We all know about JC Penney’s decision last year to change their pricing strategy from one of Coupons, Discounts and Sales to one of Everyday Low Prices. Ron Johnson, the CEO they hired away from Apple, warned everyone it would take some time for the transformation to take hold.
Unfortunately, the train wreck seems to be getting worse as JCP just announced a plummet of 32% in sales! I know that is a number none of us indie’s could probably withstand. Many in the world of retail are wondering if JCP will be able to withstand it.
But before everyone rushes off to blame the pricing strategy and see this as an indictment of the Everyday Low Prices scheme as being unable to work in today’s retail market, there were some other forces at work.
At the end of the day there are five primary drivers of traffic into retail stores.
No, they do not all have equal weight. And for every customer, different factors play out in different categories. But you have to be winning in the minds of customers in at least one of those categories if you want to see traffic.
JCP was losing in all five.
Price – Their Everyday Low Prices scheme might have worked… if they had done it. They really didn’t. Their prices seemed to be changing almost as rapidly as they had before, and in ways far more confusing despite the millions they spent in advertising. No one really knew if their prices were low or not.
Product – Some say their offerings were getting worse, not better. Even if their product stayed the same, no one was going to JCP for high-quality goods or exclusive-can’t-find-anything-like-it-anywhere-else merchandise. They had given up that ground years ago.
Convenience – If JCP had any leg to stand on, this could have been it. But they did nothing to beef up or significantly increase the convenience factor. In my own experience, their checkout lines got longer (even with fewer sales – now that’s a real trick).
Trust – this is supposed to be the hallmark of the Everyday Low Prices scheme. You can trust us because we aren’t jacking you around with yo-yo pricing. Except they didn’t do that. They still yo-yo’d their prices. They made things more confusing and less trustworthy. They didn’t re-train their staff to develop trust either. They spent money on advertising their new scheme but doesn’t look like they spent a dime on training the staff.
Delight – Once again, very little done here, before, during or after. When was the last time you were actually delighted in a JCP store? Yeah, I thought so.
The cool thing is that we can all learn a lesson from this. Pick one of those five and own it. Own it with every ounce of your existence. Own it in your category so strongly that when that topic is mentioned, everyone immediately thinks of you.
The cooler thing is that you probably noticed that it wouldn’t be all that hard to own two or three of those criteria. Do that and you won’t suffer the same fate as JCP.
PS We’ll talk about all five and how to own them in upcoming posts. Stay tuned.