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Log In / Register | Nov 22, 2014

Bad Marketing Losing Retail War for J.C. Penney

We wrote a column a while ago about how J.C. Penney, wasn’t a brand in the classic sense, if you defined that as a name imbued with some differentiating meaning.  Oh, no differentiating just on price, which would more accurately make it a commodity.But since CEO Ron Johnson had consciously walked away from that strategy to something called “fair and square”, who knew what they were trying to do to win the retail wars?

Well, you might have thought we suggested that Apple knew nothing about design or stores or sales! Readers wrote how everyone actually “knew” the J.C. Penney name so that was all the proof they needed that it was a brand. That and how they were very, very “engaged” with the commercials, and how Mr. Johnson’s idea to change the name of the store to initials was uber cool.  Apparently, these days, “engaged” J.C. Penney, I mean “jcp”, consumers (although there are fewer and fewer of them every day) either have very short attention spans or their definitions of “engagement” don’t have anything to do with creating sales of profits.

When we talk about “engagement,” we mean how well the consumer sees the brand meeting – or in some cases, like Apple – even exceeding expectations consumers hold for the drivers of loyalty and engagement in the category in which they compete. In the Department Store category, here’s how well the brand we track are currently doing. The Ideal is calculated at 100%. BYW, it’s worth noting companies are so close only points out the difficulty in differentiating in the category.

  1. T.J. Maxx        88%
  2. Macy’s           86%
  3. Dillard’s         85%
  4. Kohl’s            81%
  5. Marshall’s     80%
  6. Sears            78%
  7. jcp                 70%

Here’s something else to note. On Thursday we’ll post the results of our annual Holiday Sales Survey, but here’s a peek at the good news. Consumers are going to spend 6% more this year than last, with an average holiday spend of $870.00. The bad news? jcp doesn't look like it’s going to get very much of that. To avoid arguments to come you might want to factor in that after reporting a truly dismal 3rd Quarter (jcp lost $123 million as sales plummeted a shocking 27%), Mr. Johnson told analysts, “I am sure many of you are wondering how we’re going to make it through the next eight weeks.” One wonders, indeed. So far Mr. Johnson hasn’t been right about a lot but he’s probably right about that.

Anyway, in the face of all the “I-am-aware-of-the brand-and-really-engaged-with-its-commercials-and-new-logo-therefore-all-this-is-going-to-work-out-just-swell” thinking, this column isn’t hubris, but a reminder that the marketplace is always the acid test. Or, perhaps more accurately, in the face of more sales declines, a likely liquidity crisis, lower budgets and/or higher debt, this is Mr. Johnson’s jack-acid test. Even if you’re not an accountant you might say that things are getting worse, not better at jcp.

You might also say that Mr. Johnson is man without a brand and without a plan. And in today’s marketplace you need at least one of those if you want a hope of success.

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