Since I bought shares of struggling retailer J.C. Penney Company, Inc. (NYSE:JCP) in March, I’ve been stopping into my local store periodically to judge the ongoing renovations. It’s one of the largest in the state, and has received nearly all of the mini-shop concepts.
Throughout May, J.C. Penney Company, Inc. (NYSE:JCP) has been finishing up the shops dedicated to home goods. Visually, the shops look great — they are organized and clean. But will they help J.C. Penney Company, Inc. (NYSE:JCP) rebound?
The mini-shop concept
J.C. Penney Company, Inc. (NYSE:JCP)’s now former CEO Ron Johnson gets most of the credit for the mini-shop concept, but it was really his predecessor and current CEO Mike Ullman who started it, rolling out the first mini Sephora shops in 2007.
Johnson, however, wanted to take that strategy to the extreme. His plan called for a complete conversion of J.C. Penney Company, Inc. (NYSE:JCP)’s retail space into mini-shops.
There are obvious advantages to the strategy, such as the ability to highlight key brands and draw new customers into the store with novel shop concepts. However, it isn’t without its faults. Organizing by brand instead of clothing type can make the shopping experience more difficult.
At a remodeled store, customers must go from the Levi shop to the Arizona section to compare different kinds of jeans, rather than having the convenience of comparing different brands within a dedicated jeans section.
The new home shops
But the new home shops seem to lack that weakness. The Martha Stewart shop, for example, is dedicated to party supplies — invitations, hats, etc. The Bodiam shop is comprised of small kitchen appliances. Other home shops are organized by bedding, cutlery, luggage and so forth.
J.C. Penney Company, Inc. (NYSE:JCP) blew through roughly $1 billion during Johnson’s reign, and much of that money went into the remodeling process. It shows, as the new home shops are stuffed with attractive props — the luggage section, for example, features faux airport flight time monitors, while the actual bags are set atop large, steel luggage carts.
Overall, the displays made J.C. Penney’s home goods section look better than say Bed Bath & Beyond Inc. (NASDAQ:BBBY) — but perhaps too good. When I went to J.C. Penney on a mid-Saturday afternoon, the home shops were meticulous, as if no one had touched the merchandise since it had been set out.
That seemed fairly likely, given that (besides myself) I saw only two other customers in the home goods department. As a shareholder, I was glad to see that the rest of the store was fairly busy, but it left me a bit puzzled that, despite these incredible looking displays, no one was shopping.