May 8, 2007
Penney Seeks Growth Beyond the Mall
J.C. Penney has an aggressive growth strategy in place and much of that involves off-mall locations as either standalone stores or as part of "lifestyle centers" popping up all over the country.
One of the department store chain’s newest locations is in Matteson, Illinois. Interestingly, a Chicago Sun-Times report points out, Penney is opening the store seven years after closing another location at a nearby mall.
John Jones, the district manager for J.C. Penney in charge of Chicago’s North Side, told the paper, "The stand-alone Penney’s stores fit the shoppers’ lifestyle of not wanting to park in a mall parking lot, but to park at the store, run in, do their shopping and go home."
The new single story unit will feature Penney’s clothing departments with a mix of designer and store brands including its Ambrielle intimate apparel line. The store will also offer a Sephora cosmetics shop, jewelry department and hair salon. It will not carry furniture.
Discussion Questions: What is your assessment of J.C. Penney’s off-mall strategy? What are the reasons that shoppers are turning away from malls? Is this a permanent situation or do you see a shift coming where consumers start looking back to the malls and forego shopping at standalone locations and lifestyle centers?
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As the time pressures of life continue to mount…retailers must make it easier for customers to reach their destinations. People simply do not have the time to make a ‘trip to the mall’ a regular occurrence; it is much more likely now to be a special shopping occasion.
Moving to a free-standing strategy compliments J.C. Penney’s expanded offerings in Intimate Apparel, Cosmetics, and updated home and apparel lines. It is simply bringing the products to where the customer wants to shop. In many cases, that is closer to their home, or on the way to their normal shopping destinations.
I applaud J.C. Penney for taking the risk. They have been a mall retailer for most of their history. I hope they will continue to focus on the products and segments they serve.
Shoppers aren’t turning away from malls. It’s just that very few new major malls are being built. By considering off-mall locations, J.C. Penney has a much greater choice. Furthermore, the common area charges (CAM) and rents are usually lower off-mall. Malls are great for retailers who spend minimal money on advertising, so they live off mall traffic. Malls are also great for anchor stores who do advertise (like J.C. Penney) and get very low rent deals, as the incentive to be the anchors. If J.C. Penney isn’t offered great mall locations at low rents, why bother? J.C. Penney stores generate great traffic on their own.
J.C. Penney is following the Kohl’s strategy and why not? It has been successful. People just don’t want hassles. It is a hassle to find a parking space, deal with all the young teenie boppers on weekends, and the crowds. They want to get in and get out. That is why you’re seeing many stores downsize or have their brand of a smaller home town stores. The malls are just too cumbersome.
The primary reason shoppers are moving away from malls is the total time required to complete a shopping trip. Shoppers are looking for ways to decrease the total amount of time they shop, therefore, being able to visit a stand alone site or even a lifestyle center (if parking is easy) is more viable than going to an enclosed mall. JCP has done a great job of moving their brand position away from the traditional department store mold. The more they move away from the department store mold the more they will have earned the right to locate in lifestyle centers or as a stand alone location.
I would like to see Penney’s add a few upper-end lines such as Kenneth Cole Reaction or Polo Jeans.
Many shoppers are turned off to Penney’s because the majority of their store base is outdated and bland. If they roll out more of their wonderfully designed new stores, they should be very successful.
A successful department store caters to many classes of shoppers, not just one class. I have the feeling when I visit Penney’s, that it is very “low end” and cheap. If they want to be successful with the suburban off mall concept, they need to cater to yuppies as well as low to mid income shoppers.
Many of the malls where J.C. Penney has anchor stores were built years ago in what are now considered inner-ring suburbs with little prospect for growth. Capturing outer-ring and exurban growth (at a more competitive development cost) requires a different real estate strategy. Kohl’s, Target and Best Buy (among others) figured this out a long time ago; as for Penney, “if you can’t beat ’em, join ’em!”
