why throw that new one into the dust bin?
The Town Square idea makes no sense! I mean, move “center core” and use the area where cosmetics, jewelry and accessories are sold for “gatherings” and to sell Hot Dogs and Coke on holidays (I read that’s the plan!!!) It’s crazy.
I was in a local store yesterday. Having pricing rounded to the dollar makes me feel like I am in a dollar store…….that’s their tactic.
They are no longer going to release monthly sales figures. That is a red flag right there.
Macy’s has a contract with Stewart. They are suing her company for breach of contract. Not so sure Stewarts wares will be sold in JCP any time soon.
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Matt from WI Reply:
January 28th, 2012 at 3:27 am
@STEVE, My thoughts, exactly.
The current CEO needs to understand, JC Penney is an entirely different beast than his former fronting job with Apple’s retail sector. It’s not a specialty retailer. It’s a department store…a chain that spans some 800+ stores that encompass downtown anchors, mall anchors, and freestanding ‘big box’ stores (like the three that sit as anchors to centers in Ashwaubenon, Menomineee Falls, and Kenosha WI, respectively)…..not just those in downtown Ashland, or as a charter anchor to Forest Mall in my hometown, Fox River Mall, Southridge Mall, etc etc. One that has deep roots in shopping center development and further back into the fabric of American retailing.
I understand the whole logo redesign, but it just needs to be implemented in a way where it’ll be what you see whether you go to Woodfield in the Chicagoland area, Southridge in the Milwaukee area, my hometown (Fond Du Lac)-area location @ Forest Mall, or any of the other remaining stores in the chain.
I don’t think the “sale” strategy is a failure entirely. They can’t compete against Kohl’s, who does sales every week and has been for a good 20-25 years. (basically ever since spinning off from BATUS), and Macy*s? In Wisconisn, Macy’s is ‘high end’, so forget that. Penney is competing with Kohl’s here, basically. I welcome some of the changes.
I say, let it pan out and see where it goes. It may work in some markets, not in others.
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Pseudo3D Reply:
January 28th, 2012 at 11:18 am
@STEVE, I think one of the huge problems is this former Apple guy wants the “jcp” logo to be “simple and iconic” like Apple’s. It won’t work. Apple’s trademark has been more or less unmodified since 1976 (although the colorful stripes have gone away). Even Macy’s logo, as much as we hate the “Red Star of Communism”, has been around in some form or another since day one (late 19th century).
JCPenney had an iconic logo: the name they’ve had since 1971! Just work that to its advantage and re-vamp that way.
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Sol Reply:
February 1st, 2012 at 6:11 pm
@STEVE,
You realize that Ron Johnson was at Target before Apple, right? It’s not as if Apple stores are all he has done, and while Target isn’t really a department store it has a lot of similarities.
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Eddie
January 28th, 2012 at 6:00 am
It’s good that JCPenney is trying to evolve, stay fresh and keep up with the times, On the other hand, I’m worried that all the proposed alterations are so drastically extensive, that if this concept were to be deemed unsuccessful, it wouldn’t leave much room to revert back or into something else. No room for failure on this one! If this costly concept doesn’t work, this will be the last transformation we see of JCPenney before its death knell.
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John
January 28th, 2012 at 9:38 am
It’s the equivalent of throwing a hail mary pass on fourth and long. What other choice do you have? Tweaks weren’t going to get it there. I think they may be on to a few things here, but to achieve a successful, radical reinvention of this tired-old retailer is a very tall order.
http://www.youtube.com/user/jcpenney?blend=3&ob=0
“No Sales!” as a rallying cry for changing how Americans buy? Good luck with that strategy on Black Friday 2012…
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Ashley
January 28th, 2012 at 11:50 am
Not a fan of the new look. I personally like the logo from the 60′s.
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rob Reply:
January 28th, 2012 at 4:05 pm
@Ashley, iT DOESENT MATTER HOW THE LOGO LOOKS ISNT IT BETTER WE DONT SEE 1100 STORES CLOSE AND 1100STORES FULL OF EMPLOYEES OUT OF WORK.TtHIS MAY END UP WITH SEARS. AT LEAST JCPENNEY IS TRYING TO IMPROVE THE COMPANY SEARS RELIES ON THEIR NAME.
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J-Man
January 28th, 2012 at 6:05 pm
if the new logo is supposed to represent the American flag, why didn’t they make it rectangular instead of square?
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Mark Reply:
February 4th, 2012 at 9:58 pm
@J-Man, JCPenney kept their logo as square because the last two logo have a red square logo. That the only reason to stay square. the blue square was added as American’s color (Red, White and Blue).
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Pseudo3D
January 28th, 2012 at 8:38 pm
JCPenney in many ways is riskier than Sears. Granted, Sears is doing worse but Sears also has a substantial war chest of cash (that it uses poorly, but it still has) while JCPenney doesn’t.
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Rich Reply:
January 28th, 2012 at 9:46 pm
@Pseudo3D, Penney’s hasn’t experienced as much erosion of its sales as Sears and as a softline retailer, they are in a more profitable business.
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jhshifris
January 29th, 2012 at 11:48 am
Why not make the logo look like Stride Rite’s logo, as in with the colors? I’m sorry if I mentioned it.
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Raymie
January 29th, 2012 at 1:01 pm
I sort of agree with Matt from WI.
Our local JCPenney started out life as a Kmart in the early 90s and closed during their bankruptcy in the early 2000s. It sat vacant for several years before getting a remodel (one entrance instead of two, new signage — garden center is just a barren outdoor area attached to the store and the real only indication that something else was there) and opening as JCPenney. Penney’s has some mall locations, too. That said, I wonder if this redesign would work at all at my local store.
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Chris
January 29th, 2012 at 5:18 pm
The JCPenney store that opened recently at the Manhattan Mall (33rd & 6th) in Manhattan is very impressive: shiny floors, pretty stylish clothes, etc. If JCPenney can do a store like that, it’s definitely one that I’d shop in. Sorry, won’t win me away from Lord & Taylor for good, but I’d certainly consider JCP for a lot of purchases.
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SEAN Reply:
January 29th, 2012 at 7:02 pm
@Chris, When Garden State Plaza was expanded in 1996, the JCPenny was enlarged so that the mall completely encircles it. You can sort of figgure out the old parts from the recent adition, but they fit together nicely.
Having said all that, they still need to remoddle the store to look similar to the Roosevelt Field location wich I must say is quite impressive.
As for sign location, (LL Nordstrom side) has the sign to the left of the entrance do to it being slightly elevated compared to the rest of the mall. The remaining signs are overhead as usual. This elevation change mentioned above created another design querk, there are staires, aramp & what could be regarted as the shortest escalator ever found in a mall leading in to this J C Penny, I’m guessing around 3 or 4 feet long.
