News Headline: JCPenney Sales for 2012 Down 25.2% for Comparable Stores and $985 Million Loss for the Year

Walking into the newly renovated Victorville, California JCPenney store was literally a jaw-dropping moment. Totally gone is yesterday’s JCPenney.

In its place is an astonishingly contemporary store that looks fabulous. The build-out is terrific, simple, and white. Lighting is “right-on.” Displays look great and merchandise presentation is definitely shopper friendly. Departments are well signed and adjacencies are good. There are lots of national brands (e.g., Levi’s, Sephora, Fieldcrest, etc.) and private brands—and the Joe Fresh shop (located at the front entrance) is under construction for an opening in a few days. There were lots of strategically placed “value priced” hot items, too. And JCPenney’s handling of online is terrific!

It’s like a budget Bloomingdale’s?

So what the heck has gone wrong? The wheels have definitely come off this bus!

Mistake #1 They abandoned their old JCPenney customer and have not replaced them with new shoppers. Switching customers takes years to do. They have missed some of their market. This particular store is too sophisticated and contemporary for this “farm land, middle-American” community.

Mistake #2 The store and merchandise is predominantly “contemporary.” The “traditional lifestyle” merchandise emphasis is missing—and that is the biggest segment of the market.

Mistake #3 There are “great value” offerings; but these are isolated—particularly when compared to a Walmart’s emphasis on value. JCPenney caters to middle and lower income people. This has been hit by recession and unemployment. So value, sales, and deals are what they shop for. These people are essential to this type of retailer’s success.

Mistake #4 Some departments lack excitement and value offerings that you would expect from a JCPenney type store, e.g., jewelry. They cannot possibly generate high sales per square foot!

Store Exterior and Entrance—Very Nice!