January 30, 2013
Will Shoppers Return as J.C. Penney Brings Back Sales Promos?
It’s been well documented here and everywhere else that J.C. Penney’s "Fair and Square Pricing" strategy has driven away many of the department store chain’s traditional shoppers while failing to attract new ones.
Now, Penney and its CEO, Ron Johnson, the champion of the strategy, have reversed course and are bringing back sales with the hope that customers will follow.
According to reports, the chain will not only be rolling out sales events but will also be adding signage that shows shoppers how much they are saving by shopping at Penney instead of its competitors.
Daphne Avila, a spokesperson for the retailer, told Bloomberg News, "Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it."
Mr. Johnson told The Associated Press, "Our sales have gone backward a little more than we expected, but that doesn’t change the vision or the strategy. We made changes and we learned an incredible amount. That is what’s informing our tactics as we go forward."
Wall Street appears to have liked what it heard from the company. Penney’s share price rose more than nine percent in trading yesterday.
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Recent Discussions
Discussion Questions
How much will the return of sales promotions help in getting J.C. Penney turned around? What else must Penney do to achieve major market share gains?
Poll
The promotions are a start, but they are also going to have to fix their inventory. When was the last time you heard anybody brag that they bought something at JCP?
It would be too easy to say “I told you so” when it comes to JCP’s pricing policy. It is better to recognize Ron Johnson for acknowledging his mistake and making the right correction. J.C. Penney is an icon in American retailing much like Sears, and sale prices and promotions are just as much an American retailing tradition. Now let’s wait for the next Johnson innovation introduction. Hopefully it will be innovation that meets the shopper’s expectations.
Well, pure candor would have been better than “Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it.” If they’d said “We screwed up, we’re sorry, and now we’re going to fly right” it would have been refreshing and more appreciated by their shopper base.
Penney is, in the eyes of many, just another “me-too” mid-market mass merchandiser. That’s a disastrous position to be in. I’d be adding in some treasure hunt upscale goodies, and more upscale in general, and promoting the heck out of it with price. The alternative would be to go up against Walmart on price, and we know the usual results with that strategy.
Yes, sales will help turn things around for J.C. Penney. This is a retail chain with a very specific reputation and customer base, and obviously that customer base did not appreciate the new strategy.
With that in mind, company executives should consider how innovations, new technologies and new strategies can build on the foundation of the J.C. Penney brand.
I don’t believe Ron Johnson can change J.C. Penney to the degree he apparently he was attempting. J.C. Penney will not become Nordstrom and can not develop into an “Apple” type of retail chain.
In my opinion, this latest move will only confuse customers. Penney’s was struggling before it introduced “Fair & Square Pricing.” Obviously, the customers who left have found their needs satisfied elsewhere. Promotional pricing is neither a strategy nor a point of significant difference. Penney needs to develop a sustainable point of positive differentiation beyond merely offering sales promotions.
“Our sales have gone backward a little more than we expected.” Yep, just a little, huh? Too little too late in my opinion. The things Penney must do to gain market share, well they can’t do those things and won’t be doing them.
I really wish Mr. Johnson had read Walter Loeb’s Forbes blog before “evolving” to this new strategy. Loeb’s suggestions—which include one of the “shops within a shop” being the clearance center—are brilliant.
Also, hopefully there are enough retail veterans working in the chain to explain the laws about MSRP, and “compare at” prices. These laws are pretty well enforced and can lead to rather high fines.
I’m really starting to wish the leadership team at JCP could think a little more incrementally. I’m afraid this is just going to confuse the “new” customer even more.
I will admit that I was wrong. I was truly hopeful that Mr. Johnson’s strategy would have worked and it did not. That said, I agree that what J.C. Penney has learned over the last year plus will help them shape a strategy moving forward. Part of that strategy will need to be promotions related to sale prices.
New remodeled J.C. Penney stores look great and I believe their assortment has improved along with their offering of unique and Private Label brands. J.C. Penney has a following that will be excited about coming back. The hype around them going back to a sale model will also attract customers that want to see what they can save.
With their new logo and patriotic feel it would be great to see J.C. Penney really promote some Made in America items. This is a trend I see building momentum and J.C. Penney would be smart to jump on early and get some credit for it.
In my opinion, J.C. Penney had lost its identity even before the “Fair and Square Pricing” strategy. First of all, consumers don’t want, “fair and square,” in as much as they want “deals” and great value. Those of us in the CPG and retail industry know that only Walmart can be Walmart and be successful with everyday low pricing because the consumer “gets it” when it comes to Walmart, but the consumer doesn’t “believe” it with most other retail chains.
