Posts Tagged 'JCP'

JCP today, fitness center tomorrow?

The Simon development group is taking a three-level JCP store — soon to close at Southdale Center outside Minneapolis — and redeveloping the space as a fitness center. I’m among the RetailWire panelists discussing this smart “reinvention” strategy that can be applied to malls around the country:

Creating a fitness center out of an existing mall anchor is a creative way to reinvent excess real estate — instead of waiting for another retail tenant or tenants to energe (unlikely) in today’s overspaced environment. I’ve been in the JCP store in question and it was grossly overspaced for the volume it probably generated during the last few years.

Students of retail history (and Minnesota natives like me) know that Southdale was the first fully enclosed regional mall in the U.S. It served its purpose as a retail mecca — and community center — for many years, but the mix of anchors and nearby competition from Mall of America has made it less relevant in its current form. So the Simon team deserves credit for finding new reasons for people to come to Southdale and other malls like it.

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Thoughts on Macy’s self-service shoe and cosmetics departments

RetailWire panelists just took on the subject of a new test at Macy’s, in which its shoe and cosmetics departments are being converted to “assisted self-service” instead of the traditional associate-driven model. In the case of shoes, Macy’s is getting more of its inventory out of the stockroom and bulked out on the floor, with apparent early success. I’m raising a caution flag, however:

It’s hard to tell whether the reconfigured shoe department is meant to be a sales driver or an expense saver. JCP recently reconfigured a store that I visited to mass out its shoe inventory — DSW-style — instead of depending on salepeople to find the right size in the back. (And these associates are often paid a commission, just like cosmetics salespeople.) But it gets to the heart of what Macy’s wants to be. As Art put it, are they trying to be JCP or Kohl’s? Are they finding the hidden costs of “omnichannel” (BOPIS and so forth) to be unsustainable for a traditional department store?

And one more issue: By abandoning the Nordstrom model (where the salesperson is trained to bring out three pairs of shoes when the customer asks to look at one), Macy’s may in the long run walk away from the sales and margin potential of “upselling” that shoe and cosmetics departments should be known for. A declaration of victory may be premature.

Can JCP leverage its Sephora success?

It’s probably note the first time (on RetailWire or elsewhere) that I’ve talked about Sephora at JCP. It’s clearly a win and continues to be rolled out or expanded in more and more locations. So how does Penney use it to attract new shoppers and convert them to JCP loyalists? Here are some recent thoughts:

When Mike Ullman (formerly of LVMH) partnered with Sephora (owned by LVMH), he realized that JCP needed a critical mass of cosmetics even though the legacy department store brands like Clinique, Estee Lauder and Lancome wouldn’t sell Penney. (Lancome is now part of the Sephora assortment.) At the same time, Sephora was growing as a mall-based alternative to the anchor stores’ beauty departments with a unique approach to open-sell layout and fresh assortments. It’s turned out to be a win for both companies, especially as those traditional department store anchors lose share and traffic.

Certainly omnichannel is another opportunity for JCPenney, as Amazon continues its inroads into the beauty business. But perhaps the biggest unmet opportunity for JCP is to convince the (younger) Sephora customer in the store to buy more apparel, shoes and accessories on her visits to the beauty department.

And to add some recent comments posted after a store visit, there is visible sign of improvement in JCP’s assortments:

I’ve been critical for several years of JCP’s women’s assortments — too many brands, too many styles, too much overlap between brands. But credit where due: I shopped a Penney store in the past couple of weeks on behalf of a consulting client, and I saw a marked improvement in key item focus and brand clarity. Shoes were merchandised in a more effective way, and fashion jewelry looked improved too (although not yet handbags).

Penney promoted its men’s GMM last year to the head merchant position, and if what I saw is any indication, he’s got things heading in the right direction. It’s a small sample size but perhaps a leading indicator. JCP isn’t going to solve its sales problems until it figures out how to drive its apparel business, no matter how well it’s doing with Sephora or even major appliances.

Why Kohl’s needs a large store count

Amid all of this year’s news about stores closures, Kohl’s maintains that its large location count is a strategic advantage. (At the same time, it intends to re-size some of its existing stores.) Here’s a recent RetailWire comment following Kohl’s announcement:

I’ll start with my usual “full disclosure” that I worked for Kohl’s (and with Kevin Mansell) from 1982 to 2006. Convenience has always been one of the legs of Kohl’s strategy, and its real estate portfolio was intentionally built apart from regional malls. (I think Mr. Mansell mentioned on CNBC that only 80 of Kohl’s stores are located in regionals.) Maintaining this footprint is not only important as Macy’s and JCP continue their strategic retreat — not to mention whatever happens to Sears — but also as a way to leverage the e-commerce business that represents 15% of Kohl’s sales today.

As to the smaller or downsized stores, the trick for Kohl’s will be to keep narrowing its assortments to fit these formats. This is just as true in full-sized stores — when Kohl’s takes a position on a key brand like UnderArmour (or activewear in general), something has to give.

