Keeping New Shoppers and Regaining Old Customers at JCPenney

Matt Shelly
Posted by in Retail


Ron Johnson took over as the new chief executive officer of JCPenney in late 2011. Company stakeholders expected Johnson to do much more than lead the company; they wanted him to revive it. However, in fewer than two full years as the company CEO, Johnson implemented a number of changes that confused or alienated shoppers, and he found himself out of a job by April 2013. Retail professionals can learn important lessons from the mistakes Johnson—and other JCPenney executives—made during this short time.

 

When store executives implemented a new pricing scheme, retail shoppers revolted. Johnson decided to do away with sales and coupons in favor of reducing prices on items from brands such as Joe Fresh and Martha Stewart. Retail shoppers, who previously packed stores during special promotions, were put off by this pricing strategy, and it appears that employees were no more enthused than the customers. In fact, many employees hated the pricing strategy because it forced them to create new price tags every time management decided to increase or decrease the price of an item.

 

JCPenney also failed to communicate a consistent marketing message to retail shoppers. When it became clear that the new pricing strategy had failed, the company tried to reintroduce its previous strategy of sending out coupons and running special promotions in stores and online. Analysts questioned the company's future when JCPenney lost more than $4 billion in the first quarter of 2012. The principal shareholder of the company, Bill Ackman, acknowledged that the company made too many changes without first testing their potential impact. Despite the number of shoppers who defected to other retailers during Johnson's tenure as CEO, the company did gain some new shoppers. Its newest challenge is keeping those new customers coming back while they attempt to convince old customers to return to the store.

 

The company's marketing team has attempted to bring old retail shoppers back by running a series of advertisements and asking for feedback. In May 2013, the company introduced a commercial that apologized for all the confusion and promised to listen to customers more closely in the future. Reaction to that commercial was mixed, with some customers forgiving the company for its transgressions and others saying they had given up on JCPenney altogether. On the company's Facebook page, thousands of customers offered feedback about the pricing strategy and other perceived errors in judgment.

 

It is not yet clear whether the retailer will be able to recover from these major blunders. If JCPenney wants to survive, executives must listen to the feedback provided by retail shoppers and implement strategies that keep customers' best interests in mind. Without an emphasis on customer satisfaction, JCPenney will have a hard time keeping up with retail industry trends and appealing to retail shoppers who have discriminating tastes.

 

(Photo courtesy of freedigitalphotos.net)

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