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Penney Logic

“Improvement merely lets you hit your numbers ... creativity is what transforms,” says JC Penney CEO Ron Johnson. That was the main lesson Ron says he learned while he was at Target after gambling on introducing Michael Graves designer products.

“The math was simple,” says Ron. “If I didn’t sell one piece but people looked differently at the other 96 percent of products we’d win. It’s always about mind share, not market share.” Ron is now bringing a similar sensibility — which of course he also brought to Apple stores — to JC Penney.

The essential vision, once again, is to create “a place where the experience (is) as important as the products themselves.” This apparently was as much Ron’s vision at Apple stores as it was Steve Jobs’s.

Among other things, Ron “persuaded Jobs to nix commissions for salespeople, arguing that they should give customers the best advice, not the advice that earns them the most.” That certainly worked at Apple, where sales per square foot average $6,000. But will it work at Penney’s, where sales per square foot are currently $146?

Ron Johnson, eternally an optimist, says he plans to stick with it. “What you can’t do is chicken out,” he says. “If you had looked at the data on the Genius Bar after a year and a half, we should have taken it out of the store ... There’s no reason to sell an idea short. The only risk would be to not fulfill the dream.”

[Source: Jennifer Reingold, Fortune, 3/19/12]

Solitary Shoppers

As shoppers acclimate to the solitude of online shopping, many find in-store clerks annoying. The trend seems to be particularly pronounced among younger shoppers, but the sentiment appears to be spreading to just about everyone.

“Sales associates have always been aggressive, but it is our exposure to new types of self-shop retail models that have made us more attuned to their pushiness,” says Mark G. Pingol of Envirosell.

“They’re more subtle at Nordstrom, but the message is still the same: Buy this!” complains Roxanna Booth Miller, a shopper who says she prefers “a more solitary shopping experience.” However, other shoppers praise Sephora, the cosmetics chain, “which asks its sales staff to hover in the background until a shopper signals for help.” As a result, Mark Pingol says shoppers refer to Sephora and the Apple store as “playgrounds.”

Ravi Dhar, a Yale marketing professor, suggests that self-checkout at grocery stores has also fundamentally changed the way shoppers view the in-store experience. “The element of control, by contrast to the salesperson service experience, is attractive,” he says.

[Source: Taffy Brodesser-Akner, The New York Times, 1/12/12]

Lululemon’s Game

Lululemon Athletica is rejecting “big data” and embracing scarcity to generate $1,800 in sales per square foot. That’s “more than three times” what Neiman Marcus generates, and it has catapulted Lululemon, a Vancouver-based yoga-apparel retailer, to sales of $712 million last year.

Lululemon chief executive Christine Day “doesn’t use focus groups, website visits” or “customer-relationship management software” to create such success. Instead, she simply spends more time in the stores, “observing how customers shop, listening to their complaints, and then using the feedback to tweak product and stores ... Lulu also trains its workers to eavesdrop, placing the clothes-folding tables on the sales floor near the fitting rooms rather than in a back room so that workers can overhear complaints.”

Another major feature of Lulu’s merchandising strategy is to make sure that customers can’t always get what they want: “The goal is to sell gear at full price and to condition customers to buy when they see an item rather than wait.”

The result, says Christine, is a limited supply that creates “these fanatical shoppers.” Lulu never puts items on sale, and won’t accept any item after 14 days, nor anything that’s been washed or without tags. “We aren’t Nordstrom,” says Christine. “We aren’t your personal shopper.” Lululemon opened its first store in 2000 and went public in 2007. It currently has a stock valuation of $10.4 billion.

[Source: Dana Mattioli, The Wall Street Journal, 3/22/12]

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