Enough Is Enough, JCP

Posted At: April 19, 2013 2:00 p.m.
by Lindsey Green

Earlier this month, JCPenney fired CEO Ron Johnson after 17 months of a major rebranding attempt. Critics have been quick to criticize the former Apple executive, labeling the move and the CEO as failures almost as soon as the new “Fair and Square” pricing scheme started last February. Instead of traditional department store methods of sales and promotions, the new model would have everyday low prices and a few month-long promotions, with “best prices” being offered only on the first and third Fridays of the month.

Like many Americans, when I think of JCPenney, clearance sales and coupons are the first things that come to mind. For decades, those incentives have been the primary marketing techniques for classic American retailers. So why would someone want to take that identity away?

Johnson’s initial vision for JCPenney was a trendier blend of value and chic, in hopes of attracting younger and wealthier consumers and leaving behind its association as a bargain bin. He called these new stores “JCP” and revamped the layout to feature specialty shops with more hip and upscale brands. He hoped to transform the 1,100 existing stores into cool places to hang out, with restaurants, salons and free Wi-Fi.

While this vision sounded interesting, Johnson failed to establish an effective communication plan. He dove headfirst into the new business model and ditched JCPenney’s loyal coupon-cutting customers in the blink of an eye. Instead of using a staged roll-out, or even conducting consumer testing and surveys, he went full throttle into the campaign before properly attracting attention from the types of customers JCP was now targeting. The company’s new ad campaign focused on the new pricing scheme, instead of promoting the store as the trendy, new-age place that it was trying to be. The once-loyal, “old” customers abandoned by the department store and sales were down more than 32 percent in the final quarter of 2012.

Things could have been different for JCP and its gung-ho CEO if Johnson had merely listened to consumer response. A complete renovation of a century-old retail giant is no small task. A careful, gradual approach would have allowed JCP the opportunity to adjust flaws as they were recognized and to determine how to effectively reach the target audience. This strategy could have helped the retailer keep some of its existing customers throughout the rebranding process, creating a more stable economic situation.

Now, JCP faces a challenge: continue with the rebranding process or revert to the old model. With former CEO Mike Ullman back as interim CEO, coupons have already been reinstated. What path do you think JCP should take? Do you think the new model is still worth trying?