What Will JCPenney’s New Sales Strategy Mean for Its Branding?

The new pricing scheme unveiled recently is brave in a number of ways. Most importantly, it seems to draw a line in the sand against department stores’ downward race towards becoming discount stores. Stopping the roller coaster of sale pricing and the continuous need for price slashing could have some interesting effects for stores of their sort.

For the past 3 decades or so department stores have let the features that separate them from big box stores atrophy. The biggest difference was in the quality of attention and service a shopper would experience. This was cut in an attempt to control costs and compete with discount stores. The next thing cut was the quality of products, further blurring the line between department and discount stores. What was the difference between JCPenney and Wal*mart if the service was similar? Then, if there was no difference between products, what would justify the increased price?

In these occasions the brand is important. It has to stand for something different and for the longest time, department stores in general – and Penneys is no exception – have lost their way. The first step back is to begin to delineate itself from discount stores by holding price.

JCPenney halting a discount sale scenario is an excellent start in holding back further losses in its brand’s perception and its bottom line. The normalization of pricing is effective in moving the chain away from a discount perception and the vicious cycle of sales. More importantly, it begins to allude to the notion higher quality goods, not to mention a boost to its brand’s esteem. Penneys needs to create a difference between it and stores like Shopko and Target if it is to continue living. By not playing their pricing game is a great start.

The lack of crazy pricing will have to be filled up with some other reason to bring shoppers to the store. The more staid manner of actual close-outs and monthly featured items probably won’t provide it much. The next step would be to bring service back – the true differentiation between department stores and big box stores, as mentioned by the new head of JCPenney.

The concept for the average shopper of what ‘better service’ really is may be quite alien now. Obviously, there’s the Nordstroms level but what would be expected from Penneys in this regard? I don’t think you’d really need to go far. Putting more sales people on the floor might be the best start. Managing customer service quality would be an easier task when stores aren’t running skeleton crews. Thinking that the person in charge now has come from Apple, could also more employee empowerment be in the cards? There’s a lot of possibilities there.

The really interesting thing is that these changes are not going to make an immediate positive change to the financials. Dropping the sales is going to hurt in the short term. There might be an up-tick for a while with the novelty of the new pricing scheme for perhaps a quarter but after that, the changes are going to be much more incremental. Increases in quality of experience are not the easiest things to quantify and may take a while for gains to be attributed to it. In a world run by quarterly results, this all might just come down to results versus how patient the Board is.

If they do hold to their plans, these changes will eventually allow for Penneys to move to higher price points, both on better quality products and the perception of value stemming from a far better shopping experience. If done well, they’ll make some nice brand differentiation too. The real question might be if JCPenneys has the stomach to take the slog back into the segment where department stores used to occupy. My hope is that this doesn’t lead to another terrible JCPenney logo.

One Reply to “What Will JCPenney’s New Sales Strategy Mean for Its Branding?”

  1. Eric

    Believe your last sentence is key to the success of JCP’s mission. I believe JCP has a branding issue as it positions itself relative to Macy’s (above them) and Walmart (below them).

    They are also cutting $900M in costs along the way which may impact their ability to add services. Their new CEO comes from Apple which has huge brand identity and control over its products, markets and customers. Perhaps he feels that by establishing kiosks within the JCP stores, he can replicate Apple’s sucesses

    The recent TV ads, having mostly women screaming at discounts could backfire as that demographic enjoys the shopping experience and sale prices.

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