How J.C. Penney is Changing the Retail Model

The retail industry continues to evolve at a fast pace into something where brick-and-mortar stores no longer stand independently of digital, mobile and social technologies. Store retailers are losing sales as consumers use mobile devices and social networks while they're physically in-store to seek advice, reference product information and online reviews, and, ultimately, purchase products online or even at another store. Online retailers like Amazon.com and Zappos.com are taking advantage of this trend to lure consumers away from more traditional retailers.

Brick-and-mortar retailers need to stop striving to win the price war against their online competitors. Instead, they should create an immersive retail experience by changing their approach and adding mobile, social and digital resources to their stores. Immersion pertains to new modes of engagement and leverages digital technology or images that deeply involve one's senses and may create an altered mental state. In this case, the altered mental state is a change in perception of the value of the in-store experience, purchasing decision and ongoing loyalty. If executed effectively, an immersive retail experience will result in increased brand recognition, equity and loyalty, not to mention higher sales, repeat visits and a long-term relationships.

J.C. Penney is one retailer that believes in this integrative approach. The retailer recently hired Ron Johnson, formerly of Target and also known for introducing the Apple store experience, thereby revolutionizing brick-and-mortar retail. Johnson knows that immersion is important and has a vision for changing the way J.C. Penney approaches the retail experience:

1. Focus the pricing strategy on value. No more retail gimmicks. Johnson recognizes that online retailers will always win on price point but not on service. He plans to offer everyday low prices plus items on sale for the entire month. This move is key in creating a foundation around value, enhanced by the in-store experience rather than discounts. This is a key differentiating factor from online retailers for J.C. Penney.

2. Make the retail environment fun. J.C. Penney is introducing the concept of a "Town Square" in each store that will engage and entertain consumers before they visit, while they're in-store and after they've purchased products. It's the equivalent to Apple's Genius Bar with education, service and post-purchase care to solidify the customer relationship. J.C. Penney knows engagement comes from more than just selling products and giving advice; it must allow for interaction at all points of the retail experience.

3. Integrate social, digital and mobile. Digital and social interactions can enhance the in-store shopping experience. J.C. Penney is starting to integrate digital and physical worlds by making its stores the centerpiece of the retail experience. Sales staff have started to use iPads to assist consumers — e.g., show matching accessories for an outfit. Sales staff can complete sales on the spot, eliminating the need for customers to wait at the checkout line.

These are all bold moves in the right direction for J.C. Penney. An immersive retail experience isn't solely created through the introduction of technology, however. This is an evolution not a revolution. To be successful, retailers must approach immersion holistically from a people, process and technology perspective, introducing it piece by piece. A big bang approach could make consumers feel confused, uneasy and even drive them away. Incremental adjustments over time and the introduction of new technology will lead to better experiences, changes in consumer behavior and more sales.

Nik Badminton is the director of digital strategy at Tribal DDB Canada. Nik can be reached at nikolas.badminton@ddbcanada.com.