There are a number of reasons for this; too many to mention. J.C. Penney seems to be oversimplifying its real issue, which is that it has an identity problem with younger consumers, and it’s being out-witted by companies like Target and Kohl’s for its own market.
J.C. Penney will never regain relevance in its current form. No more so than Sears or any other department store format. Mr. Johnson’s efforts simply made JCP’s slide more public and more interesting to the business community than the others.
For those who haven’t been inside a J.C. Penney store recently, you will find yourself quite amazed at their transformation in product, presentation and pricing. Unfortunately if you are/have been a regular shopper at Penney you will be confused in their product, presentation and pricing.
As discussed in a previous posting, Penney made the same kind of mistakes that Walmart made under John Flemming, their vision didn’t align with their customers needs.
So after gutting personnel, updating their assortments in favor of younger shoppers and shifting away from promotions to every day low pricing they effectively alienated their core shopper base and as a result sales dropped precipitously.
If J.C. Penney is to survive they must keep what has been successful in their transformation, but at the same time they must work very hard to regain their core customer and to focus on delivering the Penney promise that had kept them (mostly) loyal shoppers.
For Walmart this was to add back breadth and depth to their assortments, reinvigorate their EDLP promise and to deliver on these things consistently. They are making up ground and showing a pretty impressive turnaround, however, they had the deep pockets needed to do so.
Penney may not be so fortunate as their fortunes have slid precipitously; unless they can quickly win back their core, they are in serious trouble.
This is yet another example of very smart people believing that you can apply a “template” to another retail channel and achieve the same level of success that was experienced in a vastly different environment. This approach almost NEVER works.
But now that the “fair and square” pricing has proved not to contain the magic it was thought to have as a headline pricing and promotion strategy, I would not throw it out altogether. In fact, I would keep it in the mix of options.
Returning to more traditional sales promotions will help JCP get back into the game, but I would advocate that they run fewer and deeper promotions and not overexpose sales promotions to the extent that they become the only time shoppers see value in shopping JCP.
Price comparing can be dangerous, but likely not a bad short-term strategy for re-building trust and pricing integrity back to JCP shoppers. I will watch with interest.
“Our sales have gone backward a little more than we expected”? Understatement of the year. Yes, it’s possible that JCP will start to demonstrate a positive comp sales trend in 2013, but part of the reason is the hugely depressed base from last year.
It will take more than the “targeted promotions” (such as 20% off Fine Jewelry for Valentine’s Day) or the new ticketed price comparisons to “suggested retail” to return JCP to relevance. And it’s a double-edged sword: Penney is trying to regain the core customer through sales promotions, but she is not likely to appreciate the transformation of the store into a collection of trend shops like Betseyville and Cosmopolitan, staffed by associates with handheld checkout devices.
Ron Johnson shot Penney’s best (albeit dull) arrow in the air and the company landed in “nowhere land.” Now it’s back to the future of what it once was, which wasn’t that great, and expects its pricing “evolution” holds a pot of gold. That reference should not be a pot but a “crock.”
Penny has to become something the public sees as being new and better not a just a return from a dreamer’s dream. There are hurdles ahead for old J.C.
JCP attempted the extremely difficult feat of totally repositioning a brand and recreating the shopper experience. They articulated a vision and tried to execute it immediately.
They clearly learned several things. This degree of transformation requires more than a vision;it needs resources and time to execute. It is more difficult to attract new shoppers with a new concept than it is to retain current customers with sales. Most importantly, JCP is not even remotely comparable to Apple.
Their new strategy recognizes the reality of their situation. They have to hope that they can maintain enough business to allow them time to evolve.
Penney’s is not unlike Sears; it has much to do to get its customers back. Yes, they are confused. Apparently, so is the management. No wonder we don’t know what to expect.
I have not been in a Penney store for a long time. Never found much I liked or wanted to purchase. But now I think I will visit a store just to see if the changes will warrant a return not only by me; but the masses who exited over the recent years.
Just think of Clint Eastwood’s voice: “Improvise, Adapt, Overcome!”
Isn’t this what we would expect from a good and on to be great retailer? “Our sales have gone backward a little more than we expected, but that doesn’t change the vision or the strategy. We made changes and we learned an incredible amount. That is what’s informing our tactics as we go forward.” These are his words.
