(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)
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.