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spudri
January 30th, 2012 at 8:19 pm
Looks like a Gap blue square with the old lower-case gap font stuck on a square Target logo.
There’s nothing original here.
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jhshifris Reply:
January 31st, 2012 at 3:55 pm
@spudri, their old Helvetica logo was original but what you have here isn’t.
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Mickey Mouse
January 31st, 2012 at 2:14 pm
Just wonder how much they’re going to be allocating for store remodels? Can’t imagine they’re going to go around and replace outside neon signage that quickly because that’s beaucoup buck$ (even some remodeled Walmarts here still have the old logos)
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Tanya
February 1st, 2012 at 10:50 am
Our JCPenney was remodeled ahead of this “reboot.” It looks fantastic; clean, spacious, and with perhaps 1/3 less racks of merchandise. There are central checkout stations and bigger dressing rooms. Before, the lighting was dour and dark in this store, but is now bright and pleasing. It reminds me of he lighting in Apple stores. The lighting seemed…optimistic. I was shocked actually. I’ve been making fun of Penney’s for years. It was the store of ugly polo shirts, cheap Levis, and seizure inducing children’s clothes. All the trashy coupons didn’t help the image. I only went there as I had a huge gift card (took me 3 years to spend $500!)
I bought two dresses from the store within a store “MNG by Mango.” It felt like shopping in an independent dress boutique, not in a staid, cheap department store. I usually shop in our town’s boutiques, or at BCBG. I detest Kohls (cheap, cheap, cheap) and have lost interest in Target (too many things didn’t last.) If JCPenney was trying to lure female shoppers like me in, it worked. It will now be my first stop at our mall.
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Caldor Reply:
February 1st, 2012 at 11:51 am
@Tanya, I agree, Tanya. I’m pretty picky about clothes and don’t shop at discount stores much at all anymore (and agree totally about Target stuff wearing out fast or fitting weird) but there’s a brand new JCPenney near me and it’s just like you describe. I find that I go there a lot to pick up decent stuff for good prices, and the shopping experience itself is quite nice. I would say it’s definite heads above Kohl’s (who they are clearly emulating), whose stores always feel a bit like they’re made for my in-laws. I wouldn’t go so far as to say the newer JCPenneys are cool, but it’s pretty decent and functional.
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Pseudo3D Reply:
February 1st, 2012 at 12:06 pm
@Caldor, I do like Target for clothes (sorta: that and Academy), I don’t think I’ve bought clothes at Walmart in years, except for maybe underwear and socks.
I bought a pair of dark blue Denizen jeans recently from Target, wore them a few times, including in a huge rainstorm. They bled.
As for JCPenney, I went inside one last Christmas to buy a gift for my mother. As with the other stores in the mall, the Penney’s was small (~80,000 square feet) and rather dated. The scarf selection (which I was looking at) was rather pitiful. Only maybe five choices, all on clearance. They didn’t even ask me if I wanted it gift-wrapped (apparently it was cut just WEEKS before I came)
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Troy
February 1st, 2012 at 11:57 am
I like the new concept and I think the commercials they have been running (“67% off”) were funny.
Two problems for me, though:
1. While red, white and blue look great on a flag, they tend to clash and be hard on the eyes when illuminated (such as signed, computer screens, mobile devices, etc.). I’m happy with the look, but no the choice of colors.
2. In regard to the new color-coded pricing, they are using red as regular priced and blue as the discounted price. With the exception of Kmart (blue light special), I think most folks associated red with discount or clearance. I like the color-coding idea, but feel the color meanings are wrong.
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SEAN
February 1st, 2012 at 2:52 pm
AP Interview: JC Penney CEO tries to transform Penney, borrows from Apple’s playbook
Article by: ANNE D’INNOCENZIO , Associated Press Updated: January 30,
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rob Reply:
February 1st, 2012 at 3:34 pm
@SEAN, news 12 has story on nanuet mall. i am so so on this transformation of jc penney. i hope this price concept will work i am one of those consumers who knows their prices between lord and taylor, kohls,macys and belk when i shop their web or store. sears is starting to be unable to pay their vendors. jc penney discontinued gold toe and jockey because of this new concept and that macys and lord and taylor carry it as well and goes on sale at all dept stores across the u.s. from time to time.
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SEAN Reply:
February 1st, 2012 at 5:35 pm
@rob, Lets see if JCP can turn things around. As for Sears, they are holding on by a thred. Or should I say a power cord.
If either Sears or J C Penny or perhaps both go under, the impact would be swift & desasterous for malls across the country. Hudsons Bay of Toronto could fill some locations in the better centers in the colder climate areas of the US, but I don’t know how many locations that would add up to.
Will see what happens with Nanuet especially with Sears being such a wild card.
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Caldor Reply:
February 1st, 2012 at 6:44 pm
@SEAN, let’s not get too carried away. Even though both Sears and JCPenney (though moreso the former) are struggling and behind the times somewhat, neither is in immediate danger of going out of business. It’d take years yet of failing to get to that point.
Store closures? Yes, especially for Sears/Kmart. But neither of these companies is truly on death watch yet, and I would even argue that JCPenney isn’t close.
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rob Reply:
February 1st, 2012 at 6:59 pm
@Caldor, NOT SAYING RIGHT AWAY WITH JCP,BUT I AM ONE OF THOSE PRICE CONCIOUS SHOPPERS. I THINK WHO HAS THE BEST DEAL, KOHLS, MACYS,LORD AND TAYLOR OR BELK ON LINE. I HAVE ALREADY HAVE SEEN A FEW ITEMS IN JCP THAT I USED TO GET WHEN THEY HAD SALES A FEW DOLLARS MORE NOW.. I WANTED THEM TO IMPROVE THEIR MERCHANDISE NOT TAKE AWAY THIER SALES.
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SEAN Reply:
February 1st, 2012 at 7:17 pm
@Caldor, Sorry I didn’t intend to come off that harsh. I did say above lets see what happens first with Ron Jonson’s stratagy. For all we know JCP could very well be on it’s way to it’s place among the retail leaders a year from now. Only time & the ecconemy can tell.
I don’t share your opinion with Sears though. Will they be done next year? I don’t think so, but I don’t think that they have too much time left unless drastic changes are made. My perrents worked at the Sears buyers office in NYC before I was born & it was a mismanaged company even then they told me.
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SEAN
February 2nd, 2012 at 9:43 am
Off topic; perrent of The Avenue United Retail group filed for bankruptsy protection according to Bloomburg News. As a result, they will be closing 14-stores next month.
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Bon Regis Retail Reply:
February 3rd, 2012 at 3:58 pm
@SEAN, Avenue stores were often stodgy and unkempt, so good riddance to that retail brand.
