Will J.C. Penney benefit from Starbucks?

We all know by now the fact that J.C. Penney Company, Inc. (NYSE: JCP) is undergoing some major changes in an effort to transform the stores and turn things around. The main idea is to de-clutter the stores and focus on shops (stores within the store) to make customers more comfortable while shopping and try to keep them as much time in the stores as possible.

This approach may work if it’s done in a revolutionary way, a way that elevates the shopping experience to a whole new level. But, how can that be done? You may ask yourself.

Well, after reading and reading through the earnings releases and company presentations along with other reports in the industry, I came to a conclusion; JCP is focusing on the customer experience (as they should) and not just on sales through coupons and “special” sales as some of its competitors.

When focusing on the customer experience they will be engaging customers with a nice environment and one that can’t be found anywhere else. First, by cleaning the stores (and I mean have less merchandise), they are assuring that the customers will have a better impression of the store. Based on personal experience I much rather be shopping in a place where I can easily find and appreciate what’s on display than having to go through endless racks of merchandise poorly classified.

Second; creating the “shops” as they are referring to them, they are specializing in that type of merchandise instead of shifting merchandise every month just to fill in the space shelves. Having employees dedicated to those shops will allow them to be more knowledgeable of the products they sell and therefore helping customers make better decisions when buying. Competitiveness also plays a big role here; in-store competition can be implemented between shops to improve sales. Incentives are well known for working in this type of industry.

But, how do you keep a customer engaged in your store?

The square.

Here is the answer to that question. “… a re-imagined center core experience. The square won’t be about selling products, but rather a gathering place for ongoing attractions and services.” As stated on page 15 of the JCP summary annual report for 2011.

JCP will be offering a place to relax, a place to hang on, to drink coffee and more. To husbands or boyfriends for example, is the very best way to be with your significant other without following her through the aisles and not understanding what they’re doing (as it is often my case).

Starbucks Corporation (NASDAQ: SBUX) is a natural fit to this new environment. Having brand recognition as they do and a loyal customer base can increase the opportunity to offer a truly different experience for J.C. Penney.

In a press release from Starbucks dated 12/05/2012 Cliff Burrows, president of Starbucks Americas and U.S. “announced that his region planned to add more than 3,000 net new stores” where “at least half of the new stores are expected to be in the strong, rapidly growing U.S. market.”

Even though nothing hinted that this partnership will happen, I do believe it’s a great possibility given the reasons I mentioned above. Customers will be benefited from having a Starbucks coffee shop in the store (at least on the customer experience side). Happy customers tend to stay within the store more time and with that increasing the possibilities of more sales.

Overall, if JCP plans are to change the way people shop, they have to come up with many clever ideas. A Starbucks coffee shop in their stores can be one of them. But remember, this has not been announced nor hinted in any way. It is only a conclusion I came across when reading the press releases of both companies and one I thought to share with you.