Back in February, we wrote about the beginnings of the transformation at JCP. it included Fair and Square pricing and the transformation of the stores into town squares with dynamic brand shops. We applauded the effort but also had a number of caveats about how historically hard pricing transformation has been in retail and how underwhelmed we were with the initial creative execution: unclear messaging in-store and in some media outlets.
Fast forward a few months and what we eagerly awaited is now (somewhat) public. Quarterly comp store sales were down an astonishing 18%. The company blamed poor results on the difficulty of transitioning the price strategy (no surprise there) and the poor communication of the messaging (told you so...).
However, we also know that any chance of this turnaround working cannot be measured in quarters--it will take a minimum of 12 months to work through pricing issues and even longer to effectively create meaningful physical and merchandising changes within the stores. So, what does JCP do? Trying to effect these changes while a public company is enormously difficult. JCP's management had significant support at the onset and the stock price was around $42 when we wrote our first blog. Today, it is at half that level.
They acknowledged some communication mistakes and suggested we will see a clearer explanation of the pricing policies (words like sale may re-appear). And in a bit of a stunner, Michael Francis, the President who was brought on from Target to oversee merchandising and marketing, resigned. If anyone reasonably expected a quick turnaround, they really don't understand large scale retail very well.
JCP has aggressively recruited a world class roster of retail talent who will no doubt introduce significant innovation within the brand. The transformation will take time...while clearly WAY too early to judge, it is clear that they are racing the clock, Wall Street confidence and consumer expectations while they attempt to overhaul the brand.
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What I would add to Neil's assessment is that the core JCP shopper may never have accepted that anything was broken in the first place that required change. An additional challenge of effectively changing large scale retail is the fact that you have a legacy social contract with your shoppers who, by and large, may be satisfied with status quo and confused by your message. The impediment to change that JCP is experiencing is similar to the "experience turbulance" caused by Walmart's Impact Store program, which was abandoned as competitors quickly took advantage of the opportunity to pounce as shoppers adjusted. I hope that JCP doesn't lose its appetite to innovate in today's dynamic retail landscape and that they adjust versus abandon their strategy.
ReplyDeleteBill,
ReplyDeleteGreat point. We worked a lot for Montgomery Ward (RIP) way back when. While it was clear the company desperately needed to change, the current customer base was not always willing to come along for the ride and new customers are slow to attract. JCP does need to adjust not abandon...