POOR IMPLEMENTATION: To make the JC Penny brand seem even more foreign at this time in the company's history, Michael France made the poorly implemented decision to rebrand the 110-year-old department store to coincide with the introduction of "Fair and Square" pricing. The JC Penny logo was remade into a square containing the letters "JCP" to represent the new pricing strategy. To compound the poor implementation of the new JC Penny and its pricing strategy, advertising for the change featured brightly colored TV commercials that were flashy and eye-catching, but did close to nothing to inform customer's about the new shopping experience they were in for. According to an RIS News Article in 2012, "a visit to a New York City JCPenney store in early June revealed a sterile shopping environment, devoid of
discount signage as well as customers. It was apparent that JCP’s ‘Fair and Square” pricing strategy was not
working. Many customers, looking for a deal, were disappointed to find nothing on sale but only what JCP calls a
"best price" (p 12). The poor implementation of this strategy affected online sales as well, with JC Penny seeing a 28% sales drop in online sales that same year.
Perhaps the biggest flaw in this strategy is Ron Johnson failing to realize the JC Penny customer and JC Penny itself. The JC Penny customer makes their way to the store to save money, find discounts, and get the most for their money. Their goal is to find a good deal on quality merchandise, and a huge driver of their's is to enter a JC Penny store and come across signage that visibly indicates potential savings. As the course manual states "The consumer wants to see the original price and then the discount, not the "Best Price” as JCP has advertised. Shoppers are unable to distinguish the value associated with a “Best Price” approach because they have no reference point" (p 12-13).
Ron Johnson's time at the company directly resulted in slower traffic to stores across all customer demographics, difficulties in providing a sufficient amount of merchandise to stores, a decrease in product sell-through and gross-margin's, and a lack of control over SG&A expenses.
Fast-forward to 2015, Mike Ullman is back at the helm of JC Penny and begins successfully implementing strategies that sidestep the underlying issues behind "Fair and Sqaure" pricing, showing us what good strategies developed with JC Penny customers in mind, looks like. One example was the return of print catalog's following data found in the same year that 31% of online shoppers use print media like catalog's to inspire purchases. The strategy fully aligned with the target JC Penny consumer, who will often sift through catalog's and tend to spend more as a result. Ullman also specifically stated that customer's who browse catalog's and purchase through brick-and-mortar channels are JC Penny's best customer's overall, ultimately to the benefit company financial figures at large. By Q3 of 2015 the company began reversing the adverse financial damages caused by Ron Johnson, beginning to rebound from the Company's 30% drop in revenue since he was appointed CEO.
Following Mike Ullman as CEO in 2015, Marvin Ellison also set out to show how the job was done in terms of strategizing by initiating efforts to strengthen the Company's technology and omni-channel presence. He began by committing 29% of the Company's capital expense budget to the initiative. A number of objectives were included in his strategy including the following: 1) Increasing online product assortments 2) Utilizing better inventory management and coordination to reduce the number of out-of-stock items 3) Improving demand forecasting by using data analytics to anticipate what shoppers will want 4) Improving logistics to better distribute merchandise to stores, improve buying processes, and customize
inventory 5) Developing a loyalty program that revolves around customer interest's 6) Creating and option for customer's that allows them to pick up online orders in-store.
Although the next year in 2016 JC Penny experienced a challenging Q1, Ellison pushed forward with promising strategies meant to bolster sales and further underscore how off-the-mark "fair and square" pricing was in comparison. A notable strategy on Ellison's end was to collaborate with Sephora, which broke the notion that JC Penny had to be strictly associated with discounts and savings, and in many ways is exactly what "fair and square" pricing was aiming for. It's just that Ellison understood JC Penny and found a means of doing so without having to reposition or alter the brand in any way, effectively retaining JC Penny's core customer's in the process. The collaboration did exceptionally well, and even drew in a new slew of customers outside of what JC Penny was accustomed to. Another successful strategy that Ellison is credited with was the introduction of appliances to its product offerings, putting the company in more of a position to compete directly with companies like Sears.