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JIM
February 2nd, 2012 at 10:44 pm
Logo changes always take awhile to get used to.
Even 50 years ago, when I was in school, JCP was never considered “the coolest place to shop” but always had a good selection of basics; jeans, socks, work clothes etc. so it had an important place in retail environment.
I think they missed the boat on one opportunity however. Many people I know are frustrated because they can no longer find American made clothing. What if JCP, with their buying power and reputation, put a large amount of USA made clothing and other products into their stores, and promoted it. I feel people would go out of their way to shop there. JCP was one of the first stores to sell New Balance shoes (majority made in USA) back when everyone else was selling just imported shoes. That brand has made huge gains in market share in the past few years. I think it could be a win-win for JCP, American manufacturers, and customers!
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Boyd Reply:
February 8th, 2012 at 4:01 pm
@JIM,
I totally agree with you !!! However and sadly for every one person who is really interested in buying things that are made in the USA there will be 3 or 4 really could give a rat’s ass about it. In other words..they just don’t care as long as its cheap…period.
Its kinda like radio. For every one who wants radio to be live and local with local disc jockeys around the clock…there are many more who could care less if their local radio was nothing more than Ryan Seacrest around the clock.
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SEAN
February 3rd, 2012 at 10:21 am
From Retail Traffic
Department Store Sector Split Between Winners and Losers
Feb 2, 2012 12:15 PM, By Elaine Misonzhnik, Senior Associate Editor
The department store sector is remaking itself for the new era of retailing, continuing the resurgence it experienced over the past two years with the return of the mall.
But while department stores as a concept no longer seem headed for oblivion, there appears to be a sharp divide between those chains ready to embrace change and those unwilling or unable to reinvent themselves. The latter retailers will likely disappear from the landscape, either through consolidation or bankruptcy, according to Jason S. Baker, principal of Baker Katz, a Houston-based commercial real estate services firm and a partner with X Team International, a retail real estate brokerage alliance.
Given that the U.S. currently has more regional malls than there are customers to shop at them, those department stores that anchor the bottom 20 percent of malls are headed for closure, notes C. Britt Beemer, chairman and CEO of America’s Research Group, a Summerville, S.C.-based consumer behavior research firm.
“The department store sector is challenged and one of the big reasons is that most months only 28 to 32 percent of consumers go to a mall versus 90 percent of consumers who go to shopping centers and strip centers,” Beemer says. “I think there are some retail chains that are going to be vulnerable in the long term.”
The big picture
For the fiscal year 2011, department stores posted collective growth of 3.5 percent. Nordstrom and Macy’s turned in the best performances, at 7.2 percent and 5.4 percent respectively. JC Penney, on the other hand, ended the year with only a 0.9 percent increase in same-store sales. And sales at Kmart and Sears have been so dismal that even before the 2011 holiday season ended the retailer announced plans to close up to 120 stores.
The reason for such a mixed performance is that some chains, most notably Macy’s, have been making major strides in grabbing more market share by focusing on exclusive merchandise offerings and more convenient layouts. In 2010, Macy’s signed exclusive design partnerships with Kenneth Cole Reaction and Karl Lagerfeld. Last year, it teamed up with Madonna. And it’s been adding more private label linesin an effort to provide its customers with products they wouldn’t be able to find elsewhere.
Plus, Macy’s has been pruning its portfolio to get rid of underperforming stores in both its Macy’s and Bloomingdale’s divisions and rethinking the look of its stores. These are exactly the kinds of changes department stores need to make to distinguish themselves in a market currently dominated by discounters and warehouse clubs, according to Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn.-based retail consulting firm.
“For many, many years, the specialty chains were where the excitement was in retail, they were bringing out the newness and fashion and the department stores were bland. There was no particular reason to go to a department store,” notes Johnson. Now “there is uniqueness and value that, if you want to get it, you have to go to a particular department store.”
The JC Penney way
Like Macy’s, JC Penny is also trying to improve its image. The chain has been underperforming for some time, but new CEO Ron Johnson —previously an executive at Apple and, before that, Target—unveiled several new initiatives last week meant to raise the brands’ value in consumers’ eyes.
To begin with, Johnson wants to do away with constant discounting, in order to make pricing less confusing for consumers and cut down on the air of desperation such discounting engenders. Instead, JC Penney will offer shoppers regularly-scheduled monthly discounts and best value pricing on merchandise that hasn’t sold well.
In addition, the chain will redesign its layout in a Main Street style, with eventually up to 100 brand boutiques lining a main thoroughfare in the middle of the store.
But while retail industry insiders praise Johnson for his willingness to try something new, they express major doubts about the ultimate success of the campaign, especially on the pricing strategy. In the past few years consumers have gotten so used to offers of 30, 40 or 50 percent off regular prices that JC Penney might have a difficult time luring them away from competitors who plan to continue offering discounts.
“I know Ron Johnson is brilliant, but the fashion world is a different animal from Apple,” says Baker. “Apple determined that they would not compete on price, but on quality. But with department stores the first stop is savings and value. His competitors are going to continue to operate on the promotional model and I don’t know if he’s accounted for that.”
“Penney’s is going to find itself in hot water when all of a sudden their [merchandise] is not going to be on sale and the consumer is not going to get it,” says Beemer. “And since Penney’s has such huge shopper overlap with Kohl’s, Kohl’s is going to love this.”
The idea of a Main Street layout and designer boutiques, such as Liz Claiborne and Nanette Lepore, gets more enthusiastic reactions, but even there, Penney’s management has to stay aware of redesign costs, says Baker. He estimates that a complete redesign might end up costing $1 million per store. If Johnson ends up redesigning 100 stores over the next few years, as he plans, that means a price tag of $100 million—not an inconsiderable amount at a time when most retailers are on a tight budget.
“At this point in the economy, $100 million is no longer a rounding error, it’s a big gamble,” Baker notes. “It makes me wonder if it doesn’t make more sense to experiment with 20 or 30 stores first and see how they do.”
Going away
When it comes to talk of which department store players might not make it in the long term, however, the names that come up are Sears and Kmart, not Penney’s.
While Penney’s has acknowledged it has problems and is working to solve them, Sears Holding Corp. has done virtually nothing to fix its stores, according to James C. Bieri, principal with Detroit-based Stokas Bieri Real Estate.
“It’s tough to think that Kmart is going to be around for a long time and Sears is not likely to survive in its current form,” he says.
Like Beemer, Bieri believes that a number of existing class-B and class-C malls are headed for extinction, and with them will go the department stores that anchor them.
“It wouldn’t surprise me that if stores don’t hit a certain volume threshold, department store chains are just going to close them,” he says. “The new growth of department stores is going to be targeted because the poorer performing malls are going to close.”
