J.C. Penney Adds Promos to Drive Store Traffic

Discussion
May 31, 2012

A RetailWire poll taken last month, shortly after J.C. Penney announced its quarterly financial results, found that 66 percent were somewhat or much less optimistic about the retailer’s prospects than they were at the beginning of the year. At the time, the company reported that its new pricing and promotional programs had failed to generate the type of response the department store chain was seeking. Visits during the quarter were down 10 percent and market baskets fell five percent.

Since then, the company’s biggest investor Bill Ackman, who runs Pershing Square, told CNBC, "There are some extreme couponing customers, who we probably lost money on, who may not come back, but the people who are focused on quality and value, and ultimately product, we should do very well. … Time is your friend because eventually people will get it."

Well, J.C. Penney may have time on its side (or maybe not), but management has apparently decided it’s better to act now than wait. According to an article on the Advertising Age website, Penney has added five "Best Price Fridays" to its promotional calendar. The first ran last Friday and the last is scheduled for Black Friday in November.

"The change in strategy is an admission that the company’s existing three-tiered pricing strategy has flaws — less than 120 days since Ron Johnson’s new model took course on Feb. 1," Deutsche Bank analyst Charles Grom is quoted by Ad Age. "We believe the move could confuse its shopper base even more, with some Fridays now ‘Best Price’ and some others not."

Best Price Fridays in Penney’s scheme are held on the first and third Friday during a given month. Prices on select products are marked down and the lower price remains in effect until the item has sold out.

Discussion Questions: Are ramped up promotions the answer to J.C. Penney’s traffic problem? Are more “Best Price Fridays” the right promotion to achieve the chain’s goals?

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24 Comments on "J.C. Penney Adds Promos to Drive Store Traffic"


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Bob Phibbs
Guest
9 years 11 months ago

I’m sure I’ll be in the minority, but how can anyone applaud the flawed execution of this makeover by Ron Johnson? As I wrote last week, “Marketing With Coupons: Do You Need a J.C. Penney Drug Intervention?” after addicting their customers to coupons and then going cold turkey … what were they thinking?

Have you checked their home page today? What the heck is the price of the sunglasses? $12 or $15 or what will they be on Friday?

J.C. Penney stakeholders needed to be involved in all of this and a thoughtful regionalized trial of the “great makeover” before whole-scale flip flopping. Now that they have cut jobs, commissions, and their own spine, how much better off are they in 2012?

Bill Emerson
Guest
Bill Emerson
9 years 11 months ago

We learn as we go, don’t we?

Raymond D. Jones
Guest
Raymond D. Jones
9 years 11 months ago

People want to feel like they are getting a deal. JCP and other discount retailers have trained the shopper to expect it. As many have learned, every day low prices are often just the ante into the game.

The question is whether the new strategy needs time to work or whether it is fundamentally flawed. And how long are they willing to wait? It looks like they may have already blinked.

In this case, I think time will prove to be more their enemy than their friend.

Gene Hoffman
Guest
Gene Hoffman
9 years 11 months ago

JCP was a relic in the making prior to Ron Johnson’s new model took effect in February. That hasn’t changed. Now Mr. Ackman is stirring JCP’s marketing pot and the confusion increases over how to resuscitate JCP.

“Best Price Fridays” are nice promises but consumers are apparently skeptical of those vows. Ramping up JCP’s stores and greatly improving its marketing model are on a time clock. The race is now on for JCP to either break through beyond “Best Price Fridays” and win its goals or be prepared to listen to a “Requiem” for a former heavyweight.

Dan Raftery
Guest
9 years 11 months ago

Unadvertised, in-store promotions are one of the most powerful tools that traditional retailers can use against their Internet competition. Most choose to accept ad allowances instead, but that’s another topic. The new JCP scheme is going in the right direction, but is not quite there yet. They probably mis-labeled it. Clearence Fridays would be more accurate.

Dick Seesel
Guest
9 years 11 months ago

Part of the problem with “Best Price Fridays” is that they have been positioned as clearance events. These are the dates (twice a month, with some added events according to the news story) when new markdowns are taken. The problem with this concept is that there is no “call to action” if the clearance goods are at lower prices until they are gone.

Likewise the selected month-long sale prices that are better than the everyday “Fair & Square” prices: No sense of urgency, no clear-cut savings message. JCP would be wise to spend more money building store traffic, and less money on the “Pin the Tail on the Donkey” spot promoting hassle-free returns.

