This image provided by JCPenney shows an advertisement for 'it's best price friday' campaign. - AP / JCPenney

JCPenney reinvents itself with new pricing, design

NEW YORK — JCPenney Co. wants to redefine the department store with some big, bold moves such as monthlong sales and committing to 10 new shops inside all 1,100 Penney stores by August.

Penney's new CEO, Ron Johnson, and his newly assembled management team, including President Michael Francis, told analysts, reporters and vendors in New York Wednesday morning that Penney is going to put realistic prices on everything in its store and abandon the old ways of speaking to customers.

Gone are the dollar and percent-off coupons, morning-only sales, additional markdowns at the register and all the "gimmicks," Johnson said.

It will get rid of signs with promotional prices above the racks telling shoppers how much off the artificially inflated "full" prices they're getting. To make things even simpler, prices will no longer end in 99 cents.

"What I learned at Apple is that nothing happened overnight. It just seemed that way," Johnson told a crowd of almost 800 analysts, media and fashion and retail heavyweights gathered at New York's Pier 57, including designers Calvin Klein and Michael Graves, J.Crew Inc.'s CEO Millard Drexler and former Saks Fifth Avenue CEO Phil Miller.

Comedian and talk show host Ellen DeGeneres will become the chain's spokeswoman, and new ads that explain Penney's new pricing began running on her show Wednesday. DeGeneres said during a previously taped appearance that her first job was at a JCPenney store in Metairie, La.

New merchandise will be displayed in "specialty shops" built inside Penney stores, similar to the Sephora and MNG by Mango shops in stores now and the Martha Stewart shops planned for a year from now.

The plan is to add two to three shops in stores every month so that by 2015, each Penney store will be a collection of 100 shops.

Johnson said 30 shops are in the works. On Wednesday, Penney disclosed that one of the new shops will be a juniors line by designer Nanette Lepore.

It's always been a challenge for mature retailers with stores of various sizes and ages to incorporate new store designs. Penney has developed 5-foot-by-5-foot fixtures to create quick but permanent-looking walls to accommodate new shops, Johnson said.

Using these fixtures, Johnson said, all 1,100 Penney stores can all look different in August.

Executives of the 110-year-old retailer have come up with fresh ideas, but will customers respond?

Penney's shoppers have complained that prices are too high, and they don't like navigating sales and coupons to pay what they consider is fair. In the past 10 years, full prices have been inflated to offer 60 to 80 percent off discounts.

"Now we're setting prices to begin with at the amount that most shoppers have been willing to pay," Johnson said. Penney's new pricing is an acknowledgement that "no one is paying full price," he said.

Beginning in February, Penney stores will have one sale each month, promoting items that are relevant to what most Americans are doing that month. Customers will get a 96-page book in the mail displaying what's new and what's on sale.

Prices will be available all month so shoppers don't have to rush to stores when it's not convenient, Johnson said.

Weekly 24-page circulars will also be about that month's sales and new items.

In addition, on the first and third Friday of every month, some items will be marked down 20 to 30 percent.

Penney is pairing the "best-priced Fridays" with the monthly books and weekly reminder circulars. Shoppers will be able to count on that rhythm, giving Penney credibility and restoring the price integrity that the chain has lost in recent years, Johnson said.

For its personality makeover, Penney also unveiled a new version of the square logo it adopted last year. It's been tweaked into a square frame with "jcp" in the corner and is red, white and blue, intended to stand for America's favorite store.

The squares will frame products in advertisements and actual merchandise displays in stores. Johnson hopes it comes to invoke meaning with shoppers, the way the Target bull's-eye is immediately recognizable.

Penney said its new pricing and marketing will be ready to go in stores and online Feb. 1, but analysts aren't sure consumers can be converted as fast.

Morgan Stanley retail analyst Michelle Clark said Penney is a 2013 or 2014 turnaround story at best, and if anything, its fundamentals could get worse before they get better.

"Changing customer behavior takes years, not months," Clark said. Also, with its new initiatives, Penney is targeting 25- to 35-year-old shoppers and may start to alienate core customers who are over 55, Clark said in a report Tuesday.

Doing nothing is risky, too. The price-high-and-discount-lower promotion is no longer working for Penney, Johnson said. "There's a mistrust of Wall Street and government. Perhaps that's true too with department stores."

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