[Reply]
Pseudo3D
February 3rd, 2012 at 11:17 pm
One thing I didn’t know about JCPenney is the plan to “re-design the chain’s stores to resemble a Main Street experience, with anywhere from 80 to 100 stores-within-a-store for customers to choose from”. Now, I don’t know if that will work. It didn’t work in the long-range at Montgomery Ward, and I don’t know if that design will really click. Instead of browsing for clothes in the women’s aisle (or men’s, depending on gender), they’ll have to visit dozens of stores-within-a-store.
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Pseudo3D Reply:
February 4th, 2012 at 5:25 pm
To re-iterate, if Sears pulled this off instead of Penney’s, people would accuse it of doing the exactly the same thing Montgomery Ward did.
People just aren’t fair to Sears. mygofer had definite problems, but some people compared it to Service Merchandise: even though IKEA has features that are shockingly similar to catalog showrooms (like tablets to write down things), and no one bats an eye.
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SEAN
February 9th, 2012 at 12:37 pm
Sears Up For Sale?
by Elaine Misonzhnik February 8th, 2012
Eddie Lampert might be ready to leave the sinking ship that is Sears/Kmart, according to a report in The New York Post.
Though the rumors that Lampert is looking for a buyer are for now “unsubstantiated,” the move would make sense given Sears Holdings’ long-term struggles, its intention to close up to 120 stores and retail industry insiders’ skeptical outlook on Sears’ future.
The question now is who would be interested in buying the bottom rung player in the crowded department store space? Whoever buys Sears would likely do so for the value of its real estate rather than for the value of its retail brand, given that the company owns properties in many of the nation’s oldest and best malls.
I think Hudson’s Bay AKA The Bay, maybe a good option especially in the colder climate areas of the US.
On another note, Retail Traffic has an interesting article on the worlds largest shopping malls with photo galleries.
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Pseudo3D Reply:
February 9th, 2012 at 1:06 pm
I think it would be better to let Kmart and Sears go their separate ways. I was thinking it would be neat if Amazon.com actually snapped up Sears, putting the world’s best Internet retailer with the once-famous mail order store together for the first time. It would give Amazon exclusivity in Sears brands, and could make for some awesome integrations, with Sears becoming more like a showroom.
Kmart on the other hand probably could survive. It has no-frills stores, some more American-made products than Walmart or Target, and if Walmart’s “simplified shopping” shenanigans continue, it could provide an outlet for Kmart to expand their customer base. It’s plausible, though unlikely, that Meijer could buy up Kmart and keep the name as general merchandise-only stores. Super Kmart on the other hand, would be converted to full Meijer stores, but Meijer did try experiments with Meijer Square (et. al.). Anyway, I hope that Eddie Lampert DOES sell, I hope the new owners can revive it to their former glory.
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SEAN Reply:
February 10th, 2012 at 10:09 am
@Pseudo3D, As several stock analysts pointed out in 2005, taking two poorly run companies & merging them doesn’t work. I share your sentiment on seperating Sears & K mart, but my idea comes with a twist.
Purchase NY based NRDC equities owners of Lord & Taylor & The Bay could be an interesting play for bringing The Bay’s signiture products to the states as well as expanding the Lord & taylor brand beyond the northeast & the midwest regions.
The twist is to convert Sears locations in A level locations to The Bay& either sell or close stores in B or C centers. This more or less follows what NRDC did with The Bay’s discount arm Zellers & how Target was able to get a foothold into Canada rather quickly.
As for K mart it self, sell it off in whole or in pieces. There are chains out there that want to expand & this could open some good oppertunities for them.
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Allan Reply:
February 12th, 2012 at 10:15 pm
@Pseudo3D, Agreed about that, totally. I’d rather see Sears Holdings spin off Kmart, but I sadly doubt they’ll do that. I do have to say that I wish Sears would implement the new look logo at a quicker page, a la the one implemented at Friendly Center in Greensboro, NC. If you go to Sky City on facebook, you can see pic examples of what that store looks like.
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Eunice
February 10th, 2012 at 2:31 am
It’s funny that people want to the see 1960s logo again. Yes its iconic and yes I like it myself but it was actually a disaster for the chain back then. Which is why it officially only lasted seven years until the 1971 logo when. The 60s logo is from the days of when JCPenney was trying to compete with Sears and Montgomery Ward.
Best of luck to JCP on their new gamble. I hope it pays off in the long run. It may sound crazy but it sounds like it would actually work.
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jw
February 16th, 2012 at 5:12 pm
I like the new look and Kudos to JCP for kicking it in gear and getting into the 21st century. Sears on the other hand is such a joke. There are two Sears stores near me, one is older than dirt and it is obvious that they are letting it go down the tubes. It’s dirty, old, the employees are horrible and it is obvious they are there for a paycheck only. The other Sears is newer and in a nice mall, but it is still empty! when all the other stores are crowded. I think its time for Sears to close up their stores, they are just horrible, I don’t shop there anymore, its depressing.
[Reply]
SEAN
February 24th, 2012 at 9:49 am
Sears Sells 11 Anchor Pads to GGP; To Split Off Some Businesses
Feb 23, 2012 12:21 PM, Staff Reports
Sears Holdings Corp. made two big announcements as it continues its attempts to reverse its flagging fortunes. It will sell 11 anchor pad locations to General Growth Properties in a $270 million deal. In addition, the company has announced plans to separate its Sears Hometown and Outlet Businesses and certain hardware stores through a rights offering.
In the anchor deal, Sears will sell Sears full-line store locations at 11 General Growth Properties assets to the mall REIT. The transaction is expected to close in the next 45 to 60 days, subject to customary closing conditions. The stores in the transaction include Sears-owned properties at the Coral Ridge Mall in Coralville, Iowa; The Woodlands Mall in The Woodlands, Texas; West Oaks Mall in Ocoee, Fla.; Fashion Place in Murray, Utah; Quail Springs Mall in Oklahoma City and Provo Towne Centre in Provo, Utah. The leased locations are in Ala Moana Center in Honolulu; Bellis Fair in Bellingham, Wash.; Mall of the Bluffs in Council Bluffs, Iowa; Apache Mall in Rochester, Minn. and Market Plae Shopping Center in Champaign, Ill.
The stores will continue to operate as Sears locations into 2013 with final closing dates to be determined and announced later this year.
“This portfolio represents a significant opportunity to recapture valuable real estate within our portfolio,” General Growth COO Shobi Khan said in a statement. “This acquisition also enhances several expansion and redevelopment opportunities including re-tenanting the anchor space and adding new in-line GLA.”
Splitting off sectors
In other news, Sears said it intends to separate its Sears Hometown and Outlet Businesses and certain hardware stores through a proposed rights offering that is expected to raise approximately $400 million to $500 million.
