The JC Penney and Joe Fresh partnership is an effort for JC Penney to reach a different
consumer by introducing the concept of a store-within-Store retailing. In the last few years JC
Penney has been changing from old stores to new stores, in turn, sales have taken a hit. In the
fourth quarter of fiscal 2012 JC Penney recorded a net loss of $552 million (2.51 per share).
Restructuring and management charges excluded, it was adjusted $427 million (1.95 per share).
The Joe Fresh launch is meant to boost sales and increase traffic, but consumers may take
a while to become familiar and trust the brand. JC. Penney shares jumped 5% after the debut
weekend of the Joe Fresh line in about 700 of its 1,100 stores. The line uses a “store-within-astore concept” that many observers say is key to rejuvenating the business model of large
department stores. Wharton marketing professor David Bell notes that in the medium and long
term, determining whether the Joe Fresh venture is a success or a failure isn’t entirely tied to
earnings. But the positive news about initial sales of Joe Fresh was accompanied by a report
from research firm International Strategy & Investment suggesting that the best thing J.C.
Penney could do to boost itself would be to cut its brand out of the equation. According to the
report, J.C. Penney’s most valuable asset is the sheer amount of space it owns. Volume allows
the firm to pay very low costs for the space when compared to other retailers and if it were to
remove all J.C. Penney branding from about 300 of the most strategically located stores and
sublet them to other retailers, the Texas-based department store company could clear $1.2 billion
annually in rental income, the report states.
CRITERIA
COMMENTS
Retailer’s target market(s)
External evidence employed; depth of description
(beyond simple demographic descriptions);
accuracy of description; clarity of arguments
(5 marks)
Overview of retailer’s strategy mix
Discusses all elements of retail strategy mix; mix
elements correctly classified; quality of evidence;
clarity of arguments
(10 marks)
Retailer’s position in the marketplace
Identifies appropriate competitors; states and
accurately assesses retailer’s competitive position
in marketplace; discusses perceived positioning by
consumer; quality of evidence; clarity of arguments
(15 marks)
Analysis of initiative
Identifies urgency and importance of the initiative
to the retailer introducing it; evaluates fit with the
target market; presents pros and cons of the
initiative for the retailer; details implications of
implementation to the retailer’s current retail
strategy mix; quality of evidence; clarity of
arguments; appropriate justifications
(20 marks)
The JC Penney and Joe Fresh partnership is an effort for
JC Penney to reach a different consumers by introducing
the concept of a store-within-Store retailing. In the last
few years JC Penney has been changing from old stores
to new and improved stores, in turn, sales have taken a
hit. In the fourth quarter of fiscal 2012 JC Penney
recorded a net loss of $552 million (2.51 per share).
Restructuring and management charges excluded, it was
adjusted $427 million (1.95 per share). Cons: Trying to
reach younger customers by introducing Joe fresh brand,
while also trying to convert old JCP shoppers to the new
style has means they have to shy away from existing
customers to really focus on the new younger market
they are trying to penetrate. If Joe Fresh doesn’t work out
it could severely impact JCPenneys brand image as they
are currently in a poor situation, they are praying that this
will work because competitors low pricing was too hard
to compete with using their current strategy.
.(http://business.financialpost.com/2013/03/16/cancanadas-joe-fresh-save-jcpenney/). It also may take
longer and cost more money than investor’s hope as it is
difficult to get brand loyalty with such a new brand .
Pro: exporting good to the US is not very common for
Canadian retailers in this market , but now they are a part
of it. (http://www.cnbc.com/id/100558417)
What JCPenney is trying to do is completelty revamp the
way department retailing is done. The line uses a “storewithin-a-store concept” that many observers say is key to
rejuvenating the business model of large department
stores According to the report, J.C. Penney’s most
valuable asset is the sheer amount of space it owns.
Volume allows the firm to pay very low costs for the
space when compared to other retailers and if it were to
remove all J.C. Penney branding from about 300 of the
most strategically located stores and sublet them to other
retailers, the Texas-based department store company
could clear $1.2 billion annually in rental income, the
report states.
(http://www.omaha.com/article/20130129/MONEY/701
299977/1697.)