Blog: Leonie BarrieJC Penney revamp a breath of fresh air?

Leonie Barrie | 30 January 2012

Given his success at building Apple's stores into the world's most successful retail operation, hopes have been high that Ron Johnson would also work his magic at JC Penney after joining as its new CEO in the autumn. And last week the wait was over, as he set out his new vision for the department store chain.

His strategy for tomorrow's shopping experience is wrapped under the banner 'In Praise of Fresh Air,' and will see nearly four years of gradual transformation of the retailer's entire look, pricing ethos and the way it sells its products. Plans include putting an end to non-stop promotions, which will be replaced by an everyday low pricing model. There will also be in-store boutiques to mimic a more traditional high street, a new designer partnership with Nanette Lepore, and a new logo.

Will it be enough? Repeating Apple's success in the crowded environment of a department store is no easy task. It's a huge challenge - but one that recognises just how badly JC Penney needs to up its game.

Change of a different kind is underway at The Bonmarché chain, owned by collapsed fashion retail group Peacocks, which has been sold to private equity company Sun European Partners. Some 1,400 jobs will be lost with the closure of about 160 stores, leaving around 230 Bonmarché shops in the UK. Administrators also say there has been "huge interest" from potential buyers for the Peacocks discount fashion chain.

But bad news continues to weigh on the UK retail sector after new figures showed sales fell in January, as shoppers reined in their spending after taking advantage of early discounting last month. The latest monthly CBI Distributive Trades Survey found just 8% of clothing retailers saw growth in the first two weeks in January, while 48% of footwear retailers said they saw a decline.

Even fashion stalwart H&M blamed "one of the toughest years for a long time" after it posted a 15.3% drop in full-year profits after holding its prices in the face of rising costs. Sales were up 1.4%, but comparable sales dropped 1%. Europe's second-largest clothing retailer said the higher cost of making its clothes added up to a "challenging" situation in the countries it sources from. More markdowns in its stores also hurt margins. 

The global clothes sourcing bandwagon is forever looking for the next hotspot, especially as nearly two decades of apparel cost deflation come to an end and worries continue to escalate about raw material and labour costs, capacity issues and the overall competitiveness of China. But is Bangladesh ready to step into the role of sourcing country of choice? A new report says its garment exports could triple within a decade - but only if a number of challenges are overcome.


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