Case Study

J.C. PENNEY – CASE STUDY BY GROUP 8

Group 8 ▪ Adwait Joshi ▪ Chaitanya Charabuddi ▪ Chao-Hui Yin ▪ Ming Chang ▪ Yiwen Shao ▪ Yu-fan Huang ▪ Yu-Jou Tsai

MKT 6301

Marketing Management - Prof. Abhi Biswas

Table of Contents PROBLEM STATEMENT 3 ......................................................................................

BACKGROUND 3 .................................................................................................OBJECTIVE 5 ....................................................................................................

SITUATION ANALYSIS 7 ........................................................................................NATURE OF DEMAND 7 ..........................................................................................EXTENT OF DEMAND 8 ...........................................................................................NATURE OF COMPETITION 9 .....................................................................................ENVIRONMENTAL CLIMATE 12 ....................................................................................

Demographics 12 ..........................................................................................STAGE OF BRAND LIFE CYCLE 14 ................................................................................MARKETING MIX STRUCTURE 15 .................................................................................

Product 15 ................................................................................................Place 16 ....................................................................................................Promotion 16 ..............................................................................................Price: 16 ...................................................................................................

SWOT ANALYSIS 18 .............................................................................................Strengths: 18 .............................................................................................Weaknesses: 18 ............................................................................................Opportunities: 18 .........................................................................................Threats: 19 ................................................................................................

OTHER CASE SPECIFIC FACTS 19 ................................................................................

EVALUATION OF ALTERNATIVES 19 .........................................................................ALTERNATIVE I - GO BACK TO HIGH LOW PRICE STRATEGY (HL) 19 .............................................ALTERNATIVE II - CONTINUE WITH FAIR AND SQUARE PRICE STRATEGY (FS) 20 .................................

RECOMMENDATION 22 ........................................................................................MODIFY “FAIR AND SQUARE” PRICING STRATEGY 22 ............................................................BRING BACK AND FOCUS ON JCP’S PRIVATE BRANDS 23 .........................................................BUILD TRUST BY CREATING AN INTEGRATED BRAND EXPERIENCE 23 ..............................................LIMITATIONS/BARRIERS 24 .......................................................................................

PLAN OF ACTION 25 ...........................................................................................CONTINGENCY PLAN 26 .........................................................................................

REFERENCES 27................................................................................................

PROBLEM STATEMENT

Background

J.C. Penney is a department store, which was at one time considered to be America’s

most venerated department store. In its heyday, it was one of the largest department

store chain in the U.S. with over 2,000 stores across the country. As of August, 2012,

the 110-year-old retailer is operating 1,100 stores, claiming to serve more than half of

America’s households with 41 million square feet of retail space.

J.C. Penney gets its name from its Founder James Cash Penney, who opened the

company’s first outlet in 1902, in a Wyoming mining town under the name “The

Golden Rule.” The name signified its philosophy of treating customers the way Penney

himself wished to be treated. James Cash Penney believed in everyday fair prices. He

said, ‘We don’t mark goods up just to mark them down. We don’t believe in sales.

The company enjoyed years of rapid growth and expansion. By its 50th anniversary,

annual sales exceeded $1 billion. It initially offered consumers one stop shopping as a

mass merchandiser, selling soft goods, such as clothing, as well as hard goods, such as

appliances, hardware, electronics, and sporting goods. Its retail business was joined

by a mail order catalog in 1963 and an e-commerce website in 1998. However,

following tough times in the 1980’s, the company reorganized, phasing out its hard

goods lines and refocusing on its soft goods to become a fashion oriented department

store.

But by its 100th anniversary, the company appeared to be running out of steam. Price-

oriented mass merchandisers, such as Walmart and Target, had garnered the lower

end of the market, while higher end department stores, such as Macy’s and

Nordstrom’s, were catering to the upwardly mobile middle class. Although the

economic recession of 2008 was difficult for all retailers due to consumers’ increasing

frugality, middle market retailers, like J.C. Penney and Sears, were hit the hardest.

