New store here shows Penneys' go-for-broke makeover

It was fitting that J.C. Penney Co.'s newest store, a redesigned and blinged out behemoth at Willow Grove Park, officially opened Friday of all days, the one-year anniversary of the death of Apple Inc. founder Steve Jobs.

With its iPad checkout for Levi's, its apparel brands grouped into mini-stores within the store, and its bright accent lights sparkling onto wide-open, burnished-concrete aisles, the new Penneys reflects a companywide effort to rapidly and radically transform the century-old chain under the leadership of former Apple retail guru Ron Johnson.

Since joining the company in November, Johnson has moved with the do-it-now intuition of a Silicon Valley visionary. The man credited with the Apple Store and its genius bar, he has sought to bring a similar feel to Penneys.

But his Internet-alley derring-do has caused a bit of a bust: Sales have nosedived as executives have pushed a turn-things-inside-out plan.

The new look for Penneys - including a new logo that shuns the old dark red for a clean, cherry-red box and the letters JCP - is being phased into stores as part of a transformational approach that also extinguishes its old pricing strategy.

Also being pushed by Johnson, a former Target and Mervyns department-store man, is the elimination of coupons and sales in favor of everyday low prices. The only markdowns: clearance racks.

The changes have added up to a tough sell for customers who still expect from Penneys the kind of advertised sales offered at Macy's or Kohl's.

The result: J.C. Penney lost $3 billion in sales at an annualized rate the first half of the year. "That's unimaginable," said analyst Bernard Sosnick, who follows Penneys for Gilford Securities.

The $17.3 billion company lost nearly $1.7 billion in net sales compared with the first half of last year. And yet officials say they need several years to fully implement the turnaround.

"It's been a really hard year for all of us," Johnson told investment analysts Sept. 19 after an open-house tour showcasing the evolving store-within-a-store transformation, according to a transcript of his remarks. "There are no shortcuts to success. And we're going through that."

He is executing the plan under the watchful eyes of Pershing Square Capital Management's Bill Ackman and Vornado Realty Trust's Steve Roth, who control nearly 29 percent of shares.

It takes a lot of moxie and money to try all this in the shadow of such heavy-hitting shareholders.

The goal is for 100 brands of merchandise - including Penneys' own house labels, such as JCP and Arizona Jeans, as well as brand names such as Izod and Levi's - to be displayed in mini-store formats.

"The objective is to create something that is so different and eye-popping and appealing that Penney will become America's store," Sosnick said.

The company is gunning for a generation of younger shoppers, and a chunk of business from a crowded field of big-box stores such as Target, department stores, and the likes of such stores as J. Crew and Banana Republic.

Wider aisles, sparse displays, food carts and candy are part of the eventual plan to create a walkable, townlike feel inside, Sosnick said.

Penneys would not make Johnson or other executives available for interviews. But I was granted a tour of the new store in Willow Grove, which debuts at one of the region's higher-performing malls next to a Nordstrom Rack and in the company of Bloomingdale's.

Store leader Carrie Barrus led me through the 120,000-square-foot store last week, after I had separately strolled through an updated Penneys at Cherry Hill Mall.

After hearing some customers grumble about sparse inventory and confusing displays at the South Jersey store - also in one of the region's strongest shopping malls - and finding that I agreed with them, I expected disappointment at Willow Grove, truth be told.

Instead, I was impressed. Seeing Johnson's vision there was like beholding an artist's painting on a clean canvas, rather than on a sketch pad full of eraser marks.

The price issue, however, remained.

"Oh, oh, oh!" Theresa Elliott, 62, of Mount Airy, shrieked as she admired herself in a full-length mirror after donning a $100 coat in the Liz Claiborne section. (Penneys bought the Liz brand, making it an exclusive found only there.)

She sang the coat's praises. The store's, too, saying everything looked "so organized." But buying a coat at full price - even if advertised as "fair and square," the company's new pricing mantra - did not sit well.

"Might not go home with me," she said.

Props to Penneys for giving it a try. But this is no Apple Store. After all, Penneys is still selling clothes, bedding, and pots and pans, as are so many others.

And so, it will be interesting to see whether, without an alluring iPad, the mix of store layout, pricing and brand assortment can turn mall-anchor retailing on its head - or create more headaches for shareholders hoping for a big payoff.

The new JC Penney store in Willow Grove reflects what the company is trying to do in other stores. Watch a video tour of the new store at

philly.com/businessEndText