For Penney, this is a winning strategy provided that they find the appropriate locations. They also need to focus on providing a different kind of in-store shopping and checkout experience to make sure they deliver on the promise of convenience. And perhaps their biggest challenge will be learning how to edit the assortments to fit a building that is up to half the size of their current prototype.
Malls in the classic format aren’t likely to be revived soon. Lifestyle shopping centers and/or hybrid shopping centers are indeed where mall development is evolving. Diversity is being leveraged: what best fits the trading area is what gets built.
Hybrid centers are where power centers and strip malls are integrated with a lifestyle center. A hybrid center might feature a trendy, upscale main street shopping and entertainment district surrounded by parking and out-parcels of big-box stores and smaller stand-alone shops and restaurants.
But each seeks to be unique in some way (again, determined by the local trading area). These are the projects lenders are willing to lend developers money to build. Retailers need to recognize these trends and plan accordingly.
J.C. Penney has done a great job of sharpening their positioning and advertising over the past few years, resulting in a solid and growing customer base. The off-mall strategy makes strategic sense, as time-starved consumers continue migrating toward the most convenient shopping solutions. In going off-mall, Penney can compete head to head with Kohl’s in a relatively uncrowded smaller footprint department store field.
Throughout time we’ve found many things to be cyclical, including the move away from the downtown areas, and now we’re populating downtown areas and making them the “in place” again. In addition, we’ve seen strip shopping centers abandoned in favor of malls, and now we’re seeing a shift to lifestyle centers and upscale shopping centers such as those J.C. Penney is locating in.
I’m fortunate to live in a town where J.C. Penney has located one of their new stores and it’s been overwhelmingly accepted by the town’s residents. Shoppers want to reduce the time it takes to make a planned purchase, driving up and buy what they came for, and then go on with their busy lives. Time is valuable to people and any convenience they can find to allow them to get what they want, and save time will be embraced.
As to whether shoppers will return to the malls as they did in the 70s & 80s; the malls are here to stay, but there will be a different balance as the larger, more modern malls continue to grow and be successful, the smaller, outdated ones will close in favor of the stand alone stores, and lifestyle centers.
It is a great move for JCP, especially as “farther out” places develop, we are likely NOT to see many more mall behemoths built. For one thing, the anchors are not what they used to be, with consolidation in the retail industry especially hitting department stores, Lifestyle centers allow for diversity and different types of retail all together. Also, people don’t want the hassle and time involvement of a mall. Time is constrained and important. JCP is doing the right thing and their stores are great sizes, easy to maneuver and always well stocked.
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As the time pressures of life continue to mount…retailers must make it easier for customers to reach their destinations. People simply do not have the time to make a ‘trip to the mall’ a regular occurrence; it is much more likely now to be a special shopping occasion.
Moving to a free-standing strategy compliments J.C. Penney’s expanded offerings in Intimate Apparel, Cosmetics, and updated home and apparel lines. It is simply bringing the products to where the customer wants to shop. In many cases, that is closer to their home, or on the way to their normal shopping destinations.
I applaud J.C. Penney for taking the risk. They have been a mall retailer for most of their history. I hope they will continue to focus on the products and segments they serve.
Shoppers aren’t turning away from malls. It’s just that very few new major malls are being built. By considering off-mall locations, J.C. Penney has a much greater choice. Furthermore, the common area charges (CAM) and rents are usually lower off-mall. Malls are great for retailers who spend minimal money on advertising, so they live off mall traffic. Malls are also great for anchor stores who do advertise (like J.C. Penney) and get very low rent deals, as the incentive to be the anchors. If J.C. Penney isn’t offered great mall locations at low rents, why bother? J.C. Penney stores generate great traffic on their own.
J.C. Penney is following the Kohl’s strategy and why not? It has been successful. People just don’t want hassles. It is a hassle to find a parking space, deal with all the young teenie boppers on weekends, and the crowds. They want to get in and get out. That is why you’re seeing many stores downsize or have their brand of a smaller home town stores. The malls are just too cumbersome.
