What JC Penney Management Forgot About In Their Turnaround Plans
JC Penney threw out the very customers who made them successful to court people who have no history with the brand. And that’s a big miss.
It’s as if the shoppers who built their business were lost causes.
And here’s what one of their customers had to say about that on the JC Penney Facebook page, “Always thought of JCP as a middle of the road salon, but I guess they are trying to become a discount shop! Best of luck with your endeavor! You’ll be losing us middle aged people right and left now! (And we’re who’s paying your salaries….not free kids!)”
Boomer customers and their parents are the ones who still have jobs, have discretionary income to some extent and still have an affinity toward the stores that outfitted their families early on.
Back in the day, JC Penney spent a lot of time and resources building their lists like any good retailer. Like any retail consultant worth their fees will tell you, to increase frequency of visits, you reward customers with discounts, just for them, for a limited time. It makes them feel like part of the club, gives them a reason to feel good about your brand and most of all, gets them in the door because it scratches their itch of urgency.
When those customers are totally turned off, what then?
You turn to a million free haircuts to try to build traffic.
Here’s the big thing no one is talking about…
In all the press releases, in all the announcements of the week, in all the smiling Ron Johnson photos, what has been absent is the reason consumers should choose to shop at Penney’s, that reason being that their service model was going to improve.
When I heard the news that a new Levi’s store had opened at my local JC Penney’s, I went. I walked in and saw two iPads on a deserted counter top. Did I see a service person? No. Did that make me want to buy jeans here? No.
Did the sign advertising their new, everyday prices of $45-50 scratch my itch to want to buy? No. I left empty-handed.
If JCP is going to just be a building to house 100 shops, where is the compelling reason to choose them over the same branded stores in the mall or a competitor with better promotions?
There isn’t one.
Oh there’s a lot of gee-whiz announcements like this one, “You’ll be able to check out anywhere anytime, from anyone including yourself, because we’re going to roll out self checkout to our stores next year, and it’s really cool and it’s really easy because it’s RFID-based,’ Johnson said.”
And in a clicked-on world where everyone loves technology, maybe that will work but a friend’s aunt, a loyal JC Penney shopper won’t even use an ATM. She prefers going into the bank to transact with people, not machines. Think she’ll understand RFID (radio frequency ID tag) technology will make her shopping experience better because she can do it herself?
Self checkout is not the holy grail some thought it would be, checkout today’s article that IKEA is removing self-service checkouts.
But don’t tell Johnson that for he is convinced that, “…our transformation is on track. We are making extraordinary progress in everything we’re doing.”
He’s forgotten about the JCP customer. He’s forgotten that the people who built his business are not monogamous – they can go anywhere.
You have to constantly reaffirm your customers choosing you, driving past your competitor and walking into your brick and mortar store. That comes from a customer service strategy and marketing plan focused on your loyal customers.
Final thoughts on how it could play out
Scenario 1 – Johnson is able to pull it off by his target date of 2014. My guess is if this happens it will be as a result of JC Penney closing most of their rural locations, the very ones where their loyal customers used to regularly shop. It will have become a department store concept popular on the coasts and will survive for a short while as a much smaller retailer.
Scenario 2 – The clock runs out on the JC Penney turnaround. Brands that invested into the store-within-a-store concept see sales in inverse proportion to the money they invested. Investors who believed any good news get tired of waiting. The brand, after trying to woo shoppers in without discounts, reverses course just like Sears and Macy’s tried in the past, but it is too late. Loyal shoppers see JC Penney as a lost cause.
Do I want JC Penney to fail? Of course not. But the implications if it does fail -for commercial real estate, malls, shopper behavior, and in a world where 1 in 4 jobs depends on retail – are enormous. The brand needs to reconnect to their loyal customers before it is too late.
What say you? What scenario do you see?
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I have had good luck in the past shopping at JCPenney, and thought okay, no sales or coupons, I can live with that, cuz I don’t shop that way so much. But when I walked into the store a couple of months ago, I felt totally disoriented – I didn’t realize the stores were going to undergo a whole revamping as well. I walked in and walked out, and shopped online through their website instead. I bought shorts, and then they went on sale a couple of weeks later (I thought no sales). Okay maybe end of season “closeouts”? I wish them luck. I can barely stand walking into Sears, a store that just gives me the creeps anymore. I didn’t use to feel like that 30 years ago. It is sad what has happened over the years.
Well done post, and I think you are right on target about service. I’ve had similar experiences visiting my local JCP myself.
It seems that Mr. Johnson hasn’t actually *visited* a JCP store to see this first-hand. No reasonable person with even a hint of experience, let alone his, could conclude that the complete lack of engagement on the sales floor is healthy.
It also seems that Mr. Johnson hasn’t discovered the wisdom of testing out crackpot ideas on a limited basis to see if they actually work. If he had done more testing, he’d probably see that his ill-fated pricing scheme wouldn’t drive traffic or profits.
