JC Penney Becoming More Like the Apple Store

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JC Penney is hopefully looking towards a brighter future. Bill Ackman, CEO of Pershing Square Capital Management, wants to model J.C. Penney Company, Inc. (NYSE:JCP) stores after Apple Inc. (NASDAQ:AAPL) stores. Ackman’s hedge fund company owns about 26% of the company. Last fall, JC Penny hired the former senior vice president of Apple, Ron Johnson as the new CEO. According to Ackman, Johnson wants to remodel JC Penney stores after  Apple’s retail stores.

Bill Ackman recently spoke at the Harbor Investment Conference and he explained just how JC Penney is going to be a little more like Apple:

Ackman stated that, Ron Johnson recently redid a 100,000 square foot store, and had employees collecting customer coats’. Ron wants to make the stores much more customer friendly. He also is going to add in new technology and mobile check out.

Ron wants to make small botiquies with a brand instead of hundreds of racks. Now people can see Sephora stores in the stores. Sephora makes more in a year, than JC Penny makes in a month  a month. Ron plans to change 2-3 stores a month. Retail has not changed in 25 years and now Ron is going to change it.

The new plan for JC Penney is to add smaller, more specialized “boutiques” within the stores and provide  sales associates who are knowledgeable in the products they’re selling.  This should provide a more pleasant and upscale shopping experience and will separate them from competitors such as Sears, Kohl’s, or Target.

I think Ron Johnson’s plan is a savvy move. At the beginning of the year, JC Penney tried to change their strategy by offering everyday low priced items as opposed to the traditional use of frequent sales. The annual report which was released on Wednesday, expressed the company’s concern that the long-term effect of their current pricing strategy could decrease their revenue. However, the plan is only getting started and it will take time to evaluate the financial aspect.

However, shoppers seem to like the new idea. Increased volume could make up for lower margins, especially as their large competitor, Sears struggles.

As a JC Penney shopper, I welcome Johnson’s new model plan for the store as change. Most mall chain stores provide customers with the same experience: affordable and cheap-made clothes, poor store lighting, and pushy sales associates, who are only interested in signing you up for a credit card. I really think (and hope) this idea catches on!

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