When Young & Rubicam CEO David Sable announced his advertising agency’s win of the J C Penney business on April 25, he said, “I and the whole team look forward to helping JC Penney as they write a great new chapter.” May 1, a new television commercial showed consumers the first page.
The spot will run for less than a week on broadcast channels, Facebook and YouTube, then slip away to possibly well deserved oblivion in time for a Mother’s Day promotion.
It takes the form of a plea and an apology to customers that ousted CEO Ron Johnson’s “fair and square pricing” marketing strategy alienated in droves, costing the retailer a 25 percent drop in sales and a $985 million loss in just one year.
Creative and production work began several months ago, while Penney was still sharpening up the axe for Johnson, according to a May 1 Bloomberg News report.
It uses footage from Penney’s previous “Yours Truly” campaign that debuted during the Oscars broadcast, over which a female voice says
It’s no secret, recently JC Penny changed. Some changes you liked and some you didn’t, but what matters from mistakes is what we learn. We learned a very simple thing, to listen to you. To hear what you need, to make your life more beautiful. Come back to JCPenney, we heard you. Now, we’d love to see you.
“We want to give customers our assurance that what they loved about JCPenney’s trusted brands, great style and affordable prices will be inherent to every shopping experience,” a spokeswoman said.
Since the retailer was bleeding (though not yet hemorrhaging) money before Johnson’s disastrous 17-month makeover, there may not have been that much love. And, based on online comments, there’s a lot of residual hate.
Quite an earful
“While this ad is certainly a bold move that will get talked about,” writes Will Burns at Forbes.com, “it does nothing to change my mind about the brand or the experience or anything else. It only says, in effect, ‘We were not listening to you before. Now we are.’ Okay, great.”
And in listening, Penney’s getting quite an earful.
As of the morning of May 1, when Burns checked out Penney’s Facebook page, he found “over 3,000 comments…Some positive comments, but most seemed negative and angry.”
A look at the May 2 comments to the Ad Age report confirms this:
- “I think they need to look at a more bargain pricing to get me to come back. Right now at Sears or Kohl[‘]s I can get better volume and quality for my limited spending dollars…You need to also offer discounts and promotions at a good price like before…I felt you had become to [sic] high priced. So let’s see what you can do to win us back. “
- “They missed the boat – what’s their promise? They need to re-establish the basics of the brand. What can customers expect from now on that will keep them coming back?”
- “…The ad apologizes for trying to change…why? [C]lothes weren’t exactly flying off the shelves at the old Penn[e]y’s.”
- “…Just make your changes and tell the customers about the new POSITIVE initiatives. Consumer’s [sic] today have the attention span of a gnat. The past is the past. Move on.”
- “This ad is full of the empty promises and disappointment of returning to the store.”
- “Very poor humanization of the brand. It is very hard to turn a brand around without innovation. This has none of that.”
“If the strategy was to pop the build-up of angst and anger amongst its core customers,” Burns writes, “it appears from the Facebook page to be doing so.” Fine. But popping a blister isn’t quite the same as healing the second-degree burn that caused it.
“An apology can help a brand recover from a setback,” says Northwestern University marketing professor Tim Calkins, but “[t]he key is you then have to follow it to live up to the apology.” According to some marketing critics, however, Penney’s following up in a way that may be asking for trouble.
Marking up to mark down
“[A]t first glance,” Time.com reports, “it appears as if the sales are back in a big way. A recent JC Penney brochure lists dozens and dozens of items on sale for Mother’s Day, and an online-only coupon (promo code: DEAL4ME) offered shoppers 15 percent off on purchases of $100 or less, and 20 percent off orders over $100 made by May 2.”
But appearances – particularly first appearances – can be deceiving. As early as Johnson’s last months as CEO, Penney began marking up “everyday” prices in order to mark them down. Believe it or not, there may be a certain logic to this.
Johnson’s pricing system failed to resonate with customers precisely because stores removed the cue that helps shoppers make what they think are logical, value-driven purchasing decisions. ‘By not showing marked-down prices, Penney’s removed an element that helps shoppers feel rational,’ [a Science News] post noted. ‘Seeing that marked-down price next to a higher original price provides an important yardstick for gauging whether we should buy something.’
(In other words, a $14 shirt is a piece of sleazy junk made in a third-world sweatshop, while a shirt with a $50 price tag marked down to $14 is a quality shirt at a steal. Go figure.)
According to dealnews.com, the retailer’s new pricing policy may be giving consumers plenty to feel rational about, since they’re marking up prices by as much as 67 percent.
Prices for standard store lines, they report, have been hiked by 20 percent – just enough to cancel out the store’s 20 percent discount coupons. Purchasers of other items, though, may not be that lucky. A side table, for example, “that retailed for $150 [in late April], available at $135 after a coupon…today carries a hefty $245 price tag – a 63 percent increase in seven days.” Another furniture item – a stool – now sells for 67 percent more than its early April price.
“[K]eep your credit card in your wallet,” writer Louis Ramirez advises,
until these products go on sale. If you’re looking for a special collaboration line, wait until the price is marked 50 percent to 60 percent off so you aren’t paying more than you would have before the strategy change. For cheaper everyday items, never make a purchase without at least finding a coupon that will knock at least 20 percent off.
No third chances
JC Penney better hope that its new pricing policy won’t be as serious a blunder as its 17-month-old one.
“By running this kind of ad,” Burns notes, “JC Penney has all but admitted that it has one chance to get it right. They have drawn a line in the sand and admitted past failure in a public and dramatic way. The ad will disarm some and buy the retailer time to actually get it right. And they better this time because JCP will not be able to play this card, as bold as it is, again.”
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