J.C. Penney Hopes Joe Fresh Partnership Will Reboot Sales With New Customers

J.C. Penney's latest turnaround idea is an old one — the store within a store. But signing a deal is the easy part. Making it work for both parties is the hard part.

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J.C. Penney also has had its share of recent troubles. Last month, the company saw the sharpest decline in quarterly sales since it launched a turnaround campaign. A recent switch to everyday low pricing, in lieu of coupons, hasn't worked. Well, now the company is betting on something else: a new partnership with the Canadian retailer Joe Fresh. From member station WSHU, Kaomi Goetz has this story about J.C. Penney's latest move to save itself.

KAOMI GOETZ, BYLINE: Joe Fresh is not widely known in the U.S. It's like a Canadian H&M or Topshop - trendy fashions in bright colors and prints, at low prices. In the New York City area, six stores have opened up in the last year. Twenty-year-old Leah Parris of Macon, Georgia, had never heard of Joe Fresh before. She saw an ad on the subway, and decided to check out a store.

LEAH PARRIS: It's clean and organized. I like how it's color coordinated by section. Everyone was really nice.

GOETZ: Starting this month, you don't have to be in New York to shop at Joe Fresh. The clothes are selling in their own branded space within 682 J.C. Penney stores and website nationwide. It's part of a new, four-year deal. The clothes and prices are exactly the same as in a Joe Fresh store, but it's within J.C. Penney. Shopper Rebecca Libby wasn't expecting what she found.

REBECCA LIBBY: I am surprised.

GOETZ: But the confusion lasted only seconds before she filled her arms.

LIBBY: So I got a pair of printed black-and-white shorts, and they're $29; some red shorts that are also $29; and this woven tank top for about $12.

GOETZ: Libby brought her friend Lindsey Stafford, who's 24. She wouldn't normally even be in a J.C. Penney.

LINDSEY STAFFORD: If I was going to go to a department store, I like - Macy's comes to mind first. Like, I just never think of J.C. Penney. I don't have anything against it, though.

GOETZ: And what did she think of Joe Fresh?

STAFFORD: I think it's really cute.

GOETZ: The girls are a key part of the partnership's strategy. Hip shopper Libby will come to Penney's for Joe Fresh, and maybe look around. And J.C. Penney is back in her friend's vocabulary. The girls' demographic - young, with money to spend - is one Penney's desperately wants to court. The chain just came off dismal holiday sales and a turnaround year gone bad. Some Wall Street analysts think the Joe Fresh deal is too late to save it. But retail analyst Hitha Prabhakar says, don't count them out just yet.

HITHA PRABHAKAR: Yes, we have seen consecutive sinking same-store sales and sinking revenues. But I think that, you know, with anything and any sort of turnaround with a company, you're going to see it hit rock bottom before it turns itself around.

GOETZ: And what's in it for Joe Fresh, to take on an embattled dance partner? Clearly, growth. Here's Joe Fresh creative director Joe Mimran in a promotional video.

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JOE MIMRAN: And I think for us, it also opens up the brand to America very, very quickly. We hope it will resonate with the American consumer to the extent that it already has in New York and certainly, to the extent that it has in Canada.

GOETZ: Brands that are a mismatch usually have something to offer each other, says Scott Galloway. He's a professor of marketing at NYU's Stern School of Business, and CEO of a digital research and branding firm called L2.

SCOTT GALLOWAY: The better brands don't want to be in mediocre distribution. Better distribution doesn't want to carry mediocre brands. So there's always a tussle and an attempt to move up the ladder in terms, of finding a husband or a wife that's smarter and better-looking than you.

GOETZ: Back uptown, outside Joe Fresh's store on Fifth Avenue, Leah Parris says she hasn't shopped at J.C. Penney. But now...

PARRIS: I think I would, to go see Joe Fresh stuff. Yeah.

GOETZ: But she says the J.C. Penney store near her has just closed. For NPR News, I'm Kaomi Goetz.

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