Fair and Square Retail Strategic Analysis: JC Penny Professor Maria Kalamas MKTG 4300/01 Basic Retailing- Spring 2012
Team Shopaholics Anonymous Vaughan Alexander | Marshall Gingles | Sean Lehnherr | Aftiam Ramli | Juan Torres
Table Of Contents
Introduction 01
Multipart Analysis of the Retailing Mix Customers 04
Customer Service 05
Merchandise 07
Logistics 09
Price 11
Advertising & Promotion 12
Trading Area &
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At one time JCPenney was considered the pentacle of discount shopping and was consistently growing. A heavy recession in 1974 was the first major obstacle for JCPenney and from there on forward it seemed difficult for the retailer to make progress in the magnitude it had the previous years; however the retailer continued to make profits. In 1998 JCPenney introduced its online catalog service; in the beginnings JCPenney’s catalog was strictly paper and a major player in its business strategy and profits. The introduction of the online shopping proved extremely beneficial for the company due to the online boom of the late 90’s and early 2000’s. Today JCPenney finds itself at a very interesting cross roads. In the summer of 2011 JCPenney welcomed new CEO Ron Johnson, a former Apple executive. This was a major move for JCPenney considering the recent years showed a steady decline in profits and Market share. Store closings were becoming a regular thing and the Executive committee saw Ron Johnson, who has had major success in retail, as a chance to turn the company around. On February 1, 2012 the company launched its new strategy centered on “Fair and Square” Pricing. This is the first stage of “many changes to come” according to Ron Johnson. The company also has a
Due to the economy downturn period, Macy’s and many other retailers were suffering. Fortunately, Macy’s has chosen the beneficial marketing strategy to fit the objective of business. This paper will analyze the company’s situation from its financial aspect, industry aspect, the competitive part and Macy’s marketing strategies to conclude that Macy’s could have stable profit in the next three to five years.
In the past, JCP had, on average, one price campaign every day. The stores were full of sale signs and retail rise was getting out of control. JCP partnered with numerous exclusive collaborations which was hoped to bring about an expansion for the firm. However, due to the economic slump, the oversaturation of the market, and an expected lack of quality in the goods from the consumer perspective, JCPenney’s success was degrading in contrast to its competitors. (Sloan, 2010).
The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic
In January 2012, newly appointed CEO, Ron Johnson introduced a plan to rebrand the department store chain into a 21st century retail powerhouse. Launching of the new J. C. Penney brand identity was set to occur over four years and would include a new logo, a new in-store experience featuring new and transformed brands, and most importantly, it would change the way that the company priced merchandise. Unfortunately, J. C. Penney suffered a 25% sales decline in the first year and Johnson was fired after only 17 months.
The companies that were chosen for a company analysis include Macy’s, Kohl’s, and Burlington. Since the retail industry has been lagging behind lately, these companies will help determine the prospective financial investment in the retail industry. As Macy’s as our primary company, we chose Kohl’s and Burlington to be the two comparative companies. These companies are comparable due to the same SIC code of 5311 in the subgroup of department stores. These companies offer similar products and services with little differentiation between the three.
Penney’s around for so long is their willingness to change and try different things. With technology being a huge things in today’s standards they needed to come up with different shopping methods for people who only shop online or may not be abler to get out as often as they once could. So what J.C. Penney’s did was they created an only shopping center, catalogs for people to get sent to their house, they are always doing the next best things to keep in competition.
In this segment, the retailer J.C. Penney will be analyzed against the department store retail industry, with particular emphasis placed upon their competitors, Macy’s and Kohl’s. The major components to be discussed will include the general external environment (i.e. demographics, economics, politics, legal requirements, technologies and global expansion), the industry environment, the competitive environment, the driving forces and the key factors for success within the industry. In terms of the general external environment, the retail industry is a multi-trillion dollar business in the United States alone and maintains operations primarily due to consumer spending. Such purchases rely upon the disposable income of
JC Penney had to undergo and withstand several competitive issues to include changing of brand image, selling strategy and marketing strategy. JC Penney also had to account for Environmental Factors to include: a population that continued to age and also unemployment rates. JC Penney tried to influence customers by portraying an everlasting sale. No matter how hard JC Penney tried to market their products, if people didn’t
The new pricing strategy includes three types of prices. These prices will be a new promotion that is in sync with customers' lives . Instead of flooding the client with a relentless series of sales , coupons , discounts and tricks retail , JCPenney will host 12 promotional events each year , on a monthly calendar . Each month included the best prices on things that customers are looking to buy during the month and a number of attractive products and services that are unique per month
JCPenney has struggled over the years, but they have come up with different strategies to induce a better year. The company has rebuilt and reestablished their merchandise assortment into more powerful private brands and some exclusive attraction that their customers value and can be only found at JCPenney. They are becoming more involved with mobile commerce at their web site jcpenney.com. They are adding features to it such as giving the customer the option to shop, ship or pick up their JCPenney merchandise. This will include JCPenney putting in an enterprise wide inventory network that will allow customers to be able to pick up orders on the same day and same day delivery. They are making sure their employees are engaging more with consumers
Mr. Johnson came on board as the CEO of JCP from November 1st, 2011 till April, 2013 (Clifford, 2011). During this period, JCP’s longtime loyal customers stopped shopping and were lost to the company’s competitors. Mr. Johnson made away with promotions, coupons and their favorite private brands, such as St. John’s bay, Stafford, Amarielle and Worthington (Kraft- Linder, A, 2014). Johnson’s plans to make the stores cleaner and brighter did not work. He made huge mistake (Kraft- Linder, A, 2014).
JC Penney Co. Incorporated was founded in 1902 in Kemmerer, Wyoming by James Cash Penney and William Henry McManus. Today JC Penney offers a range of family apparel, jewelry, shoes, accessories, and home furnishing products through a chain of department stores and their company website. JC Penney, headquartered in Plano, TX, operates in the United States and Puerto Rico, with a total of 1,108 stores. JC Penney also offers its products through a catalog channel. Each channel serves the same type of customers and provides generally the same merchandise mix. JC Penney’s business is conducted through a single segment, but revenues are reported by product category. In addition to their product categories, the
JC Penney is not as large as some of its competitors, many of which have more substantial resources and are constantly attacking their market share. The company also faces threats from economic conditions, such as high unemployment and the recent recession. When consumers are under financial pressures can easily decide to shop elsewhere, such as Kohl’s, Target, and even the dreaded Walmart. Even the perception of better value can drive consumers elsewhere.
JC Penney States its mission is “to help customers find what they love for less money, time and effort from a leading portfolio of private, exclusive and national brands.”
1. I have chosen to discuss and compare the department store industry. I have chosen this industry because I live in Southern California where the retail sector is a major part of business. Shopping malls are prevalent everywhere. I have seen and experienced all the differences among class and status. With a wide variety of demographics in Southern California, there are a number of shops and stores to choose from. Department stores range from discount warehouses such as Wal-Mart, mid-range stores such as JC Penney, and high-end stores like Nordstrom. I am going to discuss the department store industry specifically for Wal-Mart, JC Penny, and Nordstrom. Coming from a middle-class family, I have experienced shops at all ends of the