I wrote a post a bit over a year ago praising JCPenney for its new branding and direction. We’ve seen how well that worked out. Their stock has dropped over 50%. Now, with their apparent firing of, Ron Johnson, the man who implemented the change, I feel the need to, um, clarify my position and what I believe went wrong.
I’ll recap: In January of 2012, JCPenney announced, with the assistance of its new CEO, a major change in direction. It was abandoning their over 500 promotions a year for no more than 12 and a simplified pricing strategy. There would also be nicer single-brand “shops” within the stores for what appeared to be a great restyling of the retail experience. The idea had a lot of promise. They pretty much sold their goods at consistent, discounted prices and, it was reasoned, people knew what the best price was anyway. So, instead of endless discounts, JCPenney would just sell the items at a “fair and square” price all the time with only a few special discounts and end-of-season clearance.
There have been many retailers who have used a similar, no-discount pricing policy before. The difference is they’re typically high end. Apple, Nordstroms,Saks… not really names you’d associate with JCPenney. I give credit for Johnson giving credit to shoppers—In his presentation on the shift he made the statement the bargain hunters know the right price and will pay it when they see it—he just underestimated their target market’s motivation for shopping in the first place: the rush of saving money.
When I did my time at JCPenney, my mom came to the “Friends and Family” night where they would give the employees’ friends and family the same discounts usually reserved for the employees. At one point she came up and exclaimed “I saved $600!” Not, “I only spent however-much-she-spent,” but “I saved.” JCPenney didn’t seem to know its target market well enough to know that their main motivation for shopping is bargain hunting. If they have to buy socks, they’re going to find the most discounted socks in town. Not the “cheapest” but the “most discounted.” Not to mention the additional item(s) they would buy as they were picking up the socks because, “hey, it was 60% off.” The drug was gone and, soon, so were the users.
About a week or two after the presentation, JCPenney implemented its new pricing policy. All of the bright red SALE signs were taken down and the items were priced, on average, at about 60% of their original amount from what I could tell. Basically making all those perpetual sales permanent. What you had now though, was a store suddenly bereft of its bait. With no signage calling out to the passers by, nothing reeled them in. The stores looked very plain and, honestly, a little sad.
Nothing else visually changed. The layout, graphics and merchandise was all the same. The new “shops” were far from being implemented so, to the typical shopper, it must have been very confusing. They were left wondering, “Where did all of the deals go?” Never forget, a brand is entirely based on the customer’s experience. It’s what they say it is. If your new logo and clever advertising is saying “we’re different” but a stroll through the sales floor says “nothing has changed but the prices have apparently gone up,” you’re going to have a major issue. Your target market has to experience the change, then your advertising and marketing can help reinforce it.
Which leads me to the third problem…
Or, clear communication at least. One of the first commercials JCPenney used to kick off the new brand position was filled with shoppers screaming at the frustration of too many sales. “Enough. Is. Enough.” it proclaimed. First of all, it wasn’t enough. People LOVE sales. For whatever reason, they love never going to bed on Thanksgiving. They love clipping coupons. They love finding that pair of pants or sport coat on the clearance rack. I know I do. It was a solution for the retailer, not the customer. It may have been eye (or ear) catching, but it didn’t resonate. Second, it was annoying to most and not really memorable.
The follow up ads were unclear as well. They were cute if you were paying attention and could pique your interest, but a game changing shift like ditching all of the sales should have been clear and repetitive. You’re not communicating unless you’re over communicating. The message should have been beat over the heads of the target market from every possible media outlet. It was not a time for subtlety.
It’s easy to sit back and say what went wrong. It may even sound a little arrogant pointing fingers at the man who created the Apple Store experience (he made about oh, a bajillion dollars more than me last year. Even with a pay cut.), but it was always going to be hard to pull off such a big shift in direction. I just think a company with over 100 years of business and marketing under its belt should have been up to that task. They should have known not to put the cart before the horse. It’s a cliché for a reason. This last year or so has been a good lesson that the experience needs to come first. No amount of pretty design will change a customers poor brand experience.