PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Ron Johnson’s plan for Penney's at least gives the retailer a focus.
J.C. Penney Co. Inc. CEO Ron Johnson freely admitted yesterday he was tapping his work experience in building Apple Inc.’s retail stores in his presentation announcing J.C. Penney’s new retail strategy. Consumers can expect clearer, no-fuss pricing, stores with defined areas for brand-focused shopping and socializing, and Penney’s will communicate and reinforce the changes through highly polished marketing. Sound familiar? It’s certainly helping make Apple stores profitable. Each square foot of an Apple store brings in about $7,000 in sales.
Whether J.C. Penney’s moves will make its stores relevant and appealing enough to consumers that stores remain profitable as a whole is TBD. Each square foot of Penney’s more than 1,100 stores today brings in about $200 in sales. And we all understand the inherent financial imbalances of store retailing versus online retailing and the increasingly larger bite online retail is taking from stores. But while I watched the live webcast of Johnson’s presentation yesterday, I thought that at least Penney’s has a plan, a clear strategy it intends to execute on over the next four years. That is more than I can say I’ve heard from other store retailers who seem content to stay in the middle of the road and get run over by the forces at play.
J.C. Penney’s marketing execution will effectively decide the retailer’s future. I’m not referring only to its advertising, but to how it delivers, sells and convinces consumers at all customer touchpoints to shop its stores. It’s an enormous and complicated task. And consumers don’t react well to change initially.
Penney’s revamped pricing strategy, for one, will likely confuse customers who will only see that Penney’s isn’t having a sale and they’re not getting their $10-off coupon. In the short term, Penney’s will take some financial hits, I predict. But consumers are more accustomed to adjusting to change now than 20 years ago. Look at how quickly we all picked up on the Internet, then online shopping, cell phones, smartphones and tablets.
Accepting and processing change happens faster now. If J.C. Penney investors can accept the short-term hits and let the retailer execute on its long-term marketing the way it says it will, Penney’s stores may have a shot at surviving. If investors don’t support the moves or if the marketing fails, the weight of those 1,100+ stores will drown J.C. Penney.