When I first saw the wave of witty and snarky TV ads rebranding JCP from J.C. Penney, I was fascinated that an old-fashioned company could remake themselves and even use Ellen DeGeneres as their pitchperson. What a far cry from their stodgy reputation of yore. The ads, in heavy network rotation, made fun of complicated and gimmicky sales used by other major retailers (JCP itself used to have 600 offers a year). They were funny and well done. The takeaway was that J.C. Penny, aka JCP, was transformed into a hep, coupon-free, sales-less place where you could get a “fair deal for a square price”. There was only one problem: Consumers didn’t buy it. Literally. Apparently JCP didn’t take Consumer Behavior 101.
Less than 4 months after the Fair and Square campaign launched, it was declared a dismal failure and the company recorded higher losses than ever before. Last year, the company netted $64 million in the first quarter; this year it lost $163 million. Cooked up by former Apple retail store exec Ron Johnson, the pricing strategy had three tiers, which, arguably, is complicated in and of itself: everyday values; month-long values; and best values on the first and third Friday of the month.
Somewhere along the line, the “new and improved” JCP forgot about proven consumer behavior:
1) Shoppers DO like sales–all the time. We love to get a deal, even if we know it’s a shell game or shrouded pricing. We, in fact, like to clip coupons, to see $1.99 instead of $2, and to get the lowest advertised price. That’s just how we roll.
2) Most consumers have either time or money at any one time (the well-off have both). Those seeking a deal (JCP’s best customers) were confused about when to come into the stores for sales so didn’t bother, further cannibalizing revenues.
3) If you make a promise with a big splashy campaign, you better deliver on it. The three-tiered pricing concept is hardly “fair and square”. Nor is it easy to remember or, as it turns out, even compatible with buying behavior.
So why has Wal-Mart succeeded with its “every day” pricing? Another proven consumer practice: When purchasing utilitarian products such as paper towels or pain relievers, product differentiation does not matter. Add to that Wal-Mart’s standard price-matching policy every day. For apparel-heavy retailers like J.C. Penney, Macy’s and Nordstrom, the rules are different: Shoppers do care about brands and perceived value, so when they get a deal, they feel better about the purchase. For instance, consumers find it extremely satisfying to get that Ralph Lauren jacket originally costing $200 for only $39.99. Not only is it a posh brand, but they got it at a steal. A most definite win-win (and easier to justify spending the money).
To make matters worse during the campaign, one of JPC’s design agencies, Hudson & Broad, sued the company and launched its own anti-JCP campaign blasting the retailer for taking their rebranding display for JCP and hiring a new agency for future work. This is not an unheard-of practice in the industry, but it didn’t help JCP to earn good press either.
And depending on your vantage point, using Ellen DeGeneres—a bold move for a “family store”—both pleased and polarized its consumers. The old J.C. Penney was now JCP shedding its old-timey rep by using a celebrity lesbian. A right-wing religious lot, onemillionmoms (OMM) launched a campaign of their own against the store. Someone forgot to tell them, however, of Ellen’s successes as a pitchperson for Cover Girl, as a talk show host, comedian and a virtual American icon. Memo to OMMs: Ellen is laughing all the way to the bank (even though JCP isn’t).
When all is said and done, JCP will go down as a rebranding campaign for a product that didn’t “work”. New Coke if you will. There was flash, splash and sass but it still fizzled. Consumer interest, engagement and revenue all tumbled.
So what to do when you are at the bottom and you’re JCP? You go to what’s familiar. The retailer recently started “Best Price Fridays” promotions which I suspect is the start of the coupon-clipping, slashed prices and ongoing sales events. The company is currently running a summer TV and print campaign. No Ellen. No mention of sales or Fair and Square. All left standing is the new logo by its lonesome.
As any good marketer knows, millions of dollars are spent annually on consumer behavior research for a reason. It provides insight that can be used to make important marketing decisions. JCP might not be in this situation if it had done its due diligence. It makes me wonder if they were simply enamored with Apple’s fairy dust and didn’t bother with reality checks—proven research, focus group feedback and studying the successes and failures of its competitorsbefore spending millions of dollars to rebrand a company that already had goodwill for over a century. JCP can only hope to bring back their formerly loyal customers, but will likely have a difficult time attracting new ones with confusion over its name, pricing and, most importantly, core brand proposition. When you’re in retail, you want to lose your shirt—but not the way JCP did.