MediaPost recently posted an article about JC Penney’s new ‘fair and square’ ad campaign. In the article, Howard Davidowitz, of Davidowitz & Associates in New York, believes that ‘JC Penney is a train wreck. It’s much more disorderly than it used to be.” I wouldn’t exactly describe them as a train wreck at this point. I would simply define them as ‘in transition’.
I will agree with him on one point in that unveiling a new pricing strategy to consumers before improving merchandise and assortment in the store could backfire. With Ellen as a spokesperson, it certainly deviates from the image I currently have of JC Penney. With any spokesperson, they should evoke the same feeling and image that consumers would experience with your brand. If JC Penney is going to have Ellen as their spokesperson, they have to follow through with this image in their stores.
While the article talks about how it will alienate its existing customer base, I think you need to look at the other side of the coin. JC Penney could appeal to more people with the new pricing strategy. The campaign is designed to deliver simple, honest pricing, month-long values, and hassle free returns. While it may alienate a portion of their existing customers, can they offset it by turning the heads of enough non-shoppers?
I think I’ve gone into JC Penney twice in the past year and I it was because I passed through the store to get to my car in their parking lot. As someone who doesn’t keep a pulse on JC Penney sales, I never thought I would be getting a fair price because I knew there were coupons out there that I didn’t have at the time. Sure, JC Penney may lose some of their hardcore bargain shoppers that don’t buy into the new pricing strategy, but the game is to gain more new shoppers than what you lost. JC Penney is experiencing declining sales and needed to change, I don’t think anyone can argue that.
However, JC Penney has also taught its customers to rarely if ever buy something at full price. To flip this switch overnight will take more convincing than a TV ad. They recently rolled out their arsenal of TV ads during the Academy Awards, featuring Ellen DeGeneres as the spokesperson. Ace Metrix, a company that measures the creative effectiveness of advertising, measured the JC Penney ads between 552 and 630 (on a scale of 0-950). JC Penney’s leading ad, ‘Roman Returns’, scored higher than the popular Apple iPhone ‘Road Trip‘ and ‘Command Your Phone To Do Anything‘ ads. Not to get ahead of ourselves, Apple has an average score of 607, which is much higher than JC Penney at 516. Ace Metrix notes that ‘Receipt Revolt’ scored higher among women 21-35 and earned soaring Change, Likeability and Attention scores, all more than 15 percent above the component norms for the department store category. JC Penney’s average score of 516 was much higher than last years Oscar performance of 464.
I think retaining their existing customer base will be their biggest hurdle. Look at Kohl’s, they have built their pricing strategy on heavy sales offerings with elevated regular retail prices. Consumers think they are getting a deal because of the double-digit savings they see circled at the bottom of their receipt or that in combination with the Kohl’s cash they received. JC Penney’s “fair and square” pricing could expose these pricing tactics to consumers, particularly the cross-shoppers. I haven’t shopped at JC Penney since the launch of the campaign, but Katherine Boyle, Deal Hunder columnist, put JC Penney’s prices to the test. You can read the full article here, but she found their pricing to be comparable to the sale prices at Kohl’s or Macy’s. While some may find this “no hassle” pricing to be comforting, others will continue to gravitate towards the sales ridden arena of other department stores. We can all speculate and poke holes in their strategy, but they are responding to declining sales and taking a risk and you have to respect them for this.
I think this is a good position for JC Penney, it certainly differentiates themselves from their competition. The one thing missing for me at this point is the merchandise quality message. I assume it would be higher and more trendy given Ellen as their spokesperson, so hopefully this comes in their second leg of advertising. It will be interesting to see how other department stores react, if at all.