There is a difference between vision, strategy, and tactical maneuvering. Overall, I don’t see any change in vision or strategy. What I see is tactical changes in achieving the prior.
JCP stores are brighter, more open, and better merchandised than ever before. This also is still a work in progress that has not been completed throughout all areas of the stores.
Learning and adapting are critical components to their success. Being flexible, making changes and adjustments, don’t signify failure.
I have been previously much more critical of JCP. I have to say now after seeing a bit more that like what I am seeing. I like what is taking place in their stores.
They are gaining what I would interpret as Target-like feel. Their market is for a similar type shopper. Keep going. Keep adjusting. Keep the vision.
This whole episode just goes to show you that when you train your customers to think ‘sale’, you can wind up ruining the brand. Hopefully, RJ and the board are thinking long term in which case, a ‘sale detox’ would work.
Seems like this is a short-term fix to just get some rev going. Who can blame them, it’s January!
If Ron Johnson didn’t have “Former Apple Store Guru” after it he would have been gone a long time. Worst. Makeover. Ever.
How a guy can lose 30% of a core business, even more online, repel customers, look like some reality show all while stoking the Pollyanna PR machine isn’t fiction. Will a new term be created for such action, like he “RonJohnsoned it”?
Don’t blame any of this on the J.C. Penney brand. The fault of all of this falls squarely on one man who let down an entire nation of loyal shoppers.
If they are purely going to compete on price, I think we all know where that will lead. Whether it is EDLP, deep promotions, or any other configuration, they will forever having to react rather than be proactive.
JCP has to assert what they represent and who they are targeting. The general shopper does not have an “image” of what JCP stands for now, that aligns with what is in the stores. Is it 50 plus year old shoppers looking for a blouse or is it a teen/young adult looking for stylish jeans and shoes?
Right now, neither looks at JCP and says, “that is MY store.”
I guess everyone remembers “New Coke,” the 1985 revamp of the Coke formula. It turned out to be one of the worst product upgrades and the greatest marketing campaign. It bought Coke plenty of free advertising as the wars developed between “classic” and “new” drinkers hit the headlines.
I think this may well be the outcome of the JCP flurry into “no frills” retailing. The understanding that moderation is probably the best approach will yield a retail image that minimizes the hype while at the same time catering to the consumer. As retailers focus more and more on individual preferences, the value of mass advertising and across the board discounts will diminish. With JCP already having pulled back on their mass merchandising budget, they are in a perfect position to focus their promotion spending on targeted offers. At the same time, a little mass promotion will attract the new customers. Just where the world is headed.
Apparently customers like unnecessarily complex pricing strategies.
I think the bigger issue here is inventory visibility. On a number of occasions I’ve gone to purchase merchandise advertised on the site, only to find it sold out. JCP won’t want to train customers into thinking that they’re usually going to be out of stock.
At this point, anything that will help the customer identify with JCP and get them into the stores will help. However, they must find what they are looking for when they get there. I do not disagree with the moves Ron Johnson has made, just the misunderstanding of who their customer is and what she wants from them. I would love to see JCP engage with a top notch customer experience group and take a look at inspirational performance tools for sales associates. I worked with a room full (600) of fast food owner operators yesterday using a gamification tool and it was very enlightening. Just sayin’….
The comment by the JCP spokesperson, “Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it,” indicates a drastic lack of understanding of the concept of evolving. Had Ron Johnson chosen a course of evolution to begin with, he could have reduced the ridiculous number of Penney’s promotions annually and clarified the company’s position, without alienating a significant part of his loyal customer base. He could have reinvented the look of his stores and implemented a new pricing strategy with a fresh product mix through proper consumer tests in select markets, over time.
Evolution might have allowed him to maintain and reeducate his customer base while attracting new categories of customers.
Now his personal fame is rivaling that of the JCP brand and that is simply not good.
“Now, Penney and its CEO, Ron Johnson, the champion of the strategy, have reversed course …”
“Daphne Avila, a spokesperson for the retailer, told Bloomberg News, ‘Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it.’”
Well, which is it?
My original thought was “Another day, and another smile on Eddie Lampert’s face that Sears isn’t in the headlines,” but after reading the comments, I see that Sears managed to enter the conversation anyway…not a good thing.
Too little too late. Sales promotions aren’t the issue anymore, it’s personnel. Penny’s has run off their best people and whats left plus new hires isn’t going to cut the mustard.