The rights will entitle holders to purchase shares in the combined Sears Hometown and Outlet Stores businesses and certain hardware stores and will be transferred to holders of Sears Holdings common stock. The record date, subscription price, subscription ratio (the number of rights needed to acquire a share in the newly formed company) and other terms of the rights offering have not yet been determined by the Sears’ board.
Proceeds from the share subscription will provide additional liquidity to Sears Holdings and are expected to be used for general corporate purposes. Edward S. Lampert, chairman of the board of directors of Sears Holdings and Chairman and CEO of ESL Investments Inc. (together with its affiliated funds, ESL), has said that ESL, which is Sears Holdings’ largest shareholder, intends to exercise its subscription rights in full at the anticipated valuation, subject to the successful completion of the transaction process.
This is the second major announcement from Sears Holdings in the past 60 days. On Dec. 27, 2011., the firm revealed plans to shutter 120 underperforming Sears and Kmart stores.
[Reply]
rob Reply:
February 24th, 2012 at 11:01 am
@SEAN, WHAT DO YOU THINK THEY WILL DO WITH NANUET SEARS I WAS IN THERE LAST WEEK IT LOOKS LIKE A JUNK HOLE. THEY ARE SAYING ON CNBC THAT PEOPLE ARE STILL SO SO ABOUT JCP. I WAS ON THEIR WEB SAW A PAIR REEBOK SNEAKERS SAID ALSO IN STORES 21.00 I GO TO THE STORE THEY ARE 35.00. THE PRICING ON THE THIRD FRIDAY IS VERY CONFUSING. I HOPE THEY WILL SURVIVE ESPECIALLY WHEN IT COMES TO HOLIDAY WEEKENDS AND THE HOLIDAY SEASON .TO ME THEY NEEDED TO IMPROVE THEIR PRIVATE LABEL MERCHANDISE/ THEIR SALES WERE .ALWAYS GOOD.
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SEAN Reply:
February 24th, 2012 at 12:21 pm
@rob, I’m not sure what will happen to the Nanuet Sears, it’s still to early to tell. There was another article in the NYT’s business section today related to the one I posted above. In a nutshell Sears will be gambling by selling it’s most valuable real estate assets to get a quick cash infusion. As my father told me this morning, Alexanders went down the same route & you know what happened to them.
Did you verify the price difference with a sales person when you went to JC Penny? They should have given you the lower price without question.
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rob Reply:
February 24th, 2012 at 6:34 pm
@SEAN, OH JCP GAVE ME THE PRICE BUT THEY NEED TO BE MORE CAREFUL OF THEIR PRICING. ITS FUNNY YOU MENTIONED ALEXANDERS I REMEBERED WHAT HAD HAPPENED TO THEM AND J.W MAYS DEPT STORES AS WELL, THIS COULD BE THE SAME WAY SEARS IS HEADED. ONE DAY ALL SEARS EMPLOYEES WILL COME TO WORK AND FIND THE STORES CLOSED LIKE ALEXANDERS DID.THEY REOPENED FOR LIQUIDATION THEY CLOSED IN 1992. THEY WERE GREAT BACK IN THE DAY.
[Reply]
Nordrike Field
February 24th, 2012 at 6:17 pm
I feel that Sears might not make it pass this year; it will be a shame if they do go under, selling their stores back to the mall owner? Jeez, we’ll see what happens I suppose.
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SEAN Reply:
February 24th, 2012 at 7:07 pm
@Nordrike Field, I have the same concerns you do, but I view things differently. You need to seperate the different classes of malls. The higher quality A level centers will mostly survive if they lose there Sears anchor, but the B & C assets will have a tougher go at it if Sears ends up Closing stores.
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Raymie Reply:
February 24th, 2012 at 10:26 pm
@SEAN, Sears leaving would kill some malls for sure. Unlike just ten years ago, though, what anchors are available to fill the void?
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SEAN Reply:
February 25th, 2012 at 8:13 pm
@Raymie, I thaught of one that our Canadian readers know well, The Bay. The Bay is similar to Macy’s, but they have signiture products that you don’t find in the states. They would do well in the northern climate areas like Boston, Washington DC, Detroit, Denver & alike. in the South, Belk might be able to pick up some of the slack in the stronger markets. However as I already pointed out, A class malls will weather far better despite the loss of Sears than B or C class malls.
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SEAN Reply:
February 25th, 2012 at 8:25 pm
@Raymie, Another store that might work is Von Mour wich is similar to Neiman Marcus, but based in the midwest.
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rob Reply:
February 25th, 2012 at 6:29 am
@SEAN, I WOULDNT MISS SEARS, BOSCOVS COULD REPLACE SEARS IN NANUET OR PARAMUS PARK MALL. EVEN BONTON. I THINK MOST DEPT STORES ARE HOLDING BACK AN EXPANDING.THERE WOULD BE ALOT OF EMPTY ANCHOR STORES IN MANY MALLS.
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SEAN Reply:
February 26th, 2012 at 3:22 pm
@rob, The loss of Sears in some markets could be a benefit to A class centers & regional department stores who will have expantion opertunities put in front of them. See my comments towards raymie above.
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rob Reply:
February 26th, 2012 at 5:37 pm
@SEAN, I SEE WHAT U MEAN IN THE SOUTH BELK AND DILLARDS MAY HAVE SOME OPPORTUNITIES.LORD AND TAYLOR IS LOOKING TO RETURN DOWN SOUTH AS WELL. THE NORTHEAST MAY HAVE SOME PROBLEMS UN LESS THAT BAY WILL COME OR OPPORTUNITIES FOR NORDSTROM, BOSCOVS OR BONTON.
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SEAN Reply:
February 26th, 2012 at 7:43 pm
@rob, Bon Ton could work in some markets as can Belk. Remember The Bay & Lord & Taylor are both under NRDC ownership. It just depends on wich center you are talking about.
The Bay has a larger footprint to work from since they are national as aposed to Lord & Taylor wich is regional & a bit more upscale.
Cities like Boston, Detroit, Seattle, Portland OR, Chicago, Minneapolis & Buffalo would be logical locations to bring in The Bay first to see if US consumers respond favorably to a new department store opening. If so, then extending down towards DC,Indianapolis, Nashville, Denver & San Francisco would be next logiclly.
Chicago, Detroit & the northeast already have Lord & Taylor stores, so The Bay would be a better option.
In the south, that is where Belk, Dillards & Bon Ton could make headway by picking up stores with good leasing terms.
There’s plenty of room for Boscov’s to get in on some choice anchor spaces if they are a bit agressive. Especially in the northeast where L & T already have stores. Los Angeles & San Diego could end up with Dillards.