I think every consultant worth their salt points to the same problem you did Jeff – no testing of the idea in a few stores before putting the whole brand under siege. He’s doing the rounds of PR this month and I guess it will be awhile until someone starts saying the Emperor has no clothes.
In the past JCPenney was full of clothes, crowded and a haven for shoplifters. What the average critic does not know is that a lot of their locations were experiencing high shrinkage dollars. With the new look, everthing is organized and by using the shop, you can purchase an entire outfit without having to look all over for it. It makes shopping simplier and faster. Secondly, by slashing their prices in halp and in some cases by 60 percent, those prices are cheaper than using a coupon and they are not cutting down any extra trees. Coupons are like a crutch and if people really pay attention to the prices, they are reasonable. Everyone should know that if a company offers a coupon, the item has been marked up to compensate the difference. Furthermore, I know of people that would only shop at JCPenney when they had a ten dollar coupon and they would head to the clearance rack and spend hours looking for a ten dollar item. If people check the hisory of zJCPenney, Mr. Johnson has returned to the way Mr. Penney started the company; with fair and square pricing and he did not beleive that people should need a coupon to shop at JCPenney.
Keep up the good work Mr. Johnson
Sounds like you have insider knowledge of the brand and are comfortable with the direction. While we all hope it works, the careless disregard of the customers who built that brand has landed it in a worse position than it was with them.
Bob, enjoyed your article here very much and thanks for enriching the discussion on my Forbes blog with your insight and linkback to this article.
From a Retail Customer Experience perspective I can see what they are trying to do but, as I said, in my blog it is entirely out of context with how they are perceived by their core audience. That’s a very dangerous premise to base a transformation on, unless you are supremely confident in the outcome.
When I look at the concept stores though and and fail to see and army of happy, smiling, committed staff who are genuinely excited I get a sense that something is very wrong. The stores look sterile and over-stylised. JC does not have the same allure, image, or aspirational brand recognition as Apple so, to their core audience, and the casual observer, this just looks wrong.
Excellent point Jamie – not finding excited workers in the new space and lack of shoppers. How does JCP recover after they let Johnson go is now what I’m starting to hear people ask. It won’t be easy.
The only quick fix hope “After Ron Johnson & team” could be if old management team is brought back…I am sure they must have learned a lot during all this and with their experience and understanding of core JCP customers they can get the house in order with minimum damage. Also, this will send a very positive message to customers that their view have been heard and they’re important to JCP.
In any case, damage being done is irrepairable in my opinion!!!
I enjoyed the post too….good job.
I agree with “Scenario #2″ since failure is inevitable. I am a current employee at an international sourcing location of the company and would like to share that one additional implication of all this is the fact that long term JCP suppliers are being wounded & crippled beyond imagination…there are thousands of jobs (mostly sewing workers in 3rd world countries) which are being eliminated by all these supppliers.
Home was one of our strengths but with private brands being eliminated and deal with Martha Stewart hitting road blocks, it is almost certain that JCP will be entirely out of this category. Even our own leadership at International offices publicly claims that JCP’s deal with Martha is illegal based on her agreement with Macy’s….how could I execute Martha Stewart development through my suppliers if my boss tells me what I am doing is not legally correct??
While Mr. Johnson is too busy figuring a way out, middle management seems to have decided to use the situation to gain maximum personal benefits. Despite a very recent overhaul of International sourcing organization due to mass corruption unearthed after a massive investigation exercise, even bigger criminals seems to have been awarded the task to deprive the company of millions of dollars. Almost all managers from top to bottom are busy taking bribes from the suppliers, shipping agents and service providers. In this situation where company is being robbed from inside, you’ll not have to wait untill 2014 for turn around clock to run-out….max 6 months and JCP will be up for sale just as a real estate!! Just one wrong move causing 110 years old company to wash away and I bet Mr. Johnson will have an extremly easy way out of all this ready to take his next assignment.
Penneys WAS my store. Ron Johnson has done nothing to make me want to shop there:( The helpful friendly sales people are now chained to registers:( [edited remark] While this was happening I stopped at my local Penneys at ross park mall near pittsburgh and spoke to the store manager. She was pleasant and asked me to return after the remodeling. So I did this weekend. Geez what a mess. The entire store is a dump with merchandise all over the place including the floor. Piles of clothes in the nmens fitting room, a store employee said the workers who maintained those rooms have been let go. I walked out refusing to shop in a pig pen. Inventory levels must be really low. few size & color selections. In retrospect I think Ron is nothing more than a beancouter hatch man. I shopped penneys because they provided SERVICE, I could of gone to target for self serve. I hope Ron gets fired before the chain is put out of business. Penneys needs to bounce him, bring back the old management and publically apologize to all its customers in a very noticeable way.
This must be a terrible time for the employees