Ron Johnson’s success at Apple was due to Apple products and reputation. I really think anyone could have made the Apple stores a success. They sure didn’t collapse when he left (no one missed him)! Penney’s has problems and Johnson has turned them into insurmountable problems.
You can drive some traffic with huge loss leaders, but that’s not sustainable. I’m buying flowers for the funeral.
They maybe lost their customer base. I was in a Penney’s a few months ago; no customers. Penney’s flipped the switch too quickly. The customers went to Kohl’s.
Given that over 80% of sales transactions in department stores are for promotional items, it seems likely that JCP will see some form of increase. The other requirement is for someone on the JCP management team to figure out how to make the company relevant in the current environment. Flashy graphics, an alienation of the old customer, and a lot of hubris don’t seem to be working out too well.
In addition to the return of targeted promotions, the new effort includes in-store signing and revised price tags communicating “MSRP” or “Comparative” pricing. This too is not a new tactic. Ross Stores and the TJMaxx group have been doing this forever. And to some degree it works. With their shopper.
Does J.C.Penney think they have a comparable shopper to those models? MSRP works in auto retailing because those retails are fairly easy to find, the consumer is willing to do research in advance of the purchase, and generally trusts the information (it’s usually validated on the sticker). Apparel MSRP has none of those features.
I fully understand the thinking: “we really do have value pricing, we just have to find a way to convince the shopper that the price they see really is a great deal.” To some degree, this will work. It will also, I fear, further degrade the brand perception…because it is a tactic already familiar to bargain shoppers in much less attractively merchandised stores.
However: this will do nothing for the footsteps who have already left or are not coming back.
As others have noted, there are no case studies I am aware of in which a similar retailer actually wins back the customers lost.
Sales promotion entering into the “tactical” plans at JCP will not change the fact that they have experienced a significant erosion of their customer base, which can find goods on sale at nearly every other retailer in JCP’s category. JCP has been either myopic or arrogant in terms of thinking customer-centric as it developed and implemented its grand turnaround strategy.
JCP, like several other retailers mentioned in this discussion, will be grand case studies for future business school students.
Call me right or wrong But I personally think Mike Ullman did a GREAT job over his time at Penney. I applaud Mr. Johnson for his push towards special brands and associations and in store boutiques, but his pricing strategy is not a good idea and I have never been a fan of that.
American shoppers want a deal and want to feel like they really got something, some okay middle market garment—REALLY cheap—THAT is the success for middle market.
The middle market is a horrible bloodbath mess and the most terrible space. EDLP is NOT the way to go.
I REALLY hope that there is a change and that it works. Some people and analysts have already written Penney’s obit. I Hope NOT! However, without change and “modification” of this latest campaign, there WILL be need for all those obits.
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The promotions are a start, but they are also going to have to fix their inventory. When was the last time you heard anybody brag that they bought something at JCP?
It would be too easy to say “I told you so” when it comes to JCP’s pricing policy. It is better to recognize Ron Johnson for acknowledging his mistake and making the right correction. J.C. Penney is an icon in American retailing much like Sears, and sale prices and promotions are just as much an American retailing tradition. Now let’s wait for the next Johnson innovation introduction. Hopefully it will be innovation that meets the shopper’s expectations.
Well, pure candor would have been better than “Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it.” If they’d said “We screwed up, we’re sorry, and now we’re going to fly right” it would have been refreshing and more appreciated by their shopper base.
Penney is, in the eyes of many, just another “me-too” mid-market mass merchandiser. That’s a disastrous position to be in. I’d be adding in some treasure hunt upscale goodies, and more upscale in general, and promoting the heck out of it with price. The alternative would be to go up against Walmart on price, and we know the usual results with that strategy.
Yes, sales will help turn things around for J.C. Penney. This is a retail chain with a very specific reputation and customer base, and obviously that customer base did not appreciate the new strategy.
With that in mind, company executives should consider how innovations, new technologies and new strategies can build on the foundation of the J.C. Penney brand.
I don’t believe Ron Johnson can change J.C. Penney to the degree he apparently he was attempting. J.C. Penney will not become Nordstrom and can not develop into an “Apple” type of retail chain.
In my opinion, this latest move will only confuse customers. Penney’s was struggling before it introduced “Fair & Square Pricing.” Obviously, the customers who left have found their needs satisfied elsewhere. Promotional pricing is neither a strategy nor a point of significant difference. Penney needs to develop a sustainable point of positive differentiation beyond merely offering sales promotions.
