Tis the season for come backs. Or at least attempts at one. First Kmart released Ship Your Pants and now JCPenney, or just JCP these days, has come out in a new ad titled It’s No Secret saying, “We’ve made some mistakes, but we’ve also listened to you. Please come back. Pretty please.”
But is this commercial going to be enough? Or where does Penney’s need to go from here?
A quick JCP history lesson
After years of being on the decline, JCPenney announced in June 2011 that Apple’s Senior VP of Retail Ron Johnson would be taking the reigns as CEO. Several changes ensued.
For example, sales and coupons were reduced or eliminated in favor of the Everyday Low Price (EDLP) strategy that Wal-Mart employs. Also, cash registers would disappear and be replaced by mobile checkout. Store design started going to “shops” in August 2012. The logo also changed twice since 2011.
On April 8, 2013, JCPenney announced that it had fired Ron Johnson and called the old CEO to come in as interim CEO.
Why JCP needed to say sorry
Although Johnson was trying to make JCPenney relevant again, consumers didn’t like it. Shoppers had known JCPenney for its sales and promotions. To take those away was to radically change the shopping experience. Forbes.com reported the positive response of shoppers as they heard that Johnson was out.
Investors didn’t like Johnson either and punished JCPenney’s stock, which dropped 57.3% during Johnson’s tenure. Though since his departure, the stock has rebounded 16.15% (at time of writing), in large part due to the 7.9% stake that George Soros took in the company.
With all of that going on, JCP recognized the obvious – they had made some big mistakes, lost consumer and investor confidence, and need to say sorry.
I give them props for owning up despite the slight begging nature of the commercial.
What does JCPenney need to survive?
The competitive landscape of this industry has changed over the last few decades. Entrants such as Kohl’s have challenged norms such as the need to be attached to a shopping center. Apple has proven that you can be successful in retail even when it didn’t seem to make sense for a tech company to be a retailer (a la Gateway computers).
JCPenney seems to have lost some of business’ fundamentals:
- Segmentation and targeting
- Understanding your target segment(s)
- Building a buying experience that matches how your shoppers want to buy
- Promotional strategy that resonates and induces buying (e.g. get rid of EDLP)
- Competitive advantage that is rare and hard to imitate
- Innovating to stay competitive
To be honest, it might be too late even if they do figure those things out. Saying sorry, though, is a good first step.