As I’ve said before, JCP should have worked on reinvention of the store and merchandising experience first, then get the marketing and pricing in sync … instead of the other way around.

Phil Rubin
Guest
Phil Rubin
9 years 11 months ago

“Best Price Fridays” appear to be a bit of a give-up and an acknowledgement that customers did not, in fact, “get it.” You can’t undo years of being on-sale every day with a flash cut as JCP has attempted with a pricing strategy that, ironically, forced the customer to focus on price. As opposed to the brand, merchandise, store experience or … value.

Carlos Arámbula
Guest
9 years 11 months ago

It’s unrealistic to expect a drastic change in 120 days. JCP will adjust and refine its approach to creating traffic, it is part of a learning process.

Changing the brand image appeared to be the main priority for Mr. Johnson, and the image campaign shows promise, but it will take more than 6 months for it to affect the perception of the brand. In the meantime, promotions like “Best Price Friday” will have to create a bridge between present reality and future goals.

Gene Detroyer
Guest
9 years 11 months ago

Price never wins unless there is a cost advantage. The department store model has no cost advantage.

Robert DiPietro
Guest
9 years 11 months ago

No, please stop now! How many years did it take to train the customer only to shop when there was a sale? Now they are flinching on “fair and square” pricing after 120 days? Stick with your plan! How long will it take to go from 5 Fridays to every Thursday and Friday? The slope is slippery.

Lee Kent
Guest
9 years 11 months ago

It all goes back to ‘perceived value’ doesn’t it? No problem having EDLP as long as the consumer knows the value of what they are buying. I will shop at Target because I know that I can find my staples for great prices. I will also buy fashion from Target when I know a big name like Mizrahi has made a line for them. His reputation says that the fashion will be current. I know what I’m getting. If JCP could market the value of their individual brands, it might just go along way. IMO

Tim Henderson
Guest
Tim Henderson
9 years 11 months ago
Given JCP’s failed fair-and-square pricing strategy, I expected a promo ramp-up, especially given the short time JCP has to regain traction before the all-import fall/winter selling seasons, including back-to-school/college, Halloween, Thanksgiving and the December holidays. But if any JCP shoppers weren’t previously perplexed by the replacement of coupons with the baffling fair-and-square strategy, then the addition of Best Price Fridays is sure to get them scratching their noggins. The JCP folks must think consumers have nothing else to do except plan their shopping trips for the year around when the retailer decides to offer the good price, the better price, the best price or the Best Price Friday price. And making Black Friday a Best Price Friday is a no-brainer, not a strategy. I expect the addition of Best Price Fridays will only add to shopper confusion and ultimately alienation. Why not simply go to Kohl’s or Macy’s? And they still have coupons that don’t require scheduling shopping days on the consumer’s monthly calendar. In my original May 17 RetailWire comments on JCP’s fair-and-square strategy,… Read more »
Doug Garnett
Guest
Doug Garnett
9 years 11 months ago

You have to wonder how much this management team at Penney’s understood that the discounted prices for a sale are merely one of the values consumers get from the sales. In reality, the achievement of buying at discount, of finding a hot item for less, and the search leading to gratification are tremendously powerful for a significant portion of shoppers.

By removing that value, they’ve dropped a significant enjoyment that their shoppers seek. No wonder they’ve started to struggle.

It’s even more interesting, as I’ve read elsewhere, that Mr. Johnson removed the consume strategy team. Because this price strategy shift is one that “people” will tell you they want — but won’t act in the way they tell you. A sophisticated strategy team would understand that consumer truth and would have avoided this error.

Mark Burr
Guest
9 years 11 months ago
Uh, have I missed something here? This has been in place since their mode changed to EDLP. There have been signs on each rack with the date and “Best Price” since the change began. Uh, so, what’s new? Just that they have added five dates? Really? Offering me a better price on a different day isn’t anything different than any other promotion. They took away my Stratford pants! I miss my pants! A promotion that might get me back is one that restores a quality product at a fair price to the store. That was their original offer. Offering a lower quality product to meet a price point isn’t EDLP, it is a whole different strategy. Their strategy as it really is will not win. The consumer is smarter. They know when you change the weight on the box of cereal to keep a price point. They know when you reduce quality to keep a price point. JCP has already been like everyone else. Continuing to do that under a different guise is no strategy.… Read more »
Craig Sundstrom
Guest
9 years 11 months ago

“Swing out the davits … lower the starboard boats!”

