J.C. Penny’s, the ACME Department Store of the 21st century


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We were going to start today’s blog with a title in the form of a question. Something like, “Would you like a simpler system of price promotions when you go shopping?” or “Wouldn’t it be nice not to have to worry about coupons when you shop?”

We went with another title because the problem was that we couldn’t come up with a question where any rational consumer would have actually said “no.” We mean, come on, who wouldn’t answer “yes” to simpler pricing and not having to clip, save, and carry coupons.

But the reason we were having a problem coming up with a good “bad” question is that those are the questions we don’t use, the kind that get you excellent answers to meaningless questions. All asked and collected properly, but not actually reflecting the emotional reality of the marketplace or the expectations of the consumer: a fact that Ron Johnson, the ex-Apple, new-J.C. Penney CEO might want to consider when making plans for the company.

Mr. Johnson announced both some long-term and short-term retail strategies last week. To wit, re-do all the stores, each divided into 100 boutiques. Unfortunately, that will take 4+ years, which is glacial in retail-time. More immediately, however, the company plans to introduce a new logo and move away from nonstop promotions to three kinds of prices:

1. Everyday low prices (like Wal-Mart)
2. Monthly specials (like Sears and Kohl’s)
3. Clearance prices (like, well, every other retailer)

In an interview in The New York Times, Mr. Johnson noted that last year Penney ran 590 unique promotions, but the average customer only visited 4 times. Mr. Johnson was quoted; “So customers ignored us 99% of the time. At some point you, as a brand, look desperate if you have to market that much!”

We certainly would agree. What actually drives engagement and loyalty in the retail category are values that are synonymous with exceptional consumer experience. Unfortunately, J.C. Penney is not actually a brand right now, insofar as consumers define them, which is by how close it comes to meeting their expectations in the category. Yes, it’s certainly a name consumers know, but it’s not known for anything in particular. J.C. Penney has become a ‘placeholder’, a kind of ACME Department Store of the 21st century where low, lower, lowest pricing has become the price-of-entry, certainly not an emotional differentiator.

Mr. Johnson’s previous employer sits at the other end of that continuum. If any brand has understood and capitalized on the emotional aspects of its category, and being able to delight its customers into an engagement frenzy, it’s the platinum MBA-case study brand, Apple. There is little doubt that JCP’s new CEO has brought with him a deep understanding of that reality, as evidenced by his honest assessment JCP being ignored, and not sugar-coating the problem.

We applaud JC Penney’s move to borrow from the best. Ron Johnson’s greatest challenge may be seeing his new world without abandoning the cultural lens of his old one –a challenge made easier by an insistence on deeply understanding, and fixing, what really matters.

One might even say, in the world of retail, thinking different.

Robert Passikoff
Robert Passikoff, Founder and President of Brand Keys, Inc., pioneered research in loyalty and engagement, creating the Brand Keys Customer Loyalty Engagement Index® ,the Sports Fan Loyalty Index® , and the Women's Wear Daily Fashion Brand Engagement Index® . His first best-selling book, Predicting Market Success provides marketers a 21st century perspective on predictive loyalty metrics. His newest book is The Certainty Principle: How to Guarantee Brand Profits in the Consumer Engagement Marketplace.


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