Two comments on omnichannel

Here are a couple of RetailWire posts on the subject of whether e-commerce is eating into brick-and-mortar retail. The first comment was published after stores reported year-end sales:

“Omnichannel” retailers like Macy’s, JCP and Target are still heavily dependent on their physical footprint. Each store reported rapid e-commerce growth (from 17% in Penney’s case to 30% at Target), yet each of them also reported total comparable-sales declines in the low single digits. So it’s clear that the combination of brick-and-mortar and omnichannel isn’t driving sales yet.

All of these stores and others have opportunities to improve their assortments, customer service and overall store experience. Omnichannel initiatives like BOPIS and “ship from store” have put even more strain on retailers’ ability to execute these “Retail 101” issues better. But until they do, their overall sales will continue stuck in neutral.

The second comment was published today:

“Cannibalization” may be the wrong term, because retailers with true omnichannel strategies need to think about how to grow the overall pie. Continuing to think about business silos (e-commerce vs. brick-and-mortar) will stand in the way of a consistent overall approach to the business.

But there’s no doubt that brick-and-mortar is losing its relevance, as seen in the growing number of chains closing locations or throwing in the towel altogether. To go back to the question of how to grow the overall pie…why isn’t that happening? Why aren’t strategies like BOPIS (intended to drive traffic to stores) driving incremental sales?

These aren’t easy questions to answer, but I continue to believe that the operating demands of turning a physical store into a mini-distribution center are eroding the service-centric reasons why consumers shop in those stores in the first place.

“Cannibalization” may be the wrong term, because retailers with true omnichannel strategies need to think about how to grow the overall pie. Continuing to think about business silos (e-commerce vs. brick-and-mortar) will stand in the way of a consistent overall approach to the business.

But there’s no doubt that brick-and-mortar is losing its relevance, as seen in the growing number of chains closing locations or throwing in the towel altogether. To go back to the question of how to grow the overall pie…why isn’t that happening? Why aren’t strategies like BOPIS (intended to drive traffic to stores) driving incremental sales?

These aren’t easy questions to answer, but I continue to believe that the operating demands of turning a physical store into a mini-distribution center are eroding the service-centric reasons why consumers shop in those stores in the first place.

 

 

 

 

Black Friday 2015 observations

Many RetailWire panelists and others have commented on the relative lack of mall traffic, on the day after Thanksgiving. While some of this can be blamed on the rapid growth of both e-commerce sales and Thursday openings, I still lay part of the blame on merchandise content. In short, the lack of newness in women’s apparel is hurting sales right now, and not just on Black Friday:

One mall doesn’t make a big sample size, but the Simon mall that I shopped on Friday morning is anchored by Macy’s, JCP, Sears, Bon Ton and Kohl’s. So it’s a good place to look for areas of common ground. I noted the same thing that many observers saw nationwide: Mall traffic was not impressive around 10am on Friday, at what should be the height of “doorbuster” sales.

Yes, the growth of omnichannel, Thursday openings and weeklong “doorbusters” (instead of for a few hours on Friday morning) have all affected After Thanksgiving volume. But these tactics didn’t just start in 2015…they have been gaining strength for the past several years. So how to account for the visible dropoff on Friday? I believe it still comes down to merchandise content, especially in the women’s apparel areas that have been troubled all year. In my observation, this was consistently the quietest area of the stores.

That being said, it’s too early to write off the weekend (or the season) until somebody adds together the brick-and-mortar numbers with the e-commerce sales and what is likely to be a robust Cyber Monday (or “Cyber Week”) this year.

Unconventional choices in the CEO succession race

Kohl’s recently announced that its “chief customer officer,” Michelle Gass, is taking over the helm of the merchandise organization. This puts her in position to become the chain’s next CEO, despite her relative lack of “general merchandise” background. (She spent most of her career at Starbucks.) She may compete against the “chief operating officer” to be named, who will have oversight of stores and logistics. It’s an interesting recent topic for discussion at RetailWire:

Kohl’s has had only three CEOs in the past 35 years, and all of them have been promoted from within. (Full disclosure: I worked for Kohl’s for 24 years, until 2006.) So it’s important for the company’s board to be thoughtful about the most important decision it can make, and to weigh the merits of store-operations vs. merchandising backgrounds…among other things.

The broader question facing huge national retailers (and not just those who are publicly traded) is how to identify the right forward-looking skill set for an effective CEO. Is it simply the traditional retail background of “merchant” or “store”? Or do more intangible skills like leadership, brand building and change management in an omnichannel world matter more today?

Among recent examples, JCPenney went for the more conventional choice of a CEO with a strong background in store operations. Target, on the other hand, opted for a CEO from the CPG industry with less grounding in a traditional retail career path. The next few years will be interesting to watch at both companies, but the early read is that Brian Cornell is acting like the change agent Target needed.