J.C. Penney Takes Familiar Turn With New Boutique Toy Shop Launch

Brick-and-mortar stores have been wrapped up in a transformative time period for the past few years. While the eCommerce arena continues to grow, some retailers have integrated tablets, introduced contactless point-of-sale payments and developed brand-specific mobile applications — all in the name of becoming more streamlined and enhancing the consumer shopping experience.

As these retailers continue to look for new ways to reinvent their physical stores, one company is bringing a different approach to the table.

J.C. Penney is set to roll out its new in-store boutique toy shops in 1,000 of its brick-and-mortar locations.

Nestled inside the children’s department, and right next to the Disney Collection displays, the retailer will offer a variety of toys, including dolls, action figures, board games and more. There will also be a play area where kids can try out the games.

J.C. Penney’s executive vice president and chief merchant, John Tighe, commented on this new toy shop offering and what it means for the retailer.

“We know that shoppers buy toys year round and by creating a fun, inviting toy shop, with some of the biggest brands and hottest products, we will entice families to shop and spend more at J.C. Penney. Toys are an exciting product category for J.C. Penney, and an in-store attraction that will drive traffic and sales as we continue to focus on increasing revenue per customer,” said Tighe.

All of this may sound a bit familiar, perhaps teetering on the edge of déjà vu, because this idea has already circulated within the corporate headquarters of the big box retail store.

Six years ago, when Ron Johnson stepped in as J.C. Penney’s new CEO, he had big changes in store for the retailer. Along with a flashy new logo and advertising strategy, Johnson also sought to update the somewhat stodgy retail store with a redesign.

According to The New York Times, the redesign element Johnson had in mind was turning the store into 100 different small boutiques for its departments, with the center being known as a “town square.”

While this may have sounded like a great and fresh idea, retail experts pushed back at the time, saying that it went up against the core of the very well-established, more-than-100-year-old J.C. Penney brand.

After Johnson took the reins and started implementing his new plans for the retailer, it didn’t take long for things to go south.

During Q4 of 2012, one of the busiest times of the year due to holidays, sales tumbled 28.4 percent, which resulted in a net loss of $552 million. J.C. Penney’s sales were already in a state of decline from the prior three years when Johnson came in, and under his guidance took an additional overall 25 percent sales decrease for the year — a $4.3 billion loss in revenue.

Many in the retail industry have speculated as to why Johnson’s idea to create boutiques for each department was a flop. Some believe that the radical idea to transform a company with a long history into a new age store is where Johnson went wrong.

Columbia professor and former Sears Canada CEO, Mark Cohen, commented on Johnson’s activities as J.C. Penney’s chief executive.

“There is nothing good to say about what he’s done,” Cohen said. “Penney had been run into a ditch when he took it over. But, rather than getting it back on the road, he’s essentially set it on fire.”

Johnson, at the time, admitted to underestimating the lure of the coupon to Penney loyalists.

“I thought people were just tired of coupons and all this stuff. The reality is all of the couponing we did, there [was] a certain part of the customers that loved that,” said Johnson. “They gravitated to stores that competed that way. So our core customer, I think as much more dependent and enjoyed coupons more than I understood.”

In other words, Ron Johnson was designing for the customers that J.C. Penney wanted to attract — not the ones they always had — and wouldn’t carry the retailer forward.

Fast forward six years, and whether these new boutique toy shops will be a success still remains a matter of debate.

Just a year ago, Johnson reflected on the plans he laid out while CEO and where he thought the company would be today. “I still think if we had continued on, the company would have been a lot better than this painful U-turn where they’re trying to find growth from a new baseline.”

Now that J.C. Penney is effectively dusting Johnson’s initial idea off the shelf, we wonder what he would say.

Maybe that timing is everything.

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