Recently, J.C. Penney (JCP) CEO Ron Johnson asked brands across the country to present proposals for creating boutique shops inside his stores. The ultimate vision is to create a Main Street of shops throughout JCP locations nationwide.

But on a walk-through of the first shops to launch at the retailer’s Manhattan Mall location, there was little of the magic on display that Johnson is so famous for creating in Apple’s retail stores. The first new shops to launch include Levi’s, Arizona, Liz Claiborne and Izod, and sales of these shop brands have been touted as 20 percent higher than the sluggish sales in the rest of the store. It remains to be seen whether customers are trading purchases from other brands or if the shops are actually driving new customers to JCP.

So far these changes appear to be a work in progress, but we saw several missed opportunities for the retailer to wow consumers, as JCP does with its existing store-within-a-store partnership with Sephora.

Missed opportunity #1: Bigger scale and better product selection

The Sephora partnership with JCP is successful because the collaboration reflects a true integration of the two stores. The signature black-and-white Sephora walls indicate that this area within JCP is different, and the cross-category merchandising assortment offers the opportunity to shop all of the Sephora merchandise available at JCP in one spot. There is no mistaking that the Sephora shop is the real thing, just scaled down.

Both the men’s and women’s Levi’s shops, on the other hand, lack physical barriers, which makes it nearly impossible to distinguish a shop-in-shop from a branded display common to most department stores. Unlike the Sephora shop, the Levi’s shops are separated by gender. This lack of cross merchandising demonstrates that the concept of a true shop is still tentative at best. The women’s shop is also microscopic compared to the men’s side, and it lacks the iPads that have been heralded as the solution to providing an extended assortment and checkout mechanism for the brand.

Missed opportunity #2: Eye-catching signage and upbeat music

Adequate signage, especially a sign at the main entry point, is another essential cue for true boutique shops. Sephora has multiple signs at its entry point, and even benefits from having its logo locked up with the sign on the exterior of the JCP building. These good decisions fail to extend to the newer shops.

Liz Claiborne’s bright yellow doorways definitely stand out, but without adequate signage, it’s unclear whether that area in the women’s department features a brand or merely a recently painted wall. The Levi’s store does feature miniature versions of its signage, but they are tucked into wall displays rather than at the entry point, probably to ensure visibility from the multiple entry points on the floor.

In addition to signage, speaker systems should not be overlooked, as music can be a brand signal that announces a store’s presence even when it is out of sight. The MAC counter in any department store, even when it is merely an island, attracts customers in the makeup department with its pop playing stereos. Levi’s free-standing stores play their own signature music mix. JCP would have a cacophony if all of its shops competed for customers with tunes, but a select few shops might benefit from sound.

Missed opportunity #3: Customized service for each shop

The opportunity to talk to brand ambassadors who are product experts is a key benefit of shopping in store rather than online. The Sephora store at JCP features its own black-uniformed employees and their own cash wrap stations that hand out Sephora branded shopping bags to complete the purchase experience. Levi’s also has fit specialists in the men’s department, although they seemed absent from the rest of the shops on two recent visits.

If the goal is to create 100 shops inside its stores, the question of who will staff them is an important detail. Advertising Age noted that products may be grouped by lifestyle rather than by brand, which borrows a page from Nordstrom’s merchandising strategy and provides an opportunity to minimize headcount.

It’s unclear what the advantage would be of shopping at a JCP with myriad specialty shops instead of visiting a mall with the full size stores of those same brands. We’ll be keeping an eye on the JCP remodel, as well as the renovation at Macy’s Herald Square, which is quietly upgrading the branded displays on the beauty and accessories floor.

What do you think? Will JCP’s makeover deliver on the promised returns?

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