Penney Pivots
After listening to JCPenney's executive team a couple of weeks ago announce a marketing shift to emphasize item discounts in its advertising I had to wonder: Did the retailer's everyday pricing message resonate a little too well?
Penney's multi-media "fair and square" campaign had been its central message since it streamlined its pricing policy Feb. 1. The company had expected sales to falter in the short term as shoppers adjusted to the new strategy. However, the 20.1% drop in first-quarter sales was steeper than expected, executives acknowledged.
While JCP execs continue to insist they will not return to couponing and one-day sales, as of mid-May the message is now focused on highlighting month-long price breaks on specific products as well as "best price" clearance items.
"A lot of people think we're an everyday low price retailer. We're not," ceo Ron Johnson told analysts during a face-to-face meeting in New York on May 15.
I confess to a moment of whiplash there. But he continued: "We have promotions, but we don't have 590 of them. We have 12 - and they last all month, but people don't know that."
Another misconception, executives said, revolves around "best price" sales, which have been advertised as "Best Price Friday" on the second Friday of each month. Consumers mistakenly believe these are one-day sales. JCP is also sharpening its messaging there.
There was a silver lining behind the first-quarter numbers.
Among customers who shopped the store during the period, 21% actually bought something - not far off the 22% conversion rate in last year's first quarter. The average spend was $46, down 2% from the $48 average spend a year ago. And 67% of sell-throughs were at the highest ticketed price - an improvement from last year when 70% of merchandise sold at 50% off or higher.
But overall traffic was off by an unspecified number. Said coo Mike Kramer: "We did not realize how deep" the commitment to coupons ran.
Ay, there's the rub. The new Penney team has set a five-year term for turning around the operation. Will the new brands and shop-in-shops headed to JCP prove more of a lure than the coupons of old? Can JCP do holiday 2012 with month-long specials alone?
As I've written before, it's the retail story of the year. Possibly the decade.
Mehdy commented:
Ha this is my life right now (except I won't leave Holland with the sitter yet, BUT she's way eaiser to run errands with). I had a few girls this summer who were great with Harper and you guessed it back to college/high school now so no more freedom during the day except for MDO days! Marc would ask what I planned to do while the sitter came um, ERRANDS dude! No toddler to tote around was wonderful!
mp commented:
So far they seem to be doing everything wrong. Starting with their logo which is very similar to the one GAP tried to do years ago. They say they want to innovate, however, I am not sure how you do that with brand names that have little relevance. Names are OUT. The millennial market does not care and that is the future consumer. Consumers want well made, innovative product at good prices, they want authenticity, content, to participate in the product or to feel like they own it in some way, but most of all they want unique, engaging experiences. They have an exciting opportunity to create something so incredible right now. Success will depend on the product, the new store experience but most of all the right visionary spearheading the whole thing.
l.e. stone commented:
If JCP’s pricing message isnt’ getting across maybe they should consider concurrent focus on finding “new” products and brands that create great value at great prices and that have inherent enhanced profitability strategies reducing their reliance on products that are largely commoditized. The commoditization of home textiles is an old story where competitive basis has largely become price. Ironic, in an essentially design driven industry.
With Ron Johnson at the helm, there has never been a better opportunity for a retailer to differentiate itself by much more than pricing strategy. JCP has an enormous opportunity here to further set itself apart by working a lot harder in seeking out innovative products and to become “category creators.”
At the launch event in January Ron said “We want everyone who loves creativity and loves merchandising to come help us out.” The more important questions are, are buyers culturally open to meaningful innovative products that address the changing needs and expectations of today’s consumer?
Has the culture at JCP changed enough that their buyers would “recognize” innovative new products and the potential they have to create new categories in segments like home textiles? As Warren said “this consumer wants something that is theirs and nobody else’s.”
Do the buyers think “different enough?”
Especially in the home textiles segment, “thinking different” could really pay off.
Gloria Lang commented:
Personalized shopping offers and follow up is a key ingredient in satisfied shopping experiences most cited by college (time strapped) students.
One offer for all turns them off... These customers see value as H&M and Forever 21...For service in Home Products.... Bed Bath & Beyond receives the accolades.
bert commented:
they still are not focused on great prodcut and really fair low prices. For example on most comparable items they are above amazon . In addition they keep adding old brands which will further increase prices and decrease value
