Last week started off with grim news from JC Penney & their quarterly financial report. Most of the news sounds and is very bad with Ron Johnson's Apple-like plans for a turn around elicting very much to the point comments like this "... a ridiculous and condescending move. " from investing analyst, Margaret Bogenrief.

If you dig deep enough there are bright points and signs that things are begining to work and that the headlong descent is being checked.

A tip of the Trilby to Alan Reiter and IE without them I could never imagine myself actually thouroughly reading/caring about  the NYT article as soon as I saw it.

Some great points on the "why" of shipping behavior.  Something that many technology centric solutions seem to miss.

The intrinsic motivators of going shopping with a friend; wanting the assistance/approval (even fake approval) of somebody else are overlooked with these solutions.  

The question is - which matters most to the JCP shopper.  The Nordstroms or Neiman Marcus shopper is most certainly looking for these intrinsic services - but what about the JCP shopper.  I had some insights into their customers, but that is based on a near two decade old project so I can't say but it will be interesting to see if JCP is missing the boat or if they have an accurate bead on what their average shopper most values. 

Another way that brick and mortar stores lose out, which others have mentioned briefly here, is collection of taxes on Internet sales. Due to a 1992 court decision, Internet companies don't need to collect sales taxes if they don't have a point of presence in the state (and companies like Cabelo's have been encouraging legislation that lets them put a store into a state only if it "doesn't count" as a point of presence).

In Idaho, for example, that means a brick and mortar store starts out with a 6% disadvantage. While we have a 'use tax' that consumers are supposed to pay on their online purchases as part of their income tax, in practice few people do this. In other words, it's not that Internet sales are tax free -- it's that the vendors aren't required to collect them. 

Consequently, brick and mortar stores should be working with their state Chamber of Commerce organizations to encourage state legislators to join the Streamlined Sales Tax project, which in turn put pressure on the federal government to deal with this issue and start implementing Internet vendor collection of sales taxes.

Maskha: 

I would second you here. Price is one of the most crucial factors for consumer decision making hence if the price is the customers buying range they will opt for these stores. Else the customer will generally look for cheap alternatives. 

Agreed, Mashka.  The merchandise assortment has to be right in the first place, or else all of the technology and retail strategies in the world won't work.

I still think , the price is one of the most important factors of shopping and the only  way to keep the client  is to offer exclusive  production, that can be bought  both online or offline in the stores of that  particular enterprise.Otherwise, you can always find a better deal online

The first question to ask any retailer with brick-and-mortar stores is:  Why do people shop here?  The answer will depend on who the customer is, what the commodity is, and whether they're driven by intrinsic or extrinsic motivators.  Are they price conscious, in which case they'll just as easily shop online and switch brands to get the best price.  Are they feature/function motivated?  Do they read reviews online or see demonstrations in stores and buy based on what physical attributes they get with certain products?  These are all extrinsic motivators that don't depend on anything but information which can be acquired either online or in a store.  For these "checklists" of data, Johnson's strategies are terrific.

But why does someone walk into a store such as JCP?  How about the intrinsic motivators for shopping, such as going shopping with a friend?  Salespeople often take the place of friends, and are in-store "thought leaders" that customers look to for assisting them in decisions that are larger than extrinsic motivators.  For example, what if you need something now, not tomorrow for the spontaneous date, a job interview call back or forgotten gift for your mother-in-law?  

Salespeople don't just help match the tie with the shirt, but tell you you'll ace the job interview, or you look hot in that dress, or what a thoughtful gift you chose, even if it was last minute.  There's the human connection that makes a difference in walking into a particular store.  A level of confidence that your choices are perfect, especially if you're color-blind or think the size 8 pants fit when really you should be wearing a size 10.

Technology solves many challenges, but I'm not convinced Johnson really understands retail and what people really want.

Exactly. So what constitutes a "thought leader"?

There are a variety of definitions. Perhaps one definition could be someone who innovates, is looked up to by his peers and, in business, also generates sufficient profits.

If "thought leader" is what Johnson is and wants to build his career on it, then his strategy at JCP will give him that status.  Notice, we have a nice amount of IE traffic talking about it.  But will this level of innovation actually work for JCP?  What's the real end game here?

Hi Alan, 

Thank you for the detailed explanation. I agree with you. If the shippings and returns are offered free of cost than the customer confidence grows in the online service. And, yes with the online store a customer has 24/7 customer service available to help them out. 

@Mary - Sounds like a good reason to go to Nordstrom!  

Don't know if all the Nordstrom Racks have this feature.  The one I went to was brand new, just opened last week.