By 2011, J.C. Penney’s stores were old, often disorganized, and faded, and the brand

and its merchandise were starting to feel dated. About 400 of its stores were located

in small towns, with a population of a little over 10,000. In such towns, there were

often only few, if any, other department stores. The remaining 700 or so stores were

located in major metropolitan areas, often in suburban malls.

Following years of store closings, sales malaise, declining market share, slumping

earnings, and weak stock market performance, activist investor and hedge fund

manager, William Ackman obtained an 18% majority shareholder position in the

company in 2010–2011. He was determined to turn J.C Penney around and was

instrumental in luring Ron Johnson to take the CEO position of J.C. Penney.

Johnson was a big catch. In the 1990s, he was vice president of merchandising at

Target where he helped transform the mass merchandiser into a hot retail brand

selling stylish yet affordable products. Starting in 2000, he worked with Steve Jobs to

develop the wildly successful Apple retail stores.

Objective

Reinvent J.C. Penney – the brand

J.C. Penney was losing its market share to competitors in all segments and there was

a steady drop in sales. The newly appointed CEO, Ron Johnson tried to give a rebirth

to J.C. Penney by radically repositioning its business model and its brand in February

2012.

The centerpiece of the repositioning initiative was a switch from J.C. Penney’s

existing high-low pricing strategy, in which the retailer ran frequent sales to offer

customers deep discounts off of its higher list prices, to a new strategy the company

dubbed “Fair and Square” pricing. “Fair and Square” pricing was meant to simplify

J.C. Penney’s pricing structure and make it more straightforward for customers to

shop. It offered great prices every day, with less frequent price promotions. The

company touted its new pricing strategy as offering “no games, no gimmicks” and

invited consumers to “do the math” to see how it offered them cheaper prices on a

regular basis with less hassle.

The initial response for the change was good and the stock price of J.C. Penney rose

by 24% after the announcement of the new pricing plan. Investors viewed it as a way

for J.C. Penney to escape the ruthless downward spiral of escalating price promotions

that gripped America’s retailers struggling to survive the economic recession.

Give the initial response, Q1 results of J.C. Penney showed a dismal performance and

the stock price went down to less than half of its February 2012 value of $43 a share.

A loss of $163 million was reported, same store revenue went down by 19% and the

number of customers shopping in J.C. Penney went down by 10%. Even, the second

quarter results are expected to miss the target and, customers and shareholders are

growing impatient by the day.

We need to quickly come up with a strategy to stop the decline in sales as the all-

important back-to-school and holiday shopping seasons are not far away. Apart from

arresting the recent decline in sales, we need to come up with a long term strategy to

survive in the highly competitive retail landscape and compete with the new retail

formats. We need to reinvent the brand – J.C. Penney and regain customer loyalty and

market share, and also attract new customers.

SITUATION ANALYSIS

Nature of demand

Buyer behavior

Who – ▪ About 24% of JCP’s customers are core shoppers vs 35% peer group average

(Core shopper: Spends >$100 in 3 months) and these core shoppers accounted for 66% of total sales revenue of J.C. Penney

▪ About 40% of JCP’s shoppers are peripheral vs 32% peer group average (Peripheral shopper: Spends <$100 in 3 months) and they account for 9% of total sales revenue.

▪ Relative to peers, JCP’s customers have lowest median household income - $65000 vs Peer group average of $76,000

What – ▪ J.C. Penny is fashion oriented departmental store – it offers women’s apparel,

men’s apparel, children’s apparels, home accessories, family footwear, and fine jewelry.

▪ JCP also offers special services in elegant settings – tea-room, saloon, on-site tailoring which serve as a social hub.

When – ▪ Shoppers purchase during “Sales and Clearance” season. They love shopping

during weekend sales. Consumers are addicted to coupons and discounts. ▪ Customers are habituated to play games and hunt for good deals. Mostly shops

during big holidays with great discounts and promotions.

Where – ▪ Shoppers shop in stores located both in small towns and metropolitan areas.

JCP operates 400 stores in small towns and around 700 in metropolitan areas. ▪ Shoppers also shop through catalogs and e-commerce website.

