Explaining Southern California's economy

J.C. Penney: The new Apple Store?

Mercer 19876

Shereen Meraji/KPCC

The new Apple store at the Americana in Glendale.

Don't rule it out. J.C. Penney Company, which operates numerous* stores in Los Angeles, has hired Ron Johnson away from Apple, where he was credited with being the architect of the Apple Store retail concept. Visitors to, for example, the Glendale Galleria could someday visit Johnson's work for Apple to buy and iPad and then zip over to Penney's to buy...

Well, that's the problem, now isn't it? J.C. Penney now exists in a kind of retail twilight, mixed in with the likes of Macy's, but nowhere near as snazzy as Target (where Johnson used to work) nor as rock-bottom cheap and volume-oriented as Wal-Mart or Costco. It's a department store of old, in recent years forced to rely on a strategy of marking down everything, all the time. This is from Reuters:

Some 72 percent of Penney's $17.8 billion revenue last year came from items discounted at least 50 percent. Johnson said Penney's reliance on discounts may have gotten out of hand. "At some point, you seem desperate," he said.

Discounts will remain at Penney, but in a different form.

Every first and third Friday of the month it will clear out some merchandise by putting blue tags on certain items. The old practice, by contrast, was to throw items into a discount bin with signs proclaiming "70 percent off."

Johnson told a news conference on Wednesday that in the past 10 years, discounts have risen to 60 percent off on average from 38 percent, while the average amount of money that ends up in Penney's cash registers has fallen.

"The customer knows the right price," Johnson said. "To think you can fool a customer is kind of crazy."

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