Tuesday, April 16, 2013

J.C. Penney's woes center on its branding struggles

Can J.C. Penney be saved? That is the question on the minds of many.

The department store — long a favorite of middle-class Americans, in particular those in suburbs and small towns — has struggled the last several years.

Yet instead of looking forward, J.C. Penney went backward and hired the chief executive officer who presided over the decline that Johnson was brought in to reverse.

Johnson did many things right, including bringing in better style that at times was too fashionable. At the same time, he isolated many longtime customers.

Among the more noticeable blunders was the decision to do away with thousands of employees in an attempt to increase profit. At one point, Johnson talked openly of using tablet devices, such as an iPad, to replace the sales clerks who are all but extinct from the department store’s floor.

Johnson’s re-branding strategy, as well as his boutique-within-a-store concept, may have generated large amounts of publicity over the past year or so, but the vast majority of the department stores — many of them legacy locations in small towns scattered across what some might call flyover country — were not, as of now, set to undergo much, if any, changes.

It is too early to know what did and did not work under Johnson, though the consensus among those in the know seems to be J.C. Penney’s pricing model, which traditionally has relied upon heavily publicized clearance sales and coupons. Johnson was quick to change the model, though he later relented and started to bring back coupons.

Nevertheless, it is probably fair to place some blame on pricing, though other failures are noteworthy.

Perhaps most obvious has been the department’s store inability to effectively brand itself.

Johnson tried appealing to a younger demographic by re-positioning J.C. Penney as a fashionable retailer, though much of the customer base failed to embrace the changes.

J.C. Penney either needs a branding and merchandising strategy that works in all of its department stores or it needs to close down locations that are not compatible with its cosmopolitan flare.

The failure to define itself is also reminiscent of American Living, which launched with much fanfare five years ago.

Yet the brand, created in partnership with Ralph Lauren, was not available at most of the department stores. The lousy strategy resulted in American Living suffering a slow, miserable death until finally disappearing from shelves last year.

Take this season’s menswear collection, which features at least three all-cotton navy blazers and at least two seersucker jackets. On top of this, J.C. Penney is also selling at least a half-dozen sport jackets or spring/summer suits.

While many of these things are of reasonably decent quality for the price, there is not enough demand to justify the number of offerings.

This is evident by the amount of tailored clothing from autumn that remains on racks unsold despite heavy markdowns. 

A turnaround is still very possible, but will require a lot of soul-searching in the department store’s Plano, Texas, headquarters.

Most importantly, it will require an answer to a relatively simple question: What is J.C. Penney?

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