Why – Shoppers do shopping at J.C. Penney for the sole reason of value addition - The #1 reason why a consumer shopped at J.C. Penney in the past, and has been a point of differentiation for J.C. Penney, historically.

Extent of demand

Size of market/Growth potential

Department stores are under increased pressure, in the ever competitive retail

landscape. Losing market share to both big box retailers like Walmart on the lower

end and small specialty stores like Gap on the higher end. Over the past 30 years,

department stores have become a less relevant part of the retail infrastructure as

American retail market exploded with big box and specialty stores and new shopping

formats.

There is a steady decline in the market share of department stores as they haven’t

done much to stay relevant in the changing times and shopping formats in the retail

market

From mid-2000s, facing a recession market, many companies were trying to trim costs

and find ways to rebound by customizing their products or targeting a more specific

market. Department stores were finally beginning to change by rationalizing their

number of stores, creating smaller store formats more appropriate to new markets

and customers. Some of them are also using the Internet more effectively as the 24-

hour store. They are doing an effective job of creating a good mix of brands, reducing

the need to offer discounts to the consumer for a lower-priced option. And many

retailers like Saks, Bloomingdale's and Neiman Marcus are expanding by opening off-

price outlet stores to provide aspirational shopper access to the store and brands.

In the case of Macy’s, they finally recognized that one size does not fit all of its 800-

some stores. It is now working hard to understand its different shoppers’ segments

and how to serve and satisfy them in a more customized way under its My Macy’s

initiative. It hired DunnHumby, the research company credited with helping UK

supermarket retailer Tesco achieve its long-term success, to assist it.

There is still a lot to be done for US department stores, to provide real value to the

consumers and remain a viable retail proposition over the coming years. A start has

been made but much is still to be done.

Nature of competition Till the 1990s JCP was doing well as a department store and people loved to go there.

But, with the advent of new shopping formats and stores JCP lost its significance and

market share. Other stores like Walmart, Target, Macy’s and Sears had distinct

differentiating factors and were eating into market share of JCP both on the lower

and high end. So, JCP is not only competing with other department stores but also

competing with stores like Walmart on one end and stores like GAP on the other end.

Annual Revenue Comparison

0

12500

25000

37500

50000

J.C.Penny Kohl's Corp. Macy's Inc. Sear's Holding Corp.

Operating margins Comparison

-3

0

3

6

9

12

J.C.Penny Kohl's Corp. Macy's Inc. Sear's Holding Corp.

Annual Revenue Comparison

0

125000

250000

375000

500000

J.C.Penny Target Corp. Wal-mart Inc

Operating margin

0

2

4

6

8

J.C.Penny Target Corp. Wal-mart Inc

Environmental Climate The most important factors of JCP’s environmental climate are the demographic and

economic characteristics of its customers.

Demographics Retailers love to have two things in their customer base - youth and money. Shoppers at JCP are short on both.

Nearly half the people shopping at Penney’s 1,100 or so stores are older than 55. In comparison, only one-quarter of  Target  customers fall into that demographic. At closer competitors, Kohl’s and Macy’s, just 36 percent of customers are on the north side of age 55. Only 20 percent of Penney’s customers are under the age of 35, while some 29 percent of the crowd at Macy’s and 36 percent of Target’s customers fall in that camp.

Customer Age across retailers

0%

25%

50%

75%

100%

J.C. Penney Macy's Target

36%29%

20%

39%

35%

30%

25%36%

50%

> 55 35-55 < 35

Relative to peers, J.C. Penney’s customers have the lowest median household income ($65,000 vs. peer group average of $76,000). Only 13 percent of JCP’s shoppers have an annual household income of more than $100,000, while Kohl’s, Target, and Macy’s better that statistic handily. At the other end of the spectrum, 29 percent of Penney’s customers make less than $35,000 a year, compared with 19 percent at Kohl’s and 20 percent at Macy’s. The above data illustrates two things clearly about JCP’s shoppers: ▪ They are relatively price sensitive ▪ They are probably more set in their shopping ways than customers at

competing department stores. We can also conclude that it is very difficult for JCP to reach its past glory of being a mass market retailer. This is because the mass market is gone – the middle class is gone, or at least rapidly shrinking. There’s a troubling development in US economy, what some have termed as the “hourglass economy” – Companies can reach both high-end and low-end consumers, but there’s no longer a broad middle to appeal to. For years, a fundamental problem that JCP has grappled with is that their historical base of middle-income households is shrinking. If JCP continues to focus on the shrinking middle class, it’s only reasonable to assume their sales will also continue to shrink.

