The Breakdown | Explaining Southern California's economy

J.C. Penney: The new Apple Store?

The new Apple store at the Americana in Glendale.
The new Apple store at the Americana in Glendale.
Shereen Meraji/KPCC

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."

Excellent point. What Johnson clearly wants to establish is price stability, something that Apple has excelled at. You always know how much an Apple product is going to cost, even if you don't have the exact figure: it will cost more than the competition and deliver on the promise of a premium price.

Penney's will obviously sell a lot more different kinds of stuff than Apple. And this is the challenge for a retailer from another age: to continue to be all things to its customers while reinventing itself in the model of companies like Apple that try to do only one or two things exceptionally well.

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*I initially said that Penney's had a half-dozen locations in LA, but my commenter J_Man (see below) says there are many more, and I have no reason to doubt. So I've made the change.