JC Penney leaves the Outlets

September 14, 2011

DISCUSSION TOPIC

A Contrarian Penney to Sell Outlet Stores 09-02-2011

While many other retailers are increasing the number of outlet stores they operate, J.C. Penney is getting out of the business altogether.

According to a Bloomberg News report, Penney has reached a deal to sell its outlet stores to SB Capital. The department store chain made the decision to get out of operating the 19 stores at the same time it is closing its print catalog business.

SB Capital will continue to operate the outlet stores under the J.C. Penney banner for 21 months before a name change is made. The company is also bringing on Penney’s outlet store management team to run the business.

Penney’s decision to close its outlet stores runs contrary to the current trend in retailing that sees many chains and designers expanding. Sales in outlet stores are capturing a greater percentage of overall sales, particularly in select categories such as apparel. According to The NPD Group, total year-over-year apparel sales increased 1.4 percent for the 52-weeks ending April 2011. By comparison, apparel sales in outlet stores grew 17.9 percent during the same period.

Marshall Cohen, chief industry analyst at NPD, said the success of outlet stores is due to value conscious consumers “looking for brands they either already have, or that they trust. They want products that are tried and trusted and they don’t mind spending money on them.”

Discussion questions:  What do you make of J.C. Penney’s reported decision to sell its outlet store business? Do you expect other retailers to follow Penney’s lead?

My post:

This is a very interesting move on the part of J.C. Penney’s leadership.  It may seem counterintuitive to move away from a currently trending business model.  However, I applaud any business that chooses to focus on its core business vs. dabbling in other areas.  Despite the continuing challenges, Penney has made several good moves to strengthen its core:  closing unprofitable stores and formats, adding key customer-desired elements such as Sephora cosmetics, and strengthening its web offering.  A focused mid-tier department store world dominated by Kohl’s and Penney at the bottom/middle and Macy’s at the top sounds about right.

What I find really interesting is the decision of SB Capital to choose to make this purchase without the ability to keep the name.  In so doing, I assume this a pure real estate play and I doubt a new name for an outlet center anchor will emerge but rather Saks Off Fifth or similar will eventually occupy the sites.

The evolution of American retail continues…

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at Retailwire.com:  A Contrarian Penney to Sell Outlet Stores

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Lingerie sales are hot

March 4, 2008

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DISCUSSION TOPIC

Lingerie sales continue to heat up the register – 3/4/08

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TOPIC SUMMARY:

One of the strongest retail categories today is all but unmentionable. Women are plunking down big dollars for something most other people may never see: their underwear. ‘It’s definitely been one of the more popular categories,’ said Kelly Tackett, a senior analyst with TNS Retail Forward, a Columbus, Ohio-based retail consulting firm.

“The category has been dominated so long by Victoria’s Secret, and there really haven’t been a lot of competitors with an appealing offer, so a lot of these retailers have decided to stop giving Victoria’s Secret the whole category,” Tackett said.

Among retailers hoping to cash in on ladies’ undies are American Eagle Outfitters, which has expanded its intimates label, aerie, into freestanding stores. The company opened its first aerie boutique in Greenville in 2006.  Kohl’s department stores also has unveiled a new lingerie label, Moments, and JCPenney introduced its Umbrielle line last spring.

Discussion questions:  Can department and specialty stores continue to grow this category during an overall slowdown in apparel sales?  Will Victoria’s Secret lose share to other retailers?

My post:

The lingerie category is poised for continued and sustained growth.  Like lipstick, lingerie is a relatively inexpensive purchase for a product that makes a woman feel beautiful.  Even in a tough economy, these purchases will still be made.  As for Victoria’ Secret, recent articles have discussed their CEO’s statements that the company has become too young, overly sexual and that they must return to their roots of glamour and sensuality for the 25-45 woman.  I think they will do so, but in the meantime it leaves an opening for aerie, Penney, Kohl’s, and others to capture some share.  Choice is always a wonderful thing so I am excited to see the category get ‘exposure’ and provide women with many compelling options.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL ARTICLE AT:
http://www.charlestonbusiness.com/pub/14_5/news/11469-1.html        

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JC Penney’s Ullman Scores Another Win With American Living by Ralph Lauren

February 12, 2008

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RETAILWIRE DISCUSSION TOPIC

Penney and Polo Ralph Lauren Launch Exclusive Line  – 2/12/08
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TOPIC SUMMARY:

J.C. Penney is getting ready to kick off the biggest exclusive brand launch in its history on Feb. 24 with the American Living line from Polo Ralph Lauren.

The line, which will only be sold by Penney, is initially being introduced to consumers in the chain’s women’s, men’s, children’s, home and luggage departments in stores and online. Eventually the American Living line and its flag and eagle logo will have items in every one of Penney’s 40 departments.

Penney’s move is a definite nod to more upscale shoppers, an approach it has taken before with lines such as Nicole by Nicole Miller, Bisou Bisou and Chris Madden. The retailer has also done well with the Sephora store-within- a-store concept.

Discussion questions: Does Penney have a hit or a miss on its hands with the American Living line from Polo Ralph Lauren? How might it affect the retailer’s image? What do you think about the timing of the launch?

My post:

The merchandise has already started arriving in the stores. I went to my local mall to check out the line and was pleased with the fit, quality, styling, and pricing.  Though the styling was unmistakably Ralph, there was nothing stating “by Ralph Lauren” on the product, the signing, the fixtures, or on the website.  This is the same strategy RL used when they decided to distribute Chaps exclusively at Kohl’s (prior to that, “Chaps by Ralph Lauren” had wide department store distribution).

 

In their newer and remodeled stores, JCP is doing a good job of highlighting brands like Sephora and Bisou Bisou so they stand apart from the sea of fixtures filled with more moderate fare.  However, in my local, older, un-remodeled JCP, the American Living product was smashed in among the rest of the apparel.  My biggest shock though was finding this brand new product already signed “Buy 1 get the 2nd at 50% off.”

Why would they already be discounting their “premier” brand???  Discounting the brand upon arrival was unnecessary.   They could have at least designed the promotion to be “Take advantage of introductory pricing.”

 

Aside from the discounting I think JCP should have a long term winner with American Living.  It is just aspirational enough for the moderate crowd and will certainly pull some moderate business from Macy’s.  I’m excited about the marketing launch (during the Academy awards).  If you haven’t already, I urge you to look at the launch video on the jcpenney.com website.

 

I am a big fan of CEO Mike Ullman.  He has done a masterful job converting a once-stodgy and irrelevant retailer into a successful multi-channel retail force.  American Living will be another win.

Mike Osorio, your Dare to be Contagious! ™ strategist www.OsorioGroup.com

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GO TO THE FULL STORY AND DISCUSSION:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12752   

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Another Good Move by J.C. Penney’s Ullman

January 31, 2008

J.C. Penney plans consolidation, up to 200 layoffs

12:18 AM CST on Thursday, January 31, 2008
In today’s Wall Street Journal article, Myron Ullman, Chairman of JC Penney provides excellent insight into today’s retail climate.  He also provides clues for any retailer striving to not only survive, but thrive in the months and years to come.  He’s done a masterful job, in my opinion, converting a once-stodgy and irrelevant retailer into a successful multi-channel retail force.  Unlike many retailers, he is directing prudent belt-tightening that does not impact the long term growth strategies based on innovation and relevance for today’s (and tomorrow’s) consumer.  Well done!
Read the Article Now

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!