Can Small Experiments Turn Around J.C. Penney?

The failures of J.C. Penney have been well-documented, particularly with regard to Ron Johnson's rocky tenure at the retailer.  Johnson embarked on a sweeping change initiative that failed miserably. He tried to hit a grand slam, making substantial changes in strategy, marketing, and merchandising all during his first few months on the job.  He did not take the time to test many of his new ideas before rolling them out nationwide.  The failures led to his ouster less than two years after taking the helm.

Now Marvin Ellison, a former Home Depot executive, is trying to turn things around.  While sales are moving in the right direction, the profit picture is still not sound.  Still, I think it's interesting to note that Ellison is focusing on small experiments as a means of innovating and changing the retailer. Here's an excerpt from a lengthy story in Fortune on the Ellison approach:

Question: If you wanted to buy a pair of men’s shoes at a department store, would you look for them next to (a) Men’s Clothing, or (b) Women’s Footwear?  Most shoppers would probably answer “a.” But at J.C. Penney, the 114-year-old retailing mainstay, the answer until very recently was “b.” Women make up about 80% of Penney’s clientele, and Penney managers believed that, generally speaking, those women were likely to buy shoes for their spouses and beaus, just as they did during the Kennedy administration.  “It was a terrible idea,” says Marvin Ellison, shaking his head as he walks a reporter through a Penney store in Frisco, Texas. “It took space away from women’s shoes, and it made it very difficult for men to want to buy shoes.”  

Ellison, Penney’s newly minted 51-year-old CEO, had a better idea. He ran a test to see whether men’s shoes would sell faster when showcased next to, say, men’s suits; once the data showed that they did, he instituted that change last summer across the company’s 1,000-plus stores. Since entrusting guys to buy their own brogues and boots, Penney has seen double-digit sales gains in footwear. “That reset has been one of the smartest things we’ve done,” says Ellison.  This Frisco store, not far from company headquarters in Plano, north of Dallas, serves as Penney’s retail living lab, and as he continues the tour, Ellison proudly points out similar changes. Fashion jewelry now sits closer to its Liz Claiborne apparel brand, so women can try on accessories to go with a dress they might buy. The decor has been gussied up at the store’s traffic-driving in-house salons....As the adage goes, “Retail is detail.” And if the details Ellison is addressing seem forehead-slap obvious, signs of how far J.C. Penney had fallen behind its rivals—well, welcome to his world.