[Reply]
Brandon Reply:
February 26th, 2012 at 8:32 pm
@SEAN,
I can see that. However, I would suggest that the HBC make a minor name change for the Detroit market (the first i would pick for them as it is right across the border from their stores in Windsor). Call it the “Hudson’s Bay Co.” with a bit of emphasis on “Hudson’s”.
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SEAN Reply:
February 27th, 2012 at 12:27 pm
@Brandon, Understood. Knowing that Hudson’s was based in Detroit, that would make sence.
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SEAN Reply:
February 28th, 2012 at 10:21 am
@rob, Eddie Lampert to spin off more than 1,200 Sears stores and sell 11 in bid to raise up to $770 million
By JAMES COVERT
Last Updated: 3:51 PM, February 24, 2012
Eddie Lampert finally opened the kimono yesterday — and revealed some shrinking assets.
The number-crunching hedge-fund tycoon — who took control of Sears in 2005 by merging it with Kmart — said yesterday he will spin off more than 1,200 stores to investors and sell 11 department stores in a bid to raise up to $770 million in cash.
In a rare move, the notoriously secretive Lampert allowed Sears execs to hold a conference call with analysts to quell recent concerns about its liquidity, which came to a head last month when the retailer warned it expected to post a steep loss for the year.
Those fears, which prompted commercial-lending giant CIT to abruptly stop extending credit to Sears suppliers, were confirmed yesterday as Sears disclosed it lost more than $3 billion in 2011.
Sales in the crucial fourth quarter fell 4 percent, to $12.48 billion, capping the retailer’s eighth straight year of declining US same-store sales.
Nevertheless, Sears shares yesterday surged nearly 19 percent to close at $61.80, as Lampert took pains to quash speculation that he might throw the aging chain into bankruptcy.
“Despite our explanations to analysts, credit rating agencies and the media regarding our liquidity… many have chosen to ignore these facts, focus exclusively on our earnings performance and exaggerate the potential for any liquidity problems,” Lampert griped in a letter to shareholders.
Lampert also signaled that he wouldn’t rule out selling more real estate, the company’s 90 percent stake in Sears Canada or even the Lands’ End clothing line.
While the news about the retailer’s near-term health came as a relief to investors and suppliers, the asset sales will cut into Sears’ long-term profitability.
The 11 department stores to be sold to a mall developer for $270 million “are among the best” in the chain, according to Credit Suisse analyst Gary Balter.
“We do not believe that a bankruptcy filing near term is in the cards, but we believe the equity valuation is well out of line with comparable retailers,” Balter said, reckoning Sears shares are worth $20 — less than a third of yesterday’s close.
The 1,200 stores to be spun off are smaller-format outlets and other off-mall shops, including hardware stores, in a rights offering to investors that’s expected to raise up to $500 million.
“Our fourth-quarter earnings were unacceptable,” Sears CEO Lou D’Ambrosio said on yesterday’s conference call.
CIT, which has more than $200 million in exposure to Sears accounts, is selectively approving new deliveries to the retailer, said a source close to the situation.
jcovert@nypost.com
Come on, who on this blog didn’t see this one comeing.
[Reply]
SEAN Reply:
March 6th, 2012 at 9:40 am
@SEAN, Sears shutting the last Great Indoors
Home Textiles Today Staff — Home Accents Today, 2/29/2012 9:49:04 AM
HOFFMAN ESTATES, Ill. – The Great Indoors is going to the great beyond.
Buried in the recent announcements of store closings by Sears Holdings in the wake of major losses for the year was the A recently remodeled Sears store in Greensboro, N.C.news that it would shut down the last remaining nine Great Indoors locations. No specific closing date was given.
Launched in the late 1990s, The Great Indoors units were mammoth, 100,000-sq.-ft. home superstores, containing most major furnishings classifications from textiles to furniture to consumer electronics to kitchen and bath. There were 20 stores at the peak of the operation, merchandised and bought separately from traditional Sears stores.
Established concurrently with launch of a similar concept by Home Depot called Expo, these giants were viewed as the next big trend in home furnishings retailers, but it was not to be. Depot shuttered its Expo operation in the mid-2000s and other oversized home operations such as Garden Ridge and Incredible Universe have been substantially pared back or closed.
After the merger of Sears and Kmart to create Sears Holdings, not much was ever mentioned of The Great Indoors and the stores were never believed to be big money-makers.
According to published reports, the last nine stores are located in Scottsdale and Chandler, Ariz..; Lone Tree, Colo.; Lombard, Ill.; Gaithersburg, Md..; Novi, Mich.; Columbus, Ohio; and Farmers Branch and Houston, Texas.
Those mega stores were great for browsing, but not fun when you really needed to find something. The former Expo design Centernearest me was turned into a ShopRite.
[Reply]
Nordrike Field Reply:
February 25th, 2012 at 7:20 pm
@SEAN, I agree with all of you guys, my local mall; Temecula Promenade would not be in danger if Sears closes but another local mall, Hemet Valley Mall might be, they already lost Gottschalks and about 7 inline stores out of like 20 though they still have a really small Penneys store; class A malls would be able to fill-in the void Sears might leave; but class B and C would really struggle, specially in small towns where Macy’s, Bon-Ton, Boscovs or what have you would not do business in would really suffer; in the other hand, if Sears Holdings were to close all Sears BUT keep Kmart what they could do in smaller B and C class malls specially in town’s Wal-Mart is not close by they could convert some stores to their Kmart brand, only time will tell what’s going to happen with Sears; growing up with a Sears in my hometown I have fond memories of them and if they do go under it would be the end of a once mighty fine American brand.
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SEAN Reply:
February 25th, 2012 at 8:28 pm
@Nordrike Field, well said.
[Reply]
Annette
February 26th, 2012 at 11:53 pm
I’m glad they’re at least trying something new. JCPenney often has stuff I’d like to buy, but checking out of the place is a nightmare (at least, it is at my local store). If they’re going to make the layout less confusing and more friendly, I’ll shop there more often.
I worry about the pricing strategy though; when you say “NO MORE SALES”, people flip out. Sadly, some people may not be, er, observant enough to notice the color-coding. Personally, I think it’s a good idea, because I hate ambiguous markdowns. I’m more likely to put the marked-down item back than take it with me to the register only to find out it’s over my budget. But that’s just me.
Oh yeah, and the new logo is ugly, but most logos these days are pretty lackluster, so what do you expect?
[Reply]
Brandon
March 2nd, 2012 at 8:03 pm
Having gone to my local Penney’s and seen the changes, I think the strategy will work. It strikes me that this is more of a pricing change than a branding change. Most items were on sale, promoted, anyway at 30 to 50% off, so slashing the prices by 40% makes the old promotion price the new regular price (which is what one paid for the items anyway). The sale prices are easy to find, and the clearance items are also marked and findable.