The primary reason shoppers are moving away from malls is the total time required to complete a shopping trip. Shoppers are looking for ways to decrease the total amount of time they shop, therefore, being able to visit a stand alone site or even a lifestyle center (if parking is easy) is more viable than going to an enclosed mall. JCP has done a great job of moving their brand position away from the traditional department store mold. The more they move away from the department store mold the more they will have earned the right to locate in lifestyle centers or as a stand alone location.
I would like to see Penney’s add a few upper-end lines such as Kenneth Cole Reaction or Polo Jeans.
Many shoppers are turned off to Penney’s because the majority of their store base is outdated and bland. If they roll out more of their wonderfully designed new stores, they should be very successful.
A successful department store caters to many classes of shoppers, not just one class. I have the feeling when I visit Penney’s, that it is very “low end” and cheap. If they want to be successful with the suburban off mall concept, they need to cater to yuppies as well as low to mid income shoppers.
Many of the malls where J.C. Penney has anchor stores were built years ago in what are now considered inner-ring suburbs with little prospect for growth. Capturing outer-ring and exurban growth (at a more competitive development cost) requires a different real estate strategy. Kohl’s, Target and Best Buy (among others) figured this out a long time ago; as for Penney, “if you can’t beat ’em, join ’em!”
For Penney, this is a winning strategy provided that they find the appropriate locations. They also need to focus on providing a different kind of in-store shopping and checkout experience to make sure they deliver on the promise of convenience. And perhaps their biggest challenge will be learning how to edit the assortments to fit a building that is up to half the size of their current prototype.
Malls in the classic format aren’t likely to be revived soon. Lifestyle shopping centers and/or hybrid shopping centers are indeed where mall development is evolving. Diversity is being leveraged: what best fits the trading area is what gets built.
Hybrid centers are where power centers and strip malls are integrated with a lifestyle center. A hybrid center might feature a trendy, upscale main street shopping and entertainment district surrounded by parking and out-parcels of big-box stores and smaller stand-alone shops and restaurants.
But each seeks to be unique in some way (again, determined by the local trading area). These are the projects lenders are willing to lend developers money to build. Retailers need to recognize these trends and plan accordingly.
J.C. Penney has done a great job of sharpening their positioning and advertising over the past few years, resulting in a solid and growing customer base. The off-mall strategy makes strategic sense, as time-starved consumers continue migrating toward the most convenient shopping solutions. In going off-mall, Penney can compete head to head with Kohl’s in a relatively uncrowded smaller footprint department store field.
Throughout time we’ve found many things to be cyclical, including the move away from the downtown areas, and now we’re populating downtown areas and making them the “in place” again. In addition, we’ve seen strip shopping centers abandoned in favor of malls, and now we’re seeing a shift to lifestyle centers and upscale shopping centers such as those J.C. Penney is locating in.
I’m fortunate to live in a town where J.C. Penney has located one of their new stores and it’s been overwhelmingly accepted by the town’s residents. Shoppers want to reduce the time it takes to make a planned purchase, driving up and buy what they came for, and then go on with their busy lives. Time is valuable to people and any convenience they can find to allow them to get what they want, and save time will be embraced.
As to whether shoppers will return to the malls as they did in the 70s & 80s; the malls are here to stay, but there will be a different balance as the larger, more modern malls continue to grow and be successful, the smaller, outdated ones will close in favor of the stand alone stores, and lifestyle centers.
It is a great move for JCP, especially as “farther out” places develop, we are likely NOT to see many more mall behemoths built. For one thing, the anchors are not what they used to be, with consolidation in the retail industry especially hitting department stores, Lifestyle centers allow for diversity and different types of retail all together. Also, people don’t want the hassle and time involvement of a mall. Time is constrained and important. JCP is doing the right thing and their stores are great sizes, easy to maneuver and always well stocked.