By Nikki Baird, Managing Partner
Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research’s weekly analysis on emerging issues facing retailers.
In revealing his “fair and square pricing” program to the world, Apple’s former retail chief Ron Johnson presented J.C. Penney’s (JCP) future in the context of six P’s: Price, Promotion, Personality, Product, Presentation and Place. The company is an American icon of retailing and I agree with Mr. Johnson that this is a core value worthy of using for the company’s future. But he forgot one P in his presentation — People.
To his credit, Mr. Johnson gave out lots of kudos to his team, noting several times that the same merchants who had driven JCP’s past, broken strategy had stepped up to create the new one. The same branding team that had driven the notorious 590 promotions in 2011 also came up with all the imagery that consumers started seeing on Jan. 1.
But what about store people? When you have 590 promotions, it’s pretty hard for stores to keep up. Our own research has shown that retailers have begun to realize exactly how much trouble massive numbers of price changes create in stores — keeping track of what’s on promotion and what’s not, putting promotions up and taking them down, moving markdown merchandise around in order to make room for the new stuff coming in.
But on top of that, over the last decade and more, JCP has moved away from a service-based strategy and moved more towards one that relies only on cashiers and price taggers. I look at the sophistication of JCP’s current staff, and I wonder if, like the merchandising and marketing staff, they are really up to the challenge of the new strategy. I wonder, in fact, if JCP’s current staffing model is capable of executing on JCP’s new store strategy.
Also, one of Apple’s biggest retail differentiators has been its staffing model. While Mr. Johnson talked some about how Apple’s store design has been based around 50 percent floor space for products and 50 percent for owners (services), he didn’t talk about the people. I’m making a pretty safe bet when I guess that they have the highest labor per square foot costs in the industry (I don’t know the number at all) — but retailers often argue that it’s easy for Apple to bear that cost when they also have the highest sales per square foot in the industry as well. The funny thing about retailers’ response is they never question whether the two are related.