“Our sales have gone backward a little more than we expected.” Yep, just a little, huh? Too little too late in my opinion. The things Penney must do to gain market share, well they can’t do those things and won’t be doing them.
I really wish Mr. Johnson had read Walter Loeb’s Forbes blog before “evolving” to this new strategy. Loeb’s suggestions—which include one of the “shops within a shop” being the clearance center—are brilliant.
Also, hopefully there are enough retail veterans working in the chain to explain the laws about MSRP, and “compare at” prices. These laws are pretty well enforced and can lead to rather high fines.
I’m really starting to wish the leadership team at JCP could think a little more incrementally. I’m afraid this is just going to confuse the “new” customer even more.
I will admit that I was wrong. I was truly hopeful that Mr. Johnson’s strategy would have worked and it did not. That said, I agree that what J.C. Penney has learned over the last year plus will help them shape a strategy moving forward. Part of that strategy will need to be promotions related to sale prices.
New remodeled J.C. Penney stores look great and I believe their assortment has improved along with their offering of unique and Private Label brands. J.C. Penney has a following that will be excited about coming back. The hype around them going back to a sale model will also attract customers that want to see what they can save.
With their new logo and patriotic feel it would be great to see J.C. Penney really promote some Made in America items. This is a trend I see building momentum and J.C. Penney would be smart to jump on early and get some credit for it.
In my opinion, J.C. Penney had lost its identity even before the “Fair and Square Pricing” strategy. First of all, consumers don’t want, “fair and square,” in as much as they want “deals” and great value. Those of us in the CPG and retail industry know that only Walmart can be Walmart and be successful with everyday low pricing because the consumer “gets it” when it comes to Walmart, but the consumer doesn’t “believe” it with most other retail chains.
There are a number of reasons for this; too many to mention. J.C. Penney seems to be oversimplifying its real issue, which is that it has an identity problem with younger consumers, and it’s being out-witted by companies like Target and Kohl’s for its own market.
J.C. Penney will never regain relevance in its current form. No more so than Sears or any other department store format. Mr. Johnson’s efforts simply made JCP’s slide more public and more interesting to the business community than the others.
For those who haven’t been inside a J.C. Penney store recently, you will find yourself quite amazed at their transformation in product, presentation and pricing. Unfortunately if you are/have been a regular shopper at Penney you will be confused in their product, presentation and pricing.
As discussed in a previous posting, Penney made the same kind of mistakes that Walmart made under John Flemming, their vision didn’t align with their customers needs.
So after gutting personnel, updating their assortments in favor of younger shoppers and shifting away from promotions to every day low pricing they effectively alienated their core shopper base and as a result sales dropped precipitously.
If J.C. Penney is to survive they must keep what has been successful in their transformation, but at the same time they must work very hard to regain their core customer and to focus on delivering the Penney promise that had kept them (mostly) loyal shoppers.
For Walmart this was to add back breadth and depth to their assortments, reinvigorate their EDLP promise and to deliver on these things consistently. They are making up ground and showing a pretty impressive turnaround, however, they had the deep pockets needed to do so.
Penney may not be so fortunate as their fortunes have slid precipitously; unless they can quickly win back their core, they are in serious trouble.
This is yet another example of very smart people believing that you can apply a “template” to another retail channel and achieve the same level of success that was experienced in a vastly different environment. This approach almost NEVER works.
But now that the “fair and square” pricing has proved not to contain the magic it was thought to have as a headline pricing and promotion strategy, I would not throw it out altogether. In fact, I would keep it in the mix of options.
Returning to more traditional sales promotions will help JCP get back into the game, but I would advocate that they run fewer and deeper promotions and not overexpose sales promotions to the extent that they become the only time shoppers see value in shopping JCP.
Price comparing can be dangerous, but likely not a bad short-term strategy for re-building trust and pricing integrity back to JCP shoppers. I will watch with interest.
“Our sales have gone backward a little more than we expected”? Understatement of the year. Yes, it’s possible that JCP will start to demonstrate a positive comp sales trend in 2013, but part of the reason is the hugely depressed base from last year.
It will take more than the “targeted promotions” (such as 20% off Fine Jewelry for Valentine’s Day) or the new ticketed price comparisons to “suggested retail” to return JCP to relevance. And it’s a double-edged sword: Penney is trying to regain the core customer through sales promotions, but she is not likely to appreciate the transformation of the store into a collection of trend shops like Betseyville and Cosmopolitan, staffed by associates with handheld checkout devices.
