(By Retail Sails) Much has been made of the ‘radical transformation' of JC Penney – here are just a few examples:
- JC Penney Re-thinks Terminology, Embraces ‘Sales' Again (AdAge)
- Too Much, Too Soon Proves an Error for JC Penney (Retail Traffic)
- Discounts are already back in style at JC Penney (MarketWatch)
- Why Everyday Low Pricing Might Not Fit J.C. Penney (Businessweek)
- Why JCPenney's ‘No More Coupons' Experiment Is Failing (Time)
- Ron Johnson's revolutionary transformation of JC Penney from traditional department to ‘lifestyle' stores (Forbes)
- Ron Johnson: Retail's New Radical – The Man Behind JC Penney's Transformation (Fortune)
- Does JC Penney's new pricing structure represent the future of retail? (CNN Money)
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Nearly all of the focus of late has been on changes in promotions and pricing, and the negative effect on sales and traffic. However, the fact that e-commerce sales plunged 27.9% in the first quarter was almost completely ignored.
Perhaps that's because online sales have been lagging store sales and the performance of rivals for years now.
Macy's has been a leader in multi-channel integration – a year ago it extended e-commerce availability to 91 countries internationally and recently said most of its stores will be doubling as distribution centers for online orders:
- Macy's CEO sees stores borrowing ideas from online (Reuters)
- Macy's 2.0 Sales Strategy Puts Pedal to the Metal in Digital (Forbes)
- Macy's ties stores more closely to the web (Internet Retailer)
Kohl's has grown e-commerce sales from just $84 million in 2004 to over $1 billion in 2011, and continues to invest heavily to grow the business, opening its 3rd fulfillment center in 2011 with another planned for 2012.
JC Penney was once a pioneer of multi-channel commerce, with the largest retail catalog business and one of the first chains to sell online – in 2001, combined web and catalog sales were $3.349 billion and accounted for 18.8% of total revenues.
Today, the catalog business is closed and online sales have been flat at just $1.5 billion for 5 consecutive years. Total sales of $17.26 billion in 2011 were below levels from 10 years ago of $17.84 billion.
On analyst day in January when ‘transformation' plans were revealed, barely a mention was given to jcp.com or multichannel integration (see here and here). Not much was said about the 28% dive in jcp.com sales in the first quarter either.
Ron Johnson is obviously a very successful executive with a proven track record at Apple and Target. The 1st quarter presentation did mention "creating a whole new experience that will win in the age of a connected world, a digital world with a physical retail store."
We're just a little short on the details for now. Obviously the restructuring is a long-term project – later this year we will get a better idea of what the new stores will look like, what brands will have shop-in-shops and maybe the company will have a better handle on pricing.
But unless there are drastic changes in digital strategy, JC Penney will just be another once-great American retailer that failed to adopt in the rapidly changing environment.