Executive Briefings

How Do You Reinvent the Department Store? That's the Job of the New CEO at J.C. Penney.

As engineer of Apple's winning retail strategy, Ron Johnson created a juggernaut that reaped both profits and positive buzz. But can he do the same with the department store, a retail format that many feel is becoming antiquated? As the newly named CEO of J.C. Penney, Johnson will be tasked with crafting a new niche for an American institution.

The future of the department store is an open question, and the jury is out on whether there is ample opportunity ahead. "Department stores are still important," says Barbara Kahn, a marketing professor and head of Wharton's Jay H. Baker Retailing Center. "The risk is that department stores will become mere showrooms where shoppers browse and then buy elsewhere."

The challenge for department stores goes beyond merely competing with mass merchandisers like Walmart and Target. Department stores have to adapt to new technologies, such as mobile devices; do a better job of targeting merchandise and services to particular customers, and find a way to stay relevant as consumer choice in retailing balloons. "Department stores have control over their futures to the extent that they can create multi-channel experiences," according to Peter Fader, a Wharton marketing professor and co-director of the Wharton Customer Analytics Initiative. "They have to triangulate the purchases of a shopper across online, offline and mobile channels."

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As engineer of Apple's winning retail strategy, Ron Johnson created a juggernaut that reaped both profits and positive buzz. But can he do the same with the department store, a retail format that many feel is becoming antiquated? As the newly named CEO of J.C. Penney, Johnson will be tasked with crafting a new niche for an American institution.

The future of the department store is an open question, and the jury is out on whether there is ample opportunity ahead. "Department stores are still important," says Barbara Kahn, a marketing professor and head of Wharton's Jay H. Baker Retailing Center. "The risk is that department stores will become mere showrooms where shoppers browse and then buy elsewhere."

The challenge for department stores goes beyond merely competing with mass merchandisers like Walmart and Target. Department stores have to adapt to new technologies, such as mobile devices; do a better job of targeting merchandise and services to particular customers, and find a way to stay relevant as consumer choice in retailing balloons. "Department stores have control over their futures to the extent that they can create multi-channel experiences," according to Peter Fader, a Wharton marketing professor and co-director of the Wharton Customer Analytics Initiative. "They have to triangulate the purchases of a shopper across online, offline and mobile channels."

Read Full Article