Topic: Retail Sales

What JC Penney Management Forgot About In Their Turnaround Plans

By Bob Phibbs

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.

Read part one of this two-part blog here

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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