We have both a Penney’s and a Kohl’s here, and having been to both within the week, the Penney’s seems more “with it” and up to date. Kohl’s seems kind of staid to me. It might help that Kohl’s is away from the mall, and Penney’s is in a mall with 95% occupancy.
[Reply]
SEAN
May 10th, 2012 at 10:21 am
Hmmm, interesting.
Bed Bath, Cost Plus Deal is a Surprise, But a Pleasant One
May 10, 2012 12:00 PM, By Elaine Misonzhnik, Senior Associate Editor
Few people had seen it coming, but Bed Bath & Beyond’s decision to acquire Cost Plus Inc. might prove a boon for both the retailers involved and the retail real estate industry.
On May 9, the Union, N.J.-based Bed Bath & Beyond Inc. announced it entered a definitive agreement to buy Cost Plus Inc., an Oakland, Calif.-based retail chain, for $22 per share or approximately $520 million in an all-cash transaction. Cost Plus, which operates under Cost Plus and World Market brands, carries a wide selection of home furnishings, accessories, gifts and nonperishable food procured from around the world and competes against such retailers as Pier 1, Crate & Barrel and Pottery Barn. It operates 259 stores located throughout 30 states.
The retailer might not be an obvious acquisition choice for Bed Bath & Beyond, which focuses on basic home furnishings and appliances and already operates 965 stores in the U.S., but it should help the company diversify into new merchandise categories at a time when the housing market remains weak, says Doug Stephens, president of Retail Prophet, a specialty consulting firm. Bed Bath & Beyond reported that its same-store sales rose 5.9 percent during fiscal 2011, but opportunity for growth in its core business is still limited, according to Stephens.
“Despite risks associated with a relatively lackluster record of profitability at Cost Plus, we think Bed Bath’s culture and operating model will have a net positive impact on the Cost Plus and World Market businesses over the long run,” wrote Morningstar analyst Peter Wahlstrom in a note. “For the Bed Bath concept, which is already (arguably) approaching saturation in the domestic market at nearly 1,000 sites, the home furnishings bolt-on represents another leg of growth.”
Cost Plus Inc. reported same-store sales growth of 5.4 percent in fiscal 2011. Approximately 39 percent of its sales last year came from consumables, including spices, gourmet meats and cheeses, candy and chocolates, cookies and cakes and coffee and tea. Cost Plus’ expertise and connections with vendors in the gourmet foods sector could help Bed Bath & Beyond add a new department to its stores. This would be similar to the strategy Bed Bath & Beyond employed when it acquired Harmon Stores Inc. in 2002 and added shelves of health and beauty products to its merchandise selection, notes Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York City-based retail consulting and investment banking firm.
“One way to increase comp sales is to add new business,” says Davidowitz. “I believe Bed Bath will be able to integrate the specialty foods into their stores and I think the departments would fit because Bed Bath and Cost Plus customers come from the same psychographic and demographic.”
In addition, Cost Plus’ international bazaar retailing model is less susceptible to competition from Amazon.com and other online retailers than Bed Bath & Beyond’s more mainstream products, adds Bob Phibbs, the Retail Doctor, a Coxsackie, N.Y.-based business strategist and retail consultant. Cost Plus does carry home furnishings and accessories, but it sells niche products that can’t be found elsewhere.
Closed for Business?
In the short-term, the acquisition could still spell trouble for retail landlords, as Bed Bath & Beyond will likely close at least a few of the Cost Plus stores. Most likely these will be underperforming Cost Plus stores or Cost Plus stores in markets where the smaller retailer and Bed Bath are located in close proximity to each other.
“I think they would probably need for Cost Plus to become boutiques in some of the Bed Bath & Beyond stores,” says Phibbs. “I don’t think you’ll see it the other way,” with Bed Bath locations closing down and Bed Bath merchandise transferred to Cost Plus stores.
Bed Bath & Beyond’s and Cost Plus’ real estate models are fairly similar. Both retailers prefer locations in or near large cities, and both lease, rather than own, most of their stores. Bed Bath stores range in size from 20,000 sq. ft. to 50,000 sq. ft. Cost Plus stores average 18,600 sq. ft.
The closures will likely come sooner rather than later, with Bed Bath & Beyond taking the opportunity to take the write-down on closed stores as part of the overall acquisition, says Davidowitz.
“They won’t close half the chain,” he notes. “I I had to guess, and this is strictly a guess, I would say maybe they will close 15 percent” of Cost Plus stores.
In the long-term, the transaction should improve the health of Cost Plus Inc. and ensure that the chain will be around for years to come, Davidowitz notes—not a certainty if Cost Plus would remain an independent chain.
Bed Bath could potentially even grow Cost Plus. When the company acquired Harmon, the smaller retailer operated 27 stores in three states. Today, Harmon operates 45 stores.
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Pseudo3D Reply:
May 15th, 2012 at 9:07 pm
Fun, there’s a World Market literally storefronts away from a Bed Bath & Beyond in my town. Who knows if they’ll close or not: both offer a unique mix of products.
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Raymie
May 11th, 2012 at 6:37 pm
*looks up*
I see one Cost Plus that’s going to be closing: literally in a strip across from a BBB. (It’s the one closest to me, as well.)
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SEAN Reply:
May 11th, 2012 at 7:41 pm
@Raymie, As the above article notes, Cost Plus items could be placed in Bed Bath & Beyond stores. Also up to 15% of CPWM stores couuld close if they are lower volume locations or near BBB stores.
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SEAN
May 16th, 2012 at 3:33 pm
J.C. Penney Stock Drops As Questions On Strategy Grow
By Karen Talley
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–J.C. Penney Co. (JCP) is seeing its shares tumble in the aftermath of the chasm-sized first-quarter loss the retailer posted after Tuesday’s close, out of concern that its transformation may, at the very least, take longer than planned and, at the very worst, not work.
Given that shoppers aren’t accepting Penney’s non-promotional approach to selling merchandise, there is no near-term catalyst for sales, analysts said. The 18.9% drop in same-store sales that Penney reported came on a 10% drop in customer traffic, as the retailer failed to draw people in.
The concerns sent shares down 18% to $27.49 in recent trading. Investors who bought in when Chief Executive Ron Johnson disclosed the retailer’s plans in late January and the stock surged had already lost that gain before Penney posted first-quarter results after Tuesday’s close, so they are now losing money and perhaps patience.
Investors are also losing their dividend, at least for a time. J.C. Penney said it is suspending its dividend, the first Standard & Poor’s 500 company to do so since February 2010, when Tesoro Corp. (TSO) halted its payout, according to S&P. In fact, no retailer has suspended its dividend going back to at least 2003.
