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Business

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Back to school to test Penney

First opportunity to check worth of turnaround plan

– Best Buy Co.’s sales force wears blue shirts. Apple Inc. “specialists” are garbed in branded T-shirts. J.C. Penney Co. associates can wear whatever they want.

The undress code is a legacy of ousted CEO Ron Johnson, the former Apple retail chief who espoused a hipper, less formal vibe for J.C. Penney. The strategy has a flaw evident to anyone who has shopped at the department-store chain lately: You can’t tell the sales workers from everyone else. That made it hard to ask for assistance and pay for purchases because Johnson also removed many cash registers and put checkout devices in the hands of hard-to-find store workers.

As Johnson successor Mike Ullman tries to reverse a sales collapse at the century-old department store chain, he’s restoring some basic ABCs of retailing – tenets he became familiar with during his previous stint at J.C. Penney.

Before the back-to-school shopping season next month, store workers will be outfitted with red branded lanyards, Ullman said. The company also is considering changing the relaxed dress code.

“We want to make sure there is no doubt who works for us,” Ullman said in an interview in New York.

In his bid to transform J.C. Penney into a fashion destination, Johnson encouraged store employees to wear designer jeans and graphic T-shirts.

Customers already alienated after Johnson killed discounts and several popular brands found in the camouflaged store workers another reason to shop elsewhere. Sales last year plunged 25 percent, leading to a net loss of $985 million.

While shares of J.C. Penney, based in Plano, Texas, have rebounded 14 percent since Ullman returned April 8, they remain down 43 percent from Johnson’s first day as CEO on Nov. 1, 2011.

“It didn’t take long to figure out” why shoppers couldn’t find the store workers, said Ullman, who toured stores shortly after his return.

When Johnson introduced mobile checkout devices much like the ones used at Apple stores, customers thought “we took registers off the floor and didn’t have a lot of places to check out,” Ullman said. “We actually had a lot more places to check out than the customer gave us credit for because they didn’t know where they were.”

When shoppers did find a salesperson packing an iPod-based checkout device they often didn’t trust the security of a wireless technology that is still rare at U.S. retailers. They also balked at handing over a charge card to a person who often didn’t look like an employee.

Customers must “feel comfortable giving their credit card to someone who is wearing the proper uniform,” Ullman said.

The dearth of cashiers created more challenges: where to fold and bag clothing? Where would bags be stored? What if the customer wanted a printed receipt instead of an e-mailed one? None of this created headaches at Apple, where tech-savvy customers typically buy one or two boxed items per visit and long ago embraced mobile checkout.

Ullman’s solution: putting 2,800 wheeled carts in about 700 of J.C. Penney’s largest stores that can be rolled to the busiest departments. Some will have a fully functioning cash register and all of them will give store workers a place to fold clothes, store bags and print receipts.

The 20 or so store workers packing checkout devices in each store will now wear a gray sash that serves as a holster. The chain is also adding signs explaining how to check out. The company is scurrying to get these tweaks ready for back-to-school, With good reason. Children’s apparel accounts for 12 percent of sales. It’s also the first major shopping event since Ullman’s return and a key chance to show progress.

“Back to school, that’s our Olympics” for the youth business, he said.

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