JC Penney Drastically Altering Business Model

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JC Penney announced Wednesday that it is completely restructuring its business starting in February. Changes include a new logo, simpler pricing, less promotions, and a new spokesperson in the form of Ellen DeGeneres, according to Reuters.

The struggling department store chain will reduce the number of promotions it holds per year from 590 to just 12, using the newly freed up money to advertise its brand more extensively. The company will still release traditional weekly newspaper ads, and a new 90-page monthly ad with that month's promotions.

In lieu of direct-mail and blowout-style promotions, JC Penny will enact new "fair and square pricing". Only one in 500 items at JC Penney is actually sold at full price, according to AdAge. The new pricing model is meant to reflect the way Penney's merchandise is already being sold while doing away with confusing sales and promotions. An example given in AdAge says that a shirt retailed for $14 would have typically sold for around $6 under the old system, so the new price will be $7. To further reduce confusion, all items will have flat prices.

The company will also be restructuring their stores to resemble the layout of department stores of yesteryear, with small boutiques within the larger store, and a new "town square" area set up in the area currently reserved for cosmetics and jewelry. JC Penney hopes an improved in-store experience will bring back shoppers who are currently content to find deals online rather than wade through endless racks.

These changes come in the wake of an executive shake up at Penney. Last fall the chain hired a new CEO, Apple alum Ron Johnson, and a new president, Michael Francis, formerly of Target. The new leadership at Penney's has said that they are aspiring to mirror the success of their former companies with JC Penney.

The changes will launch in February, though won't fully take effect until 2015. The shake-up has already been well-received with business press. Forbes called Penney the "most interesting retailer of 2012", and Penney's stock saw a 15% jump on Thursday, according to the Salt Lake Tribune.

"We're rethinking and reimagining, and if we find that we've picked up any bad habits over the decades, we're going to leave them far behind," Johnson told Ad Age.

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This page contains a single entry by wagne798 published on January 26, 2012 11:20 PM.

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