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J.C. Penney and the Billion-Dollar Question: How to Turn the Retailer’s Fortunes Around

Coupon king Myron Ullman is back in the spotlight trying to save J.C. Penney from itself. But can he succeed?

That’s the $1 billion question currently being asked by media and retail industry experts. It’s also how much J.C.Penney lost last year when so many of its customers took their loyalty elsewhere after the retailer phased out the coupons shoppers had come to love and, more importantly, expect. As part of its turnaround, pundits argue, JCP needs to return to basics: no more costly store redesigns, fewer in-store boutiques and a complete restoration of the retailer’s daily discounts. Judging from its latest ad, JCP recognizes its errors, admits its mistakes and says: “we learned a very simple thing, to listen to you.”

I think what the retailer is also trying to say is: “we’re sorry.”

At Kobie, we’d recommend not getting stuck in that kind of discount dilemma to begin with. Stereotypical points-for-rewards programs and coupon-conditioning aren’t what inspires true brand loyalty. They simply inspire behavioral conditioning based on cost, not brand attributes – and it’s very difficult to build a sustainable loyalty program based on offering the lowest price alone. And at this week’s annual GRMA Leadership Forum, a high-level gathering of retail executives and industry influencers which took place in Kobie’s home city of St. Petersburg, many shared that sentiment.

J.C. Penney, Loyalty, CouponThe Response to Coupon Conditioning
Let’s say you are a retailer who offers daily deals or coupons as part of your corporate culture. What do you do then? Does that contradict our typical customer reward program recommendations? In light of a recent 2013 Coupon Trend Report which showed a 14% drop in the US coupon redemption rate for 2012, can J.C. really win back its formerly loyal customers this way, one penny at a time?

Yes. I think it can – by embracing both old and new tactics. That means returning to brand experience basics, including a store filled with discounts and deals. But it also means the use of omnichannel marketing and loyalty tactics – an approach which growing numbers of US retailers are adopting. Omnichannel loyalty, an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience, is channel-agnostic and delivers true customer engagement.

So, if I were in Myron Ullman’s shoes, I would be:

  • Launching aggressive campaign outreach across multiple channels, asking members of JCP’s Rewards program which discounts they would like restored first – beyond what’s already been put back.
  • Making in-store product research and price comparisons easy and transparent.
  • Put yourself in the shoes of your customers. Don’t just listen to your customers.  Understand what it means to “be” them.
  • Considering QR codes or at least using image-recognition technologies like Google Goggles, a standard feature on the mobile search engine.
  • Improving the brand’s mobile interface and online buying experience.
  • Becoming Amazon-aware and beating competitors at their own game, improving rewards technology.

Almost a year ago, I wrote a blog called The Drug of Discounts: Couponing Addiction and What to Do About It, tepidly endorsing the now defunct “Fair and Square” pricing initiative and praising the brand’s attempt to break its couponing addiction. Rather than going cold turkey though, perhaps JCP should have explored some form of “coupon replacement” therapy instead.

Retail analyst Robin Lewis calls the current JCP crisis a “saga” and “perhaps the most colossal, dramatic, tragic, transparent, rapid and microscopically-tracked meltdown in the history of retailing.”

Let’s see if Ullman’s approach to the brand and to rebuilding customer loyalty can prove him wrong.

Kobie Marketing

Kobie Marketing