Highlights from our April 26th Retail Roundtable with Dick Seesel and Maggie Gilliam

May 3, 2012

Our latest retail roundtable on April 26th featured Dick Seesel and Maggie Gilliam.  The hot topic was JC Penney and the future of department stores and e-commerce.  Dick and Maggie both agreed that Penney’s faces several major challenges.  It is difficult to go from a store with high promotion and everyday high cost to a store with low promotion and everyday low cost.  Penney’s is essentially abandoning their customer and is now focused on a different customer at a higher price point by bringing in new brands and ditching some of their old ones.  Tom Roulston argues that they have no intention of everyday low pricing.  The ultimate question becomes, “Do they have a way to attract customers and make money on it, or will they continue to bleed sales?”

JC Penney’s new model will surely bring about changes in employment.  Due to everyday low prices and the technological advancement of electronic signing, workers will not be spend so much time changing signage and price tags, meaning less workers are needed.  Therefore, employment within the stores will decrease which, as Maggie pointed out, will no doubt help supply chain management.

Dick, however, is skeptical about the branding.  While it is a good thing that Penney’s is ditching some of its brands since they were so over-branded, the visible brands that they are bringing in makes Penney’s an easy target.  Anytime you have a visible brand it is easy for competitors to fend off the everyday low pricing, since it is essentially fixed.  Maggie focuses on the vendor’s perspective; vendors who have been selective with their brands are optimistic that Penney’s new model will work while others, however, have no faith in the new model.

Dick says that America is not over-stored it’s under-retailed.  The success or failure of a company relies on how they are merchandising—in the store and out.  With that being said, the success of the internet business is still up in the air, but Penney’s does have a long history of catalog success to their advantage.  During times of recession, one used to see innovation in the form of construction of new stores, now the innovation is on the internet.  E-commerce must be nimble on its feet and not be the demise of the brick and mortar business.

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