Many of JCPenney’s loyal customers have missed the regular couponing and special offers that used to be part of the marketing mix. This was the exact promotional strategy that was ended with great fanfare at the start of 2012 by Ron Johnson and his new team. One of JCP’s missteps was the failure to explain the new/simplified pricing structure clearly in marketing vehicles or in-store.
The costs of this mistake are well-documented, with JCP taking on water at a fast pace. Its comp sales have declined so quickly — and its operating losses have grown so fast — that the viability of the long-term strategy is at risk. New brands and shops, new technology and a reinvented store experience are hard to execute with the headwinds of 20% sales decreases.
Meanwhile, JCP cardholders (like this writer) have received two “gifts” from Ron Johnson and team in the past month: Coupons good for $10 off any purchase of $10 or more. (The first one arrived via e-mail, the second one via snail-mail.) At the same time, JCP is advertising an additional 30% off “clearance” prices, which were originally being marketed as “best prices.”
I assume the second “gift” arrived because the first offer worked, and the JCP team is at least trying to be flexible. But this raises a couple of key questions: First, how is that 20% decline in sales working out for the company’s bottom line? And, second, is this the beginning of the end for the “fair & square” pricing strategy?