Can Canada's Joe Fresh revive a sagging U.S. retail giant?
Published Friday, March 15, 2013 10:12AM EDT
Canada's Joe Fresh, which has carved out a niche as an affordable fashion retailer, is exporting its cheap chic style to approximately 700 newly-renovated J.C. Penney stores south of the border today, in a move that has investors and analysts wondering if it will be enough to boost the U.S. retail giant’s declining sales.
Because of the brand’s popularity with young and hip shoppers, the introduction of Joe Fresh boutique stores is seen as a strategy JC Penney CEO Ron Johnson hopes will not only overhaul the once stalwart 110-year-old department store, but also introduce a whole new segment of shoppers to the chain.
“Over the last ten years, it has had a really tough time,” retail industry analyst and author of ‘Retail Revival’ Doug Stephens said Friday on CTV’s Canada AM.
“But is it enough to pull this beleaguered battled retailer out of the malaise that it’s been in for a number of years?” Stephens asked of the deal inked last summer.
It’s a question many investors and analysts are asking as Johnson, a Midwest native and the man behind the success of the Apple retail store works to reinvigorate the former retail empire by attracting a whole new generation of consumers.
“He’s in a really tough position,” Stephen said. “Joe Fresh is just one part of the equation.”
Since leaving his position as the senior vice president of retail operations at Apple in June 2011, Johnson has been overhauling the department store from the ground up. He’s introduced new brands, rolled out new pricing in Penney’s 1,100 stores, and replaced rows of clothing racks with “shops” within the store to create a mini mall experience for shoppers.
But many are skeptical of Johnson’s cheap chic strategy.
“Since he came in, the vision hasn’t materialized,” said Stephen, pointing to the fact that the chain has reported three consecutive quarters of significant losses on sharp sales declines.
The tenuous future of the chain is in sharp contrast to the evolution of Joe Fresh. The Canadian brand, headed by creative director Joe Mimran, the man who founded Club Monaco Inc., opened a temporary summer location in East Hampton, N.Y., in 2011 and has flagship stores in New York City, New Jersey, and Long Island.
The cross-border move is just one example of big name brands and stores expanding their retail reach, creating competition and opportunities for price wars.
In Canada, the arrival of U.S. discount giant Target in March will put a lot of pressure on already established big-box retailers, Stephen said.
“Wal Mart should be frightened,” he said. “We’ve got more competition than we’ve seen in 20 years.”
Earlier this month, Target outlets opened in Guelph, Milton and Fergus, Ont.
The Ontario locations in relatively small markets are the first in the phased introduction of the U.S. brand across Canada.
Target expects to open 124 Canadian location in 10 provinces by the end of 2013.
With files from The Associated Press