Household Income of Customers

58%29%

13%

> $100,000 < $35,000 Others

Stage of Brand Life Cycle

J.C. Penney was founded in 1902 and it was the time when many other department stores started their operations too. The company, along with other department stores, enjoyed years of rapid growth and expansion over the next 50 years and by its 50th anniversary, annual sales exceeded $1 billion. Over the next 20 years, the department store industry was in the maturity phase and JCP was no different. The highest number of stores it operated at this time was around 2000. But by its 100th anniversary, the company appeared to be running out of steam and JCP’s stores were old, often disorganized, and faded, and the brand and its merchandise were starting to feel dated. A survey shows that a new generation of teens views a brand as "old school." A new technical or cultural innovation makes the brand seem quaintly obsolete, or the brand begins to fade into the cultural background noise as newer competitors dazzle with novelty. J.C. Penney is facing a similar problem right now. It is considered as an old-fashioned and outdated brand and is unable to attract young shoppers. Changes in societal values provide a substantive reason for increased competition, and a brand like J.C. Penney, that has enjoyed unchallenged success for decades must

1900’s Up to 1950’s 1960’s – 1980’s 1990 – 2010 Post 2010

quickly adapt to survive. It is critical that strong brand leadership act quickly to re-establish the brand's core relevance in the minds of its consumers, or risk the pull of commercial perceptions that will accelerate brand obsolescence A brand audit can help JCP initiate a repositioning strategy. Brand managers can quickly grasp the problem by identifying what parts of the Brand - JCP are timeless and which aspects haven't aged well or are out of step with the modern mindset. From there, a refreshing brand strategy at every touch point can constantly eschew images, words, product lines, or marketing that makes the brand seem dated or irrelevant. JCP is a very well known brand but also so ubiquitous that it became a background noise, and people forgot why it's special. Relevance in a fresh context can become a growth engine for an older brand like J.C. Penney.

Marketing Mix Structure

Product Apparel, Home products, Fine jewelry, Footwear, Accessories, Services - Salon, Optician

Place • Extensive network of physical stores – 400 in small towns and 700 in Metropolitan areas • Online store & catalog order

Promotion Advertising (TV, Radio, Print, Online), Sell promotions (free service), Direct marketing (Catalog), Internet (website, social media)

Price: Fair & Square pricing strategy - 3 types: Everyday, Month-long, & Best Friday High Low pricing strategy

High Low Pricing Strategy

▪ Frequent sales to offer customers deep discounts off of the higher list prices ▪ In 2011, JCP spent $1.2 billion to execute 590 different sales events and

promotions and generated 72% of its $17.3 billion (annual revenue) from products sold at steep discounts of more than 50% off of the initial list price

Fair and Square Pricing (Combination of EDLP & HL)

Announced in January 2012

▪ JCP avoided using the words “Sale” and “Clearance” in its messaging ▪ Listed only the “Fair and Square” price, rather than MSRP ▪ All “Fair and Square” prices ended with .00 instead of .99 ▪ Distribution of high quality, editorial content-heavy glossy magazines to

highlight Monthly Values (both branding and promotion). $80 million funding for each Monthly Value event.

Comparison of High Low Pricing and Fair & Square Pricing

Every Day Fair Price Month Long Values Event Best Price Fridays

Reduced prices by 40%

Special pricing on seasonal items Additional 20-29% discount

Every first and third Fridays Spl deals on items to be liquidated 1/3rd of the Every Day Fair Price

SWOT Analysis

Strengths: ▪ J.C. Penney has a long history in the department store industry. It established

stores nationwide in the U.S., When people think about department store, they think about J.C. Penney

▪ J.C. Penney has vast real estate holdings with an estimated worth of $11 billion, (it provide abundant capital for J.C. Penney to expand their operation)

▪ J.C. owns 400 of its retail stores and pays low rent for the remaining 700 stores - an average of less than $5 per square foot, compared to other retail stores like Gap which pay around $40 per square foot.

