J.C. Penney's Startling Customer Service Problem

Retail Sales
AP, Mark Lennihan
This week, I paid a visit to a J.C. Penney (JCP) at a shopping mall in New Jersey.

The century-old retailer has spent the last three years in the headlines for all the wrong reasons. Former Apple executive Ron Johnson took over as CEO in fall 2011 and immediately implemented a total makeover, doing away with coupons and sales, and abandoning its traditional house brands in favor of more fashion-forward collections. Sales tanked, so earlier this year the board fired him and brought back his predecessor, Myron Ullman, to try to get things back on track. Now the sales and coupons are back with a vengeance, as are brands like St. John's Bay.

The big question now is whether the customers will come back, too. I headed to the mall on Wednesday night to see how the turnaround is going -- and what it means for shoppers.

I found a ghost town.

Where Are the Employees?

Granted, a Wednesday night isn't a great time to evaluate foot traffic -- I would have been better off going on a weekend. But even compared with the mall's other anchors, traffic was exceedingly thin.

And it wasn't just the lack of customers that had me concerned.

After wandering around the men's department for several minutes, it occurred to me that I hadn't come across any store employees. So I did a walk-through of the entire department, and confirmed it: There wasn't a single employee on the floor of the men's department, save for a woman folding clothes in the fitting room.

There were no cash registers open. The Levi's Denim Bar, a Johnson innovation, was not attended by any associates who might have helped guide a jeans purchase. The iPads mounted on the end of the bar were switched off.

Finally, an employee did show up, trailing an agitated customer. It seems he was having some difficulty understanding the terms of a T-shirt sale, and had dragged her there from another department to explain which shirts were $8 and which were $10.

"I think it's only $8 for promo tees," she said after puzzling over the maze of sale signs. "But I don't know what those are. I work in shoes."

Then she walked away, leaving the customer's question unanswered; when he protested, she reiterated that she worked in the shoe department.

Obviously J.C. Penney doesn't want its stores packed with employees if the customers aren't there -- it's got profits to think about, after all. But it was clear that having such low staffing levels constituted a significant customer service issue.

(It's also a loss-prevention issue: With no employees in sight, anyone could have easily stuffed some merchandise into a bag and walked out without being noticed.)

Profits vs. Customers

Obviously a single trip to one mall on a Wednesday night is insufficient evidence to conclude there's a company-wide issue. So for more insight, I called up Seth Golden of Capital Ladder Advisory Group, which has conducted multiple "channel checks" of J.C. Penney since initiating coverage of the retailer.

Golden says he hasn't seen staffing shortfalls to the extreme that I observed. But he does say there's been intentional downsizing at the retailer, a process that's been helped along by the adoption of the "Libby" -- a handheld cash register similar to what Apple Store employees use. That ability to control costs, combined with an observed uptick in foot traffic in the last five months, are good signs for the company.

At the same time, it's difficult to believe that J.C. Penney is going to win back any lapsed customers if it's leaving entire departments without a customer service presence.

"The company still doesn't rank where we're bullish on their customer service," he says. "Do they need more people on floor? Yes, from a customer service standpoint, they do. But they do have to manage profitability."

If you're a J.C. Penney investor, it's good to hear that the company is taking steps to improve its margins. But should customers bother with it?

Besides the lack of staff, the other thing that struck me was how many signs I saw advertising significant discounts. Martha Stewart party favors were marked down to $3.99, T-shirts were selling for $8, and I saw some big markdowns on sheet sets. Even if the customer service left something to be desired, at least there were good deals to be had.

But Golden urges caution on that front, echoing the growing consensus that the retailer was simply marking up its prices so that it could then advertise discounts.

"There's not really any discounting going on, outside of the couponing," he says. "If you look at the actual price that you will be paying after the percent-off, it is the exact same retail price that you'll find at 90 percent of retailers."

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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Ronald Graham

We went to your Vancouver Mall store in Vancouver, WA looking for a couple men's shirts with a front pocket. There were no casual shirts with a pocket. Both my husband, age 65 and my dad, age 81, want a shirt without a front pocket. they want to put their glasses in the pocket. We went to Kohl's and bought two shirts with pockets but not the nice quality of jcp. we have always like to shop at jcp but I so hope you will stock shirts with pockets. Thank you.

November 09 2013 at 12:29 AM Report abuse rate up rate down Reply

I have called NLR JC Penney numerous times to check and see if my order is in. No one has bothered to answer the phone. It rings, rings, rings, and rings, then apparently goes to the fax machine... ?? They used to have the courtesy to call me when my order comes in, but they no longer take the time to do that.

October 18 2013 at 8:48 PM Report abuse rate up rate down Reply

their in-store customer service isn\'t their only problem. they have BIG problems with their customer service in their calling centers as well. I used to place most of my purchases with JCP over the phone until the rudeness and inattentiveness of the order taker got so bad I gave up. I have been disconnected during an order, I had one person who had trouble taking my order with a person in the background making her laugh, I have had to repeat my self over and over to them, I have been told they didn\'t sell a product by one person, called back and ordered through another. it goes on. I really loved JCP and their products. too bad.

October 18 2013 at 2:54 PM Report abuse rate up rate down Reply

I never did like JCP, and I dislike it even more now. They will soon be shut down like Montgomery Ward.

October 18 2013 at 12:56 PM Report abuse rate up rate down Reply

I was just at JCP, looking for short sleeve shirts for my son. A salesman nearby showed me a table that had the last of summer stock on sale. No problem. This was at Garden State.
I like the store and have been going there for many years.

October 14 2013 at 5:18 PM Report abuse rate up rate down Reply

went to jcp yesterday to buy a coffee maker that was on sale. the add was on their website. after spending 30 min looking for the coffee maker or a sales person, finally got some help. turns out that jcp does not have the coffee maker in store. only way to get it is to order it from the mfg. no mention of that on the online add. and to make it even better they will not ship to store. only to my home. for an $8 shipping fee. so the sale price is not what you pay! discount coupon (%20) does not apply to elect. appliances ... what a rip off!! no sales people, no sale products in store!

October 14 2013 at 9:29 AM Report abuse rate up rate down Reply

This may off subject, but the big reason I stopped shopping JC Penny is when they discontinued the catelog business. I was a big shopper there. You can\'t find anything in the stores. I just stopped shopping there. I loved the catelogs, and found I bought more than my original intent was after going through the catelog. I liked I could get something, and return it right at the store if it wasn\'t what I wanted.

October 14 2013 at 7:10 AM Report abuse rate up rate down Reply

I used to be a loyal customer and after the shakeup returned to find the stores big, open empty spaces looking like a \"going out fo business\" sale. The merchandise I liked in jeans, tees, sweaters etc was now replaced with Liz Claibourne which I neither like or want and seems to now be a mainstay for JCP. They ignored the loyal older customers for the \"younger\" market and failed and now have failed it bringing back what us older ladies liked too. They can keep their Liz merchandise. Back to Macy\'s and Kohls where customers are better appreciated and served.

October 14 2013 at 6:20 AM Report abuse +1 rate up rate down Reply

It is so sad as J.C. Penneys used to be one of my two favorite places to shop. I haven't been for several months as I am tired of not being able to find any one to help me when I need something. I hate to see them go down the tubes but it looks like that is what is happening. I am a petite and they carry the jeans that fit me as well as several other things. I guess I will have to shop around for another store.

October 14 2013 at 6:00 AM Report abuse rate up rate down Reply

They lost me as a customer years ago.

October 14 2013 at 5:52 AM Report abuse rate up rate down Reply