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Best Buy Has the Future of J.C. Penney’s Dreams

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From analysts at Janney...one of Microsoft'sMSFT -0.41% newWindows mini stores inside a Best Buy

From analysts at Janney…one of Microsoft’sMSFT -0.41% newWindows mini stores inside a Best Buy

From analysts at Janney, who recently took a
look at one of Microsoft’sMSFT -0.41% new
Windows mini stores inside a Best Buy
BBY +2.31% showroom:

The lighting, the color and the signage made
that section of the store look like a
technology store, selling high tech products.
With the Samsung store within a store
nearby, and a small, but visible Google
presence, along with the older looking, but
still forceful AppleAAPL +0.82% presence,
Best Buy looks more and more like the
agnostic seller of technology ecosystems that
show the real value of what Best Buy will
become.

Does a collection of small “ecosystem” mini-
stores inside a larger big box showroom remind
you of anything? Soon after the one-time Apple
retail boss Ron Johnson took over running J.C.
Penney JCP -2.89%, here’s how the WSJ reported
his plan to reshape the struggling store chain:

Mr. Johnson, who won plaudits for
reinventing the retail experience with Apple
stores’ clean lines and empty space, laid out
an ambitious plan Wednesday that involves
carving stores into a warren of specialty
shops, turning the high-traffic center selling
space into an entertainment and hang-out
area, and eschewing constant “sales” in
favor of lower prices every day.

The idea is to make stores more inviting,
highlight brand names and gain more
control over pricing.

“Some may call it crazy, but I don’t think
there is an alternative,” Mr. Johnson said in
an interview. “In an Internet age where you
can have exactly what you want with one
keyword, people won’t tolerate big stores.
You have to break it down for them.”

That was in early 2012, and the ambition turned
out to be a little more than J.C. Penney could
digest: The company has bled customers, and
cash, ever since. Efforts to redesign the stores
and change the company’s pricing approach
turned off its hisoric customer base, without
attracting a new one that was big enough to
replace it. Mr. Johnson was given the boot in
early April.

J.C. Penney has suggested it will push forward
with aspects of Mr. Johnson’s vision, including
the store-within-store redesign. But his idea
that consumers weaned on Amazon and the
Apple Store expect something slicker and more
focussed when they head to a big box seems to
live on most brightly at Best Buy.

And we mean “brightly” in the literal sense of
the word. According to Janney’s take on its visit
to a Best Buy:

The blue color and bright lights of the
Windows store attracted our attention, while
the availability of all types of Windows-based
devices from several vendors including HP,
Microsoft and Lenovo, allowed us to better
understand hardware and software features.
In this battle to get consumers to their
ecosystem, we believe that Best Buy will
become more and more valuable to
consumers and vendors.

In the long run, perhaps Mr. Johnson’s vision
will be vindicated — just by a different
company than the one he was running.

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