Penney’s decision to suspend its dividend came as the retailer posted abysmal first-quarter results and, according to S&P, suspending its quarterly payout of 20 cents a share will save the retailer roughly $116 million a year. But the move has also sent a message. “You are telling the last two types of people that you want to–your owners and your competition–that you are having a cash-flow problem,” said Howard Silverblatt, senior index analyst at S&P. “You’re putting blood out.”
Some investors are staying far away. “We were not convinced of their story and the earnings call confirmed our suspicions,” said David Abella, who helps manage about $4.5 billion in assets at Rochdale Investment Management. “It’s tough to turn around retailers in general and it’s not clear that their new strategy will work.”
Others are looking from the sidelines in anticipation.
“I will eventually (take a stake) but I am not ready to jump into that murky pool yet,” said Patricia Edwards, chief investment officer at Trutina Financial, a wealth management firm in Bellevue, Wash. “I think they will eventually be able to turn things around. You have some of retail’s best people at J.C. Penney now and they have the brain power and the ability to make this happen.”
Edwards said she needs to see “some revenue growth that’s driving earnings growth and people in the stores with shopping bags on their arms” before she will act.
To be sure, what J.C. Penney is trying to achieve is daunting. The company has undertaken “the most-significant restructuring and repositioning of a major retailer” in some time, Credit Suisse analyst Michael Exstein said.
But whether J.C. Penney will succeed in its transformation is coming into question. The first-quarter report “left more questions than answers,” said Matthew Boss, retail analyst at J.P. Morgan.
Questions for J.C. Penney include how will the company be able to show improvement as it comes up against back-to-school and Black Friday sales periods, both of which were very promotional last year, and how will it drive higher-income customers into the store and, if it does, will it alienate its core customers, who already appear to be dwindling.
J.C. Penney swung to a loss in its fiscal first quarter, with customers failing to embrace the retailer’s new pricing strategy. CEO Johnson said “sales and profitability have been tougher than anticipated” as the company tries to “educate” consumers about its new approach. However, he expressed optimism, saying that ultimately J.C. Penney will become “America’s favorite store.”
Virtually every metric in J.C. Penney’s earnings report came up short of expectations and, in some cases, woefully so.
The report came after J.C. Penney spent the first quarter beginning to put in place a vast transformation program that Johnson outlined in late January. Johnson, the former retail chief at Apple Inc. (AAPL), envisions a department store made up of a myriad of “shops-within-shops” with a town square at its center.
The first quarter was about putting in place Penney’s new pricing strategy, perhaps the most-difficult component to sell. The three-level plan does away with scores of sales events in favor of more-stable pricing. The approach involves everyday prices, sales that last a month, and certain merchandise marked for clearance the first and third Friday of each month and kept at promotional levels until sold.
The strategy didn’t catch on with customers and, for the quarter ended April 28, Penney reported a loss of $163 million, or 75 cents a share, compared with a year-earlier profit of $64 million, or 28 cents a share. Excluding markdowns to reduce inventory levels, restructuring costs and pension-plan expenses, the latest quarter’s loss was 25 cents a share, compared with a year-earlier profit of 36 cents.
Total sales declined 20% to $3.15 billion. Same-store sales dropped about 19%, when analysts expected a 13.3% decline. Analysts polled by Thomson Reuters had projected a per-share loss of 11 cents and revenue of $3.41 billion.
Gross margin narrowed to 37.6% from 40.5% due to lower-than-expected sales and the impact of deeper seasonal markdowns to clear inventory.
-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com
This was the 2nd update to this story.
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Nordrike Field
May 16th, 2012 at 4:59 pm
From Yahoo Finance:
“J.C. Penney (JCP) shares tumbled Wednesday after the retailer reported a much wider-than-expected first-quarter loss, suspended its dividend and saw weakness across all core metrics.
In an apparent rebuke to new CEO Ron Johnson’s strategy to change the company’s focus from discounts to everyday low prices, total sales fell 20% while same-store sales declined 19% and gross margins fell to 37.6% from 40.5% as foot traffic in the stores dropped 10%.
“Our marketing isn’t doing the work,” Johnson said in a conference call. “We’ve got to get our pricing across. Coupons were a drug, they really drove traffic. [Customers] need to understand the value we’re offering.”
But it’s Johnson, not J.C. Penney’s customers, who has a problem understanding what the retailer needs, says Howard Davidowitz, a veteran retail banker and CEO of Davidowitz & Associates.
“He’s caused incalculable damage,” Davidowitz says of Johnson, who joined J.C. Penney last year after running Apple’s (AAPL) retail operations. “The customers are everything. They don’t know what the hell he’s doing.”
In a nutshell, Johnson wanted to wean customers off one-time discounts — notably coupons — and get them to look at J.C. Penney as a place for everyday low prices. (See: J.C. Penney CEO: We Can Become America’s Favorite Store)
But that’s “a very tricky thing to get customers to believe,” Davidowitz says. “What is a ‘fair’ price? Who’s to determine it?”
Using Target’s (TGT) multi-year rollout of groceries as an example, Davidowitz says “experiments” are good in retail but need to be done on a test basis and introduced slowly to get customers comfortable with a new concept.
“J.C. Penney didn’t need a revolution, it needed an evolution,” he says. “You can’t take an old line company that’s been operating the same way a very long time and throw everything out the window and say ‘now we’ve reinvented the company.’”
Davidowitz does have a flair for the dramatic, as you can see in the accompanying video. But he was also one of the few who didn’t buy into the hype last year when Johnson was named J.C. Penney’s CEO, as you can see here.
After calling J.C. Penney shares a short last June, Davidowitz remains glum about the company’s prospects following its dismal quarter, predicting the company will now slash inventories — limiting customer choice — cut staff and eliminate all promotions.
In other words, Davidowitz says J.C. Penney is going down the same path as Sears Holdings (SHLD), another retailer that has fallen on hard times. As with Eddie Lampert at Sears, J.C. Penney has come under the influence of financial heavyweights, hedge fund manager Bill Ackman and Vornado Realty Trust’s Steven Roth.
Lampert, Ackman and Roth are all incredibly accomplished investors and brilliant by all accounts. But the early returns at J.C. Penney suggest once again that being a great investor does not necessarily make for a great retailer.
Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him ataltask@yahoo.com”
Guess they didn’t think this thru, I kind of like the whole “fair and square” thing and the little shops inside Penneys are kind of cool but only time will tell
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SEAN Reply:
May 16th, 2012 at 7:33 pm
@Nordrike Field, This turnaround for JCP is in a word… desasterous & I know who called it up the thred munths ago.
He Shoots! He Scores! Nordrike Field!
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