Ron Johnson shot Penney’s best (albeit dull) arrow in the air and the company landed in “nowhere land.” Now it’s back to the future of what it once was, which wasn’t that great, and expects its pricing “evolution” holds a pot of gold. That reference should not be a pot but a “crock.”
Penny has to become something the public sees as being new and better not a just a return from a dreamer’s dream. There are hurdles ahead for old J.C.
JCP attempted the extremely difficult feat of totally repositioning a brand and recreating the shopper experience. They articulated a vision and tried to execute it immediately.
They clearly learned several things. This degree of transformation requires more than a vision;it needs resources and time to execute. It is more difficult to attract new shoppers with a new concept than it is to retain current customers with sales. Most importantly, JCP is not even remotely comparable to Apple.
Their new strategy recognizes the reality of their situation. They have to hope that they can maintain enough business to allow them time to evolve.
Penney’s is not unlike Sears; it has much to do to get its customers back. Yes, they are confused. Apparently, so is the management. No wonder we don’t know what to expect.
I have not been in a Penney store for a long time. Never found much I liked or wanted to purchase. But now I think I will visit a store just to see if the changes will warrant a return not only by me; but the masses who exited over the recent years.
Just think of Clint Eastwood’s voice: “Improvise, Adapt, Overcome!”
Isn’t this what we would expect from a good and on to be great retailer? “Our sales have gone backward a little more than we expected, but that doesn’t change the vision or the strategy. We made changes and we learned an incredible amount. That is what’s informing our tactics as we go forward.” These are his words.
There is a difference between vision, strategy, and tactical maneuvering. Overall, I don’t see any change in vision or strategy. What I see is tactical changes in achieving the prior.
JCP stores are brighter, more open, and better merchandised than ever before. This also is still a work in progress that has not been completed throughout all areas of the stores.
Learning and adapting are critical components to their success. Being flexible, making changes and adjustments, don’t signify failure.
I have been previously much more critical of JCP. I have to say now after seeing a bit more that like what I am seeing. I like what is taking place in their stores.
They are gaining what I would interpret as Target-like feel. Their market is for a similar type shopper. Keep going. Keep adjusting. Keep the vision.
This whole episode just goes to show you that when you train your customers to think ‘sale’, you can wind up ruining the brand. Hopefully, RJ and the board are thinking long term in which case, a ‘sale detox’ would work.
Seems like this is a short-term fix to just get some rev going. Who can blame them, it’s January!
If Ron Johnson didn’t have “Former Apple Store Guru” after it he would have been gone a long time. Worst. Makeover. Ever.
How a guy can lose 30% of a core business, even more online, repel customers, look like some reality show all while stoking the Pollyanna PR machine isn’t fiction. Will a new term be created for such action, like he “RonJohnsoned it”?
Don’t blame any of this on the J.C. Penney brand. The fault of all of this falls squarely on one man who let down an entire nation of loyal shoppers.
If they are purely going to compete on price, I think we all know where that will lead. Whether it is EDLP, deep promotions, or any other configuration, they will forever having to react rather than be proactive.
JCP has to assert what they represent and who they are targeting. The general shopper does not have an “image” of what JCP stands for now, that aligns with what is in the stores. Is it 50 plus year old shoppers looking for a blouse or is it a teen/young adult looking for stylish jeans and shoes?
Right now, neither looks at JCP and says, “that is MY store.”
I guess everyone remembers “New Coke,” the 1985 revamp of the Coke formula. It turned out to be one of the worst product upgrades and the greatest marketing campaign. It bought Coke plenty of free advertising as the wars developed between “classic” and “new” drinkers hit the headlines.
I think this may well be the outcome of the JCP flurry into “no frills” retailing. The understanding that moderation is probably the best approach will yield a retail image that minimizes the hype while at the same time catering to the consumer. As retailers focus more and more on individual preferences, the value of mass advertising and across the board discounts will diminish. With JCP already having pulled back on their mass merchandising budget, they are in a perfect position to focus their promotion spending on targeted offers. At the same time, a little mass promotion will attract the new customers. Just where the world is headed.
Apparently customers like unnecessarily complex pricing strategies.
I think the bigger issue here is inventory visibility. On a number of occasions I’ve gone to purchase merchandise advertised on the site, only to find it sold out. JCP won’t want to train customers into thinking that they’re usually going to be out of stock.
