JCPenney Rebrand Begs for Mercy

I thought I’d seen everything. I never considered jcpenney’s bold move. Who would think that a giant retailer would create, produce and air television spots begging customers to give them another chance because they had made some huge mistakes in a new marketing strategy that didn’t consider the needs and wants of their customer base. The backlash is palatable.

jcpenny’s management started this campaign this month after they ousted CEO Ron Johnson. It’s called “It’s No Secret” and television spots talk openly about their recent troubles and missteps in their pricing strategy. In the same spot they say that while they hadn’t listened to their customers before, they were going to start now, if only established customers would just come back and give them another chance. What?!?!

This is a very expensive public apology. In my opinion, a press release would have been the answer, but not a television campaign. There are ways to acknowledge their errors without making them sound so strategically inept. This approach is nothing more than a pathetic attempt to get some of their customers back before the whole company takes the final dive. Frankly, I’m not sure the customers will ever come back because jcpenney appears to be so confused about its brand identity.

How did this happen? This big box retailer has traditionally catered to Middle America and the rural areas where the customers wanted value for their hard earned money. For over 111 years, jcpenney has been the trusted catalogue store that many remember from their childhood, where moms would sit down and buy household goods, clothes and Christmas presents for their families. As time passed, competition from discount stores like Target and Wal-Mart and Internet merchants took market share and the store has struggled for the last few years to find its niche.

It was only 17 months ago that Ron Johnson was named CEO and was championed as being the brilliant mind needed to bring innovation and success back into jcpenney’s future. He came with new ideas and bold strategies to redefine jcpenney’s brand strategy. It was what some have called a “burn it and rebuild it” strategy.

Johnson was used to his recent successes at Target and Apple and he didn’t listen to his customers or his other stakeholders when he rebranded with a new logo and set a new pricing strategy that dumped the sales promotions that the company was known for and brought in “everyday low prices.” Even the new logo with a lower case jcpenney in a red box didn’t seem to excite the customers or the marketing experts. It seemed to resemble the Gap logo. We all know that a new logo doesn’t make a rebrand successful. It takes a lot more buy-in from customers to shareholders and employees to make it work.

In the first quarter of the launch, some store sales plummeted by 15%. This should have been a sign that things weren’t working, but they forged on until all the shareholders were calling for Johnson’s removal. During his tenure, sales dropped 25% and the company laid off 15% of its workforce.

Why did his strategy fail? It was a bold and innovative strategy that had worked for other retailers. The lessons learned were that customers need to be listened to and catered to for a store to be successful. It’s the same old story. It was too much change too fast for the established customer base to grasp, so they left and shopped elsewhere where they could find sale prices and not the “everyday lower prices” that Johnson had promoted.

Yes, the jcpenney brand needed to be changed, just as the stores needed to change with the times to be relevant. The colossal error here was don’t ignore your customer base because if you lose them you can lose the proverbial store and everything that built the company.

What will management do next? What will the shareholders expect and how many customers will believe the latest ad campaign and come back? These are the questions that will be answered in the months to come and I know I will be waiting as this “comedy of errors” probably isn’t over just yet.