Strategy execution takes time. The problem is that very few people evaluating that strategy or the people responsible for it give a hoot.
For good or ill - mostly ill - this economy is Short Term Central. What have you done for me lately has morphed into 'what are you contemplating doing for me tomorrow that I might care about.' Patience? Exercise your options and go plant a garden.
Traditional retailer JCPenney hired a flashy new CEO. His provenance is all class and upscale profitability by way of Target (Tar-zhay to its upper middle class patrons) and, even better, Apple's iconic stores, which he launched. Though questions were raised about how applicable his experience might be to dowdy mid-level markets, he had ideas - and no one had the gumption to argue with his success.
So, the first results are in and, to be charitable, there is some work to be done. The JCPenney customer, who, as a general rule, does not drive a Range Rover to do her shopping, is not as enamored of the 'fair and square' approach as had been hoped. Trying to wean people off coupons who are unemployed with shrinking household incomes is a tough sell.
The larger issues have to do with management and brand. There is a belief, particularly in the US but perhaps pervasive in the western leadership canon, that intelligence and success are both transferable and more valuable than mere experience. That is how a guy who was selling $400 iPads comes to be selling $3 underwear. With regard to brand, there is, quite simply, a lot we do not know. Design, charisma, product, style, function; lots of statistical noise in those juicy margins.
This is a smart guy with an impressive record. If his board doesnt get an itchy trigger finger, he could stick around long enough to craft the adjustments probably necessary to make it work. There are entire teams devoted to deconstructing Apple's magic and applying it in more pedestrian realms. And it could happen. Please let us know when you hear of one that succeeds. JL
Meghan Casserly reports in Forbes:
Early this year JCPenney tried out a new gimmick: they decided to do away with gimmicks. The original 30-second spot of the campaign contained no dialogue, only female consumers screaming “Nooooo!,” at signs and advertisements announcing price reductions. “No more getting up early for door buster deals!” they shouted in spots starring comedian Ellen DeGeneres. “No more slashed prices!” But most importantly, especially to new CEO Ron Johnson, “No more coupons!”
Their customers were annoyed with clipping to save, posited Johnson, and so the retailer went cold turkey on coupons. But just one quarter into the experimental new strategy, sales have dropped
JCPenney reported a $163 million loss in the first 90 days of the year and executives at the company were forced to link the coupon strategy to a 10% drop in customer traffic. They didn’t realize how “into” coupons their customers really were, said COO Mike Kramer. Johnson was shocked at their commitment to the “little scraps of paper.”
It seems like Johnson and his team overlooked one critical component in the decision to eliminate coupons from Penney’s marketing strategy: the female consumers who make more than 67% of mall purchases each year.
Immediately after the campaign began airing, customers began voicing their concern. “I am complaining about the obnoxious television commercial aired announcing your new pricing campaign,” wrote a shopper on consumeraffairs.com. “It has to be one of the most irritating, annoying commercials ever created for television. If you think this will make anyone shop at your stores, you are mistaken.” Many others spoke out on JCPenney’s fan page on Facebook with no response until this week’s earnings announcement.
But can Johnson really be blamed for underestimating the budget-conscious female consumer? His resume reads more attuned to the high-end retail than the mommy market. During his 10-year stint at Apple he was credited for developing The Genius Bar. At Target he helped introduce “cool” to the retailer; he was responsible for the introduction of designer lines like Michael Graves for Target.
Target, to be sure, is a believer in coupons—they use them to predict purchasing patterns in consumers quite effectively. But they’re not the only ones in the know. Well-documented research shows that women find coupons, sales promotion codes and other time-sensitive incentives to be not just relevant, but essential. A recent study by Burst Media entitled “What Mom Likes Online” found that moms in particular are more than willing to click to get coupons– 45% of moms age 18-34 and 55% moms age 35-54 make it part of their daily routine.
“Taking coupons away from a couponer is like taking vodka away from an alcoholic,” says Faith Popcorn, a consumer trend strategist and CEO of BrainReserve in Manhattan, who stresses that at this particular moment in time, savings are important to every consumer, from the richest to the poorest, especially where coupons are concerned. Far from annoyed with couponing, she says that we’ve become a nation obsessed. “Everybody’s hooked on the things,” she says. “You just can’t make a move like that without asking people first—and he couldn’t have asked.”
Steven Boal, CEO of Coupons.com, knows a thing or two about the importance of coupons to female consumers: 71% of users on the site are women and he’s quick to point out that whether she’s the one who presents them at the cash register or not, she’s the key influencer in the vast majority of household purchasing decisions. “She’s influencing if not dictating every major purchase,” he says.
From online coupons to store circulars, coupons are a powerful tool for reaching these household influencers and convincing them to try new products. Boal confirms: “When there’s competition in a market, the retailer that delivers a coupon for both e-commerce transactions and in-store purchases tends to get a higher share of the customer wallet.”
But for JCPenney, admitting that the coupon strategy was short-sighted may not be enough to fix their very-public faux pas. “I’m offended that your COO wants to ‘wean me off’ those ‘scraps of paper,’” writes one customer on the store’s Facebook wall. “Those scraps of paper are what allow me to feed my family.” She adds that she plans to take her home goods purchases to competitor Kohl’s “since they (like me) ♥ coupons.”
Popcorn, who is the author of a book titled “Eveolution: The Eight Truths of Marketing to Women,” says that Johnson and company are going to have to do some serious damage control to win back angry customers. One of the principals she discusses in her book is the importance of branding with your consumer rather than to her. “what they failed to do was to ask their customers what they wanted. They just went ahead and did it—and now they’re feeling the repercussions of that.”
So what should they do? Popcorn says DeGeneres could play a key role. “I’d come back with a very strong apology campaign showing Ellen cutting coupons in secret, and making it very clear how important these pieces of paper are to their consumer base,” she says. “He needs to get on the same page as his consumers before he alienates them forever.” Rather than deprive them of something they value, she says Penney’s execs should focus on “surprising and delighting” their customers through the very promotions and gimmicks they hoped to do away with just three months ago.
“He’s got to give them stuff; he’s got to be couponing to the max,” she says. “He may consider coupons annoying bribes, but he’s got to know that they’re bribes that work.” They may be distasteful to his upper-class male sensibilities, but to atone Johnson first has to realize that, when it comes to keeping customers, his tastes aren’t the ones that matter.
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