Weaknesses: ▪ Dissatisfaction among employees for eliminating commission ▪ Deficit of younger shoppers in J.C. Penney’s current customer base. J.C.

Penney’s stores were old, often disorganized, and the brand and its merchandise were perceived as outdated

▪ Confusion about JCP’s brand image due its radical makeover. Loyal customers not happy with the change and new customers (younger generation) still not interested

Opportunities: ▪ E-commerce: Though a pioneer in multi-channel commerce (catalog and web),

J.C. Penney’s e-commerce sales had stagnated and there is scope to substantially grow in this segment

▪ J.C. Penney, even after the recent radical makeover, doesn’t attract buyers from the younger generation which is a potential sales driving market segment

▪ J.C. Penney can also target the niche market segment of LGBT (4% of the US population), a community which was already supported by J.C Penny in the past (through advertisements and its media spokesperson)

Threats: ▪ An Industry under pressure: The retail landscape has become very competitive

and the Department stores in particular are under increased pressure from new retail formats such as big box retailers like Walmart and small specialty stores like Gap

▪ Even within the Department store channel, J.C. Penney is losing business to its competitors Macy’s and Kohl’s both from the high and low end.

▪ After the economic recession of 2008, consumers have become increasingly frugal and price-oriented mass merchandisers, such as Walmart and Target, have garnered the lower end of the market, while higher end department stores such as Macy’s and Nordstrom’s are catering to the upwardly mobile middle class.

▪ Threat of losing the core customers of J.C. Penney with the new radical makeover of J.C. Penney

Other Case Specific Facts A serious mistake Johnson made was that J.C. Penney did not do any marketing research to support the plan because J.C. Penney needed the new strategy on board in few months. Johnson ignored the importance of coupons and the attraction of sales for the core customers. In late 2012, sales continued dropping dramatically. The “Fair and Square” strategy was described as the "one of the most aggressively unsuccessful tenures in retail history". Johnson denied that the strategy was failed but insisted that customers need to be “educated”, it attacked J.C. Penney’s loyal customers. J.C. Penney did not have deeply understand the market because they did not do market research before involve Fair and Square strategy.

EVALUATION OF ALTERNATIVES

Alternative I - Go back to High Low Price Strategy (HL) Pros- ▪ Allows JCP to use price discrimination to maximize the average price paid by

customers who differ in their willingness to pay

▪ Enables customers to enjoy the biggest discounts and get the best prices on specific Sale days. Also, HL gives satisfaction to customers who like playing games and keep hunting for deals, and the markdown from the original price is how they keep score.

▪ Allows J.C. Penney to retain its traditional customers

Cons- ▪ With the pre-dominance of HL pricing across retailers, even less price-sensitive

consumers have become savvy about waiting for sales or comparing prices across retailers

▪ High-low pricing structure has gotten out of control, customers have become hooked on the deals; in the last 10 years, the average discount to get customers to buy went from 38% to 60%

▪ JCP spent over $1 billion on price promotion, and the customer didn’t even pay attention

▪ Price war – Discounting the brand and eroding the trust and loyalty of customers by participating

Alternative II - Continue with Fair and Square Price Strategy (FS) Pros- ▪ Simplify JCP’s pricing structure and make it more straightforward for customers

to shop ▪ Great prices everyday, with less frequent price promotions (No games, no

gimmicks; do the math), Offered cheaper prices on a regular basis with less hassle. Customers no longer needed to wait for promotion days, as they are provided with everyday fair prices

▪ Saves budget on promotions which can be used to offer more benefits to the customer.

Cons- ▪ JCP lacks the differentiation to make this pricing strategy successful. When

selling a relatively undifferentiated product, the only lever to generate higher sales is discounts.

