JCPenney stores originally opened as discount shops where customers could find good deals and low prices on clothing, home goods, and other items. As the brand grew, the company began expanding into new territories and increasing its number of stores. Due to low sales in 2012, the company changed its policies to focus more on each individual JCPenney customer.
Ron Johnson took over the job of CEO in 2011, and over the course of his tenure, the company encountered financial difficulties. The company's stock dropped by more than 50 percent in the 17 months that he ran the company, and in April 2013, JCPenney announced that it would bring back former CEO, Myron Ullman. Bill Ackman, a hedge fund manager, invested millions in the company and chose Johnson when he purchased a majority share in JCPenney.
When Johnson took over as CEO, he decided to rebrand the company instead of looking at the needs of each JCPenney customer. Under his guidance, the stores eliminated coupons, ran fewer sales, and focused more on high-end shoppers. Many stores created separate spaces for different brands, which led to more confusion on the part of JCPenney customers. Johnson wanted workers to push the company's everyday low prices and convince shoppers that the stores didn't need coupons or sales because of the low prices already available on all products. By the time the company replaced Johnson, it had lost millions.
According to Tim Calkins, a professor at the Kellogg School of Business, the JCPenney marketing strategy that Johnson implemented shows that it's harder to gain new customers than to retain existing ones. JCPenney customers left the stores in droves, taking their money to Kohl's and similar discount stores, while the new customers that Johnson anticipated never appeared. Johnson focused on gaining new customers to replace the older leaving customers, and he couldn't find a way to balance both parties. Ullman let shoppers know that he would reintroduce coupons and other past JCPenney marketing strategies that customers had loved. The company, which started a legal battle in 2013 over the Martha Stewart brand, is in need of past and current JCPenney customers. Utilizing the right marketing strategies and introducing a solid retail plan to balance new and old customers is sure to help achieve this goal.
After changing the layout of the stores, stopping sales, and dropping coupons under the previous CEO, the company's old customers left, and new customers never materialized. With former CEO Myron Ullman back in charge, the company hopes to achieve a balance that brings returning JCPenney customers back while still appealing to new shoppers.
(Photo courtesy of FreeDigitalPhotos.net)
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