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Joe Says – Don’t Jump, Ron

03/15/2013

jumping-man-scaleJCPenney, the much-maligned mid-price retailer, is on the brink.

CEO Ron Johnson and his team have gone all in on their concept – which has been successful at one thing…driving away its loyal customer base.

JCPenney has been on a terrible run. The last few weeks have been disastrous: it reported horrific Q4 earnings, went to court to fight Macy’s over Martha Stewart, and had a board member dump 10 million shares of stock.

Not to worry though. JCP has unveiled its key to success. Joe Fresh. Specifically Joe Fresh ‘concept shops’. Canadian fashion brand Joe Fresh will be entering a whopping 681 JCPenney stores simultaneously this morning as you read this.

Joe Fresh will be an indicator for the effectiveness of Johnson’s overall turnaround plan, which is to transform the in-store shopping experience into his “shops” concept, and attract new customers to the store with his new assortment of brands. Johnson said that 61% of Joe Fresh buyers are first-timers at jcp.com. So that’s the strategy, eh? Current customer genocide to make room for new first-time buyers of Joe Fresh. Yikes.

Those of us who’ve been around retailing long enough know that the concept of ‘concept shops’ has been around the block many times. It’s an idea that is embedded in nearly every retailers mind – and oddly enough ‘concept shops’ rarely work.

If Joe Fresh is a dud analysts predict CEO Johnson will be gone before back to school in mid-summer.

Johnson’s crime? He will have wasted tons of capital on initiatives the consumer market wasn’t ready for yet and in the process, basically drove a 110 year old department store into a liquidity crisis. That’s a tough report card to bring back to school.

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