Ron Johnson’s abortive strategy to replace coupons with everyday low prices, and remodeling stores to be more ‘cool,’ probably inspired by Apple Inc. (NASDAQ:AAPL)’s stores, only succeeded in driving away business, particularly from ‘core’ J.C. Penney Company, Inc. (NYSE:JCP) customers.
J.C. Penney vs Apple Stores
A recent article in Forbes highlighted a crucial difference between Apple Inc. (NASDAQ:AAPL) and J.C. Penney Company, Inc. (NYSE:JCP) stores. Apple Inc. (NASDAQ:AAPL)’s stores have a major advantage: the hype surrounding the company’s unique and innovative products have customers beating a path to the nearest Apple store in droves. But J.C. Penney’s merchandise has no such buzz surrounding it and the coupons were probably a major draw that ensured steady sales. Johnson did not see the difference and made the strategic mistake of assuming that radically formatted stores and steady prices could boost customer foot traffic at J.C. Penney stores. It didn’t work, and the company, still reeling from the catastrophe, has brought back the J.C. Penney of old in terms of store layout and pricing.
Also back is a significant emphasis on new promotions, as described in Deutsche Bank AG (NYSE:DB) (ETR:DBK)’s “Promo Watch” of October 22, 2013, an in-depth look at retail marketing by analysts Paul Trussell and Matt Siler.
J.C. Penney’s Promos
- A new ‘Mystery Savings’ scheme offering (1) extra discounts on apparel, shoes, accessories and home, (2) online-only coupons of amounts determined by the purchase values, (3) Double points for J.C. Penney Company, Inc. (NYSE:JCP) cardholders along with a $10 reward on $50 spent; and (4) extra 10%-20% off storewide discounts.
- Last week’s ‘Lowest Prices of the Season Sale’ campaign
- Coupons for $20, $15 or $10 off purchases of over $100, over $75 and over $50, respectively
- Night & Day Doorbusters
The analysts point out that the promotional activity is trending much higher than the retailer’s 2011 and 2012 marketing levels.
But will all this get J.C. Penney Company, Inc. (NYSE:JCP)’s old appeal and ‘buzz’ back?
With rumors of a probable bankruptcy swirling around the market, it is possible that time is running out, and these promos may just be too late.