▪ If competitors drop prices on comparable products, JCP’s hands are tied- it is a sitting duck that can’t respond

▪ No market research conducted to test the appeal of the FS pricing among consumers

▪ Dissatisfaction among important target markets, such as mothers, who weren’t receiving coupons anymore

▪ Perceived as costlier, though identical items at J.C. Penney were cheaper than Macy’s and Kohl’s (9% cheaper than Macy’s and 26% cheaper than Kohl’s)

▪ Shoppers think that the J.C. Penney of old actually offered better value than the “fair and square” model introduced

▪ Reaction- "It wasn't just the pricing change that hurt their sales," Lynda H., a shopper at J.C. Penney stores in Texas, told The Huffington Post in an email. "They are catering to the younger shopper, and it isn't the younger shopper that kept them afloat."

▪ “By taking away the weekly sales customers loved, Johnson abandoned his core JCP shopping enthusiasts. In effect, signaling to the core JCP enthusiasts- shoppers who have sustained J.C. Penney through its years of retail muddling, that they no longer mattered. He confused them, and he pissed them off.”

▪ “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton

▪ Macy’s and Sears (competitors) were benefitting because of JCP’s dismal performance after implementation of FS Pricing strategy

▪ Suppliers preferring competitors over JCP as the demand has gone down ▪ Other retailers like Macy’s and Sears flirted with EDLP pricing in the past, but

both had abandoned it once they realized how addicted consumers were to sales, coupons and discount programs.

RECOMMENDATION

Johnson’s plan (strategy) of brand revival with a radical makeover of JCP by changing the Pricing structure has failed. We need to carefully look into the pros and cons of this strategy and make changes to suit the consumer needs. We cannot completely revert back to the earlier strategy (Alternative-I, HL pricing), because –

• Firstly, the situation earlier wasn’t better either and Johnson was brought in for exactly this reason.

• Secondly, there is already a lot of confusion about JCP’s pricing among customers and making huge changes again would confuse them further.

• Moreover, a lot of money has been spent on marketing the “Fair and Square Pricing” strategy and customers associate “Fair and Square” with “honest and simple.”

We suggest to conduct a market research and make the following changes –

Modify “Fair and Square” Pricing strategy • JCP’s core customers are generally older and more price sensitive, and they hate

not getting coupons anymore. So, to win back their loyalty, we need to get back to HL pricing at least in few important categories.

• With the help of market research, categorize and rank products offered by JCP in the order of customers’ price sensitivity. Offer huge discounts on the products for which the core customers are most price sensitive – to satisfy them, and continue with EDLP for the products for which they are price insensitive.

• Offer EDLP and HL pricing based on the product category. Based on market research, categorize products into either necessity – the kind of products, which are to be bought immediately and customers can’t wait for the huge discounts, or other essentials, such as clothes and bags, for which customers are ready to wait for discounts.

• The idea is to use different product categories and match a better pricing strategy for them. For example, customers usually shop for clothes in their leisure time and it is not necessary for them to buy clothes in a specific time period. Using High-low price here would be ideal, as customers can wait for the Sale days for huge discounts. On the other hand, products such as, household furniture are essential for every family. When a Sofa/Couch is broken, customers can’t wait for several months to buy another at a big discount. Instead, they would compare prices among retailers and buy it immediately at a store offering

the cheapest retail price. Offering, EDLP for such products, will give customers the best price when they actually need them.

Bring back and focus on JCP’s private brands

• In today’s world where, “Brands are becoming retailers, and now retailers are becoming brands.” – It is important that JCP focus on its private brands

• J.C. Penney had long generated about half of its revenue from  its own in-house brands, with the other half coming from national brands that are widely available at other retailers.

• JCP had a portfolio of more than two dozen in-house brands, ranging from Liz Claiborne to St. John’s Bay to Arizona jeans, among many others.

• JCP has a long history with in-house brands - James Cash Penney started making his own merchandise 100 years ago.

• Such brands are typically more profitable for JCP than other national brands, and are a useful way to get shoppers into stores since they are exclusive to Penney.

• Ron Johnson, in an attempt to make JCP hipper, dumped these private brands and this was one of the main reason why JCP’s sales dropped by 30%. Bringing back these private brands can be instrumental in arresting this sales drop.