Scanner recently told us his “pair of pants” story, now I’ll add my “pair of shoes story.” Last week I decided to replace the pair of shoes I wear most days — purchased at JCP 8-10 years ago (yes THAT long) — so I checked their website; lo-and-behold, there they were, exactly what I wanted, great price, and unavailable…. So I went to Sears.com. Mot quite as good, not quite as good a price, but at least available (which matters most when you actually want to buy something. I ultimately ended up at Amazon — where else? — but only because I have a gazillion points there).

So it seems JCP has many problems, and I wish them luck…they seem to need it.

Ted Hurlbut
Guest
Ted Hurlbut
9 years 11 months ago

Once you step out onto the slippery slope of discounting, there is no going back. It can’t be done because your customers won’t let you. If you won’t run sales or spread coupons around, they’ll shop with a retailer who will. To Bill Ackman’s point, the JCP customer ALREADY gets it.

That said, JCP is a mass market retailer, and in the mass market it’s all about price. Low price wins. The effort to shift from a promotional to an EDLP pricing model is, in my judgment, a costly distraction from the essential task of continually cutting the unit cost of delivering merchandise to their customers in order to compete.

Both Ron Johnson and Bill Ackman would like to transition JCP into a higher margin business, but it’s hard to see that happening. In the mass market, it’s a race to the bottom, and JCP is losing ground in that race to its competitors.

Veronica Kraushaar
Guest
Veronica Kraushaar
9 years 11 months ago

We posted on our blog of 2/24 about our concern with JCP’s new direction. Yes, tacky to say “told you so” but even from a humble shopper’s perspective, I don’t get why they are doing this. Hope they find their way in a tough world.

David Livingston
Guest
9 years 11 months ago

The message they are sending is they are high priced the other six days a week. Why not offer the best price seven days? The good news is JCP is starting to look like Kmart with their ideas and execution. That means we won’t have to be discussing them much longer.

Brian Kelly
Guest
9 years 11 months ago

This isn’t “the consumer didn’t get it.” It is JCP didn’t get it.

JCP proves, AGAIN, that EDLP is not the best deal. Consumers remain under pressure to find the best deal. Train that consumer?

As we like to say, “retail ain’t for sissies.”

Christopher P. Ramey
Guest
9 years 11 months ago

Any incentive is worth the experiment. The stores are a laboratory; they’ll figure it out. Furthermore, based on Mr. Ackman’s comments, their largest investor is patient too. JCP is not Sears — they have strengths that allow them to test programs to create distinction and thrive.

Mike B
Guest
Mike B
9 years 11 months ago

Cutting product quality to meet lower price points will do nothing but drive off the long-term customers. Will they be able to get new customers in with their merchandising and marketing initiatives? Run a poll on what young people think of J.C. Penney and you have your answer. And they see right through the “JCP” remarketing, too.

Best Price Friday confuses me. I thought Fair and Square got me their best price, every day. What is this Friday thing? I’ve been meaning to go check out JCP on a “Best Price Friday” for the past few months but I can never figure out which Friday is “Best Price Friday.” Maybe I’ll go check them out tomorrow. If I remember. And can figure out if it is the right day.

I did hear a radio ad for “Best Price Friday” … last Saturday.

Jerry Gelsomino
Guest
9 years 11 months ago

I learned a long time ago, you gotta make it easy for the customer to shop and save money in your store. If Charles Grom is right, this could be a disaster.

Mike B
Guest
Mike B
9 years 11 months ago
I did it! Yesterday I went to “Best Price Friday.” Maybe I missed it, but I didn’t see much of anything that appeared to be a “special” best price. To me, the amount of best price stuff looked the same as the last time I went into a JCP which was absolutely not on a Friday. There was also no signage or other promotional material at the store entrance to inform people passing by that this was “Best Price Friday.” Very deceptive. They had many racks full of collared dress shirts, the racks were literally stuffed. “best price $5…” and “best price $10…” another said… then very small on the bottom: “AND UP.” I did find some $10 shirts, just a few. Most were $12 or $15; some were $25. Ouch. They had a nice table full of neckties, “best price $5…” it said in big letters and numbers… and you guys know the rest… The ties were marked assorted prices, some as much as $15. I didn’t actually find any for $5. Macy’s had… Read more »
niranjan kulkarni
Guest
niranjan kulkarni
9 years 11 months ago

Reliance on contemporary retail practices are the best bet, not ramped up promotions, I think.

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