At this point, anything that will help the customer identify with JCP and get them into the stores will help. However, they must find what they are looking for when they get there. I do not disagree with the moves Ron Johnson has made, just the misunderstanding of who their customer is and what she wants from them. I would love to see JCP engage with a top notch customer experience group and take a look at inspirational performance tools for sales associates. I worked with a room full (600) of fast food owner operators yesterday using a gamification tool and it was very enlightening. Just sayin’….
The comment by the JCP spokesperson, “Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it,” indicates a drastic lack of understanding of the concept of evolving. Had Ron Johnson chosen a course of evolution to begin with, he could have reduced the ridiculous number of Penney’s promotions annually and clarified the company’s position, without alienating a significant part of his loyal customer base. He could have reinvented the look of his stores and implemented a new pricing strategy with a fresh product mix through proper consumer tests in select markets, over time.
Evolution might have allowed him to maintain and reeducate his customer base while attracting new categories of customers.
Now his personal fame is rivaling that of the JCP brand and that is simply not good.
“Now, Penney and its CEO, Ron Johnson, the champion of the strategy, have reversed course …”
“Daphne Avila, a spokesperson for the retailer, told Bloomberg News, ‘Our return to sales in no way signifies a change to our pricing strategy, but rather an evolution of it.’”
Well, which is it?
My original thought was “Another day, and another smile on Eddie Lampert’s face that Sears isn’t in the headlines,” but after reading the comments, I see that Sears managed to enter the conversation anyway…not a good thing.
Too little too late. Sales promotions aren’t the issue anymore, it’s personnel. Penny’s has run off their best people and whats left plus new hires isn’t going to cut the mustard.
Ron Johnson’s success at Apple was due to Apple products and reputation. I really think anyone could have made the Apple stores a success. They sure didn’t collapse when he left (no one missed him)! Penney’s has problems and Johnson has turned them into insurmountable problems.
You can drive some traffic with huge loss leaders, but that’s not sustainable. I’m buying flowers for the funeral.
They maybe lost their customer base. I was in a Penney’s a few months ago; no customers. Penney’s flipped the switch too quickly. The customers went to Kohl’s.
Given that over 80% of sales transactions in department stores are for promotional items, it seems likely that JCP will see some form of increase. The other requirement is for someone on the JCP management team to figure out how to make the company relevant in the current environment. Flashy graphics, an alienation of the old customer, and a lot of hubris don’t seem to be working out too well.
In addition to the return of targeted promotions, the new effort includes in-store signing and revised price tags communicating “MSRP” or “Comparative” pricing. This too is not a new tactic. Ross Stores and the TJMaxx group have been doing this forever. And to some degree it works. With their shopper.
Does J.C.Penney think they have a comparable shopper to those models? MSRP works in auto retailing because those retails are fairly easy to find, the consumer is willing to do research in advance of the purchase, and generally trusts the information (it’s usually validated on the sticker). Apparel MSRP has none of those features.
I fully understand the thinking: “we really do have value pricing, we just have to find a way to convince the shopper that the price they see really is a great deal.” To some degree, this will work. It will also, I fear, further degrade the brand perception…because it is a tactic already familiar to bargain shoppers in much less attractively merchandised stores.
However: this will do nothing for the footsteps who have already left or are not coming back.
As others have noted, there are no case studies I am aware of in which a similar retailer actually wins back the customers lost.
Sales promotion entering into the “tactical” plans at JCP will not change the fact that they have experienced a significant erosion of their customer base, which can find goods on sale at nearly every other retailer in JCP’s category. JCP has been either myopic or arrogant in terms of thinking customer-centric as it developed and implemented its grand turnaround strategy.
JCP, like several other retailers mentioned in this discussion, will be grand case studies for future business school students.
Call me right or wrong But I personally think Mike Ullman did a GREAT job over his time at Penney. I applaud Mr. Johnson for his push towards special brands and associations and in store boutiques, but his pricing strategy is not a good idea and I have never been a fan of that.
American shoppers want a deal and want to feel like they really got something, some okay middle market garment—REALLY cheap—THAT is the success for middle market.
The middle market is a horrible bloodbath mess and the most terrible space. EDLP is NOT the way to go.
I REALLY hope that there is a change and that it works. Some people and analysts have already written Penney’s obit. I Hope NOT! However, without change and “modification” of this latest campaign, there WILL be need for all those obits.