• Private brands do indeed play to JCP’s strengths, with its big operation and offer much higher profits, control over pricing, the timing of markdowns, and distribution of the inventory

• These efforts can lead to a jump in JCP’s profitability, with such brands offering a gross profit rate (4 to 5 percentage points) higher than national brands

Build trust by creating an Integrated Brand Experience • In terms of marketing, there is a clear lack of connection between JCP’s

customers and the brand because JCP’s various channels do not provide a unified brand experience to customers.  People tend to trust a brand more when the brand understands their needs and provides the service/products that fulfill this need.

• JCP can build people’s trust and reliance by understanding their needs, providing values that can fulfill the needs and building relationships through integrated brand experience in various channels.

• To regain people’s attention and trust, we suggest a complete online and offline integration of JCP and associating JCP brand with useful content. The content

generated should be consistent across all of its channels – owned, earned and paid by JCP.

Limitations/Barriers

• There is no strong differentiator between JCP and other retailer stores. All JCP stands for now is deals and coupons, which other stores are doing as well.

• Many of JCP’s previous customers are already shopping at stores such as Macy’s and Kohl’s. It’s difficult to change their behavior without JCP creating a strong buzz.

• It is very difficult and expensive to conduct an extensive market research and identify the right factors effecting the customer satisfaction.

TV Website + Blog Social Media App

In – Store Expert

Guidance

JCP’s main target audience watches prime time TV shows

Moms love content related to life and fashion hacks. JCP will host its own blog dedicated to provide valuable content for its target audience at making their lives easier

JCP’s audience is active on various social media channels. JCP will provide value content /host game + competitions in order to engage and build relationship with them

App is another way customers can access the valuable content on their mobile device on the go. Easy to access and engaging.  JCP can also notify customers when certain item goes on sale

Everything posted on JCP’s online channels will be readily available in the store. Plus in-store expert guidance in fashion and life hacks to provide an integrated brand experience

PLAN OF ACTION

• Aug-Sept, 2012 – Conduct an extensive market research to analyze market sentiment, customer perception and understand customer needs.

• Oct, 2012 – After confirming customer dissatisfaction with Johnson and the changes made by him, we suggest firing Johnson and rehiring former CEO Myron Ullman, and rolling back some of the changes he made, to grab attention and win back the loyalty of JCP core customers.

• Oct, 2012 – Bring back private brands owned by JCP and loved by its core customers. Send press release about repositioning and rebranding stories.

• First, we need to arrest the drop in sales and stabilize the business. After the business is stabilized, we have to prove that JCP can actually thrive again, and not just muddle along with modest sales gains or worse yet, revert to the stagnating JCP of 2011.

• Oct-Dec, 2012 – Complete online and offline integration. Roll-out a mobile App, enabling customers to shop on the go. Telecast advertisements during Primetime TV shows, targeting the core consumer group of JCP, highlighting the changes made based on customer feedback.

• Generate and circulate content (through website, blog and social media) related to topics such as fashion on the budget, how to look like a Celebrity in under $50, and various life and fashion hacks that help save money. People are still cautious about their spending; they are always looking for ways to save and getting deals.

• Everyday fashion and makeup artists on Social Media have great influence

over JCP’s target customers’ fashion choice and purchase.

• YouTube celebrities can easily incorporate JCP’s apparel and beauty products into their tutorial videos.

• Fashion and Life Hack Blogs will be great for building awareness about some unique products from JCP and how these products can help save money.

• Customer Journey: First, customer needs can be triggered either by customers’ own needs or by JCP’s content via various channels. Then, different touch points and channels enhance customers’ journey toward purchases. Customers will be able to experience JCP’s different touch points throughout their lifecycle to truly enjoy the brand and become a part of the JCP community.

• The goal of JCP’s various media channels is to help turn customers from prospects to Brand Evangelists.

Contingency Plan

If the sales fall continuously, even after making these changes, then it’s safe to assume that department stores and in particular JCP are nearing death and exit gracefully without going bankrupt. Look for a suitable buyer who can make use of the valuable real estate of JCP.

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multichannel-fail