J.C. PENNEY BEGINS TO BRAND ITS FUTURE WITH ARIZONA PROTOTYPE
Byline: David Moin
NEW YORK — J.C. Penney has seen the future, and it’s in the desert.
It’s in Prescott, Ariz., about 100 miles northwest of Phoenix, to be precise, where on March 8, the company opened a 65,000-square-foot, one-level prototype store, classified internally as “box one.” It’s got the latest Penney’s has to offer in layout, decor, graphics, fixturing and merchandising formats. New Penney stores and major remodels will get a heavier dose of the box one DNA and have a much cleaner look, although all stores will be touched to some degree by certain elements of the prototype. Already, new graphics are in all stores.
On April 16, the strategy — an attempt to give a uniform look to the Penney’s chain, or “brand” the business — will be unveiled to retail analysts who have been summoned to the 150,000-square-foot Lewisville, Tex., store, as part of the corporation’s annual update to Wall Street. Lewisville is about 20 minutes from the Plano headquarters, and the store there is among the handful of Penney’s branches adapting many elements of the plan so far, including a 21,000-square-foot unit in Greenville, Tex.
Wall Street can be expected to cast a critical eye too as Penney’s boost in capital expenditures this year, to between $800 million and $900 million from $650 million last year, has prompted some concern about cash flow among analysts. But the tour will be geared to convince them it’s money well spent.
Penney’s officials said box one is not a total remake or reinvention of the stores. They acknowledged, however, that it’s a big step forward in exerting greater central control over the stores, attempting to correct problems, and ultimately have the merchandise presented in “lifestyle” format clearly segmented by classifications and collections. The Penney’s chain is a hodgepodge of stores built over several decades and generations of store design, in which customers have difficulty finding the merchandise they want and key trends are often undetectable. The stores are further confused by years of decentralization, where local managers once had more say in how to spend the capital. The $32 billion retailer also stressed that the strategy is just one part of the multi-year turnaround effort being led by chairman and chief executive Allen Questrom, who has a meticulous nature. When he joined the company in September 2000, he announced he wanted to make the stores more attractive and navigable. While moving forward on the store environments, there’s a still a long way to go on the merchandising and marketing fronts, where Penney’s needs greater distinction from the competition.
Among the key elements:
Fixturing modules flexible enough for displaying folded or hanging merchandise and for different brands.
A central promenade, with a racetrack aisle so stores are easier to navigate.
Checkouts placed to closer to entrances so they are easier to find, and to free up some merchandise space.
“Hot spots” that highlight merchandise trends. “Box one is an initiative to bring national consistency to our stores in terms of look, merchandising and layout,’ said Chuck Foughty, senior vice president and director of store environment, in an exclusive interview. “We have over 1,000 stores built over at least 50 years, many in the Seventies, Eighties and Nineties with a generational twist. Because of decentralization, there was more local discretion over how the capital was deployed with remodeling. Now we are being driven by a stronger central point of view.”
Penney stores vary greatly in size, from as much as 150,000 square feet of selling space to as little as 20,000. They were long classified into at least a couple of dozen size types for merchandising purposes.
“We’ve reclassified them into six buckets — all sitting under the umbrella of box one as the end vision,” said Michael Cape, Penney’s visual merchandising and store design director.
One element of the plan, he said, is its “core, focused and flexible fixture package, honed down by division,” from which all Penney’s stores will pull.
“Senior management toured the Prescott store within the last couple of weeks,” Cape added. “There’s a good feeling that many elements from there will be incorporated into new stores and remodels as we go forward.” Financial reviews of stores will determine to what extent.
“There will be different levels of box one implementation. It tiers,” Cape said. Brand new stores will get all of the components; full remodels will have many components; good stores that may need a lift will get some physical improvements, such as lighting and painting; and all stores at a minimum, get the visual package, which has been used to create “ceremonial store entrances” highlighting a theme for the season. Currently, it’s “spring into color,” which Doughty said could be reinforced throughout the store with the hot spots. Cape said hot spots, possibly 30 to 50 per branch, depending on store size, will be created to put the latest seasonable trends up front, with new lighting and fixturing.
“We want to present a global merchandising message in the store,” said Doughty. “The idea is really to present a much more current, relevant appeal to Penney. It does present the merchandise better. There’s a better traffic pattern, a better flow, better lighting and an ease of shopping.”
Lewisville, a full-line store, has been “spruced up physically and contains many of the new modules [a group of fixtures to create a shop],” Cape said. The Prescott store sells all apparel and accessories, soft home and housewares, but no furniture, lamps or pictures.
In recent years, Penney’s store upgrades were light — a new coat of paint, new lighting and carpeting in many locations. The Macy’s, Lazarus and Bon Marche divisions of Federated Department Stores are among other retailers also experimenting with smaller, easier-to-shop formats, which Kohl’s offers throughout its chain.
Box one will impact the merchandising of stores large and small. Of Penney’s 1,075 domestic stores, roughly half are under 40,000 square feet. “Even with these baby stores, Penney’s used to stick everything in them,” said one source. “They’ve been crammed up with all sorts of classifications, even recliners and beds, making them difficult to shop and confusing.”
In effect, the new concept could help Penney’s showcase its best products and strongest classifications, whether they are coffeemakers or mattresses, and help the now-centralized buyers and allocators manage floor plans better, for a more consistent presentation. That could also help make Penney’s advertising more effective with national campaigns, once stores are in concert on the merchandising.
“This may seem basic, but internally, this is pretty dramatic for J.C. Penney,” said one official. “It’s been challenging dealing with a lot of different store arrangements. It was too complicated.”