Jc penney ppt draft new

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CompanyHistory

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• At the turn of the century, JCPenney celebrated 100 years in the retail industry

• Founded in 1902 by James Cash Penney when he was just 27-years-old

A focus on understanding the JCPenney brand

Catering to the needs of their customers

Offering fashionable, high-quality merchandise at affordable prices

A retail legend born

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Grew its success by following 3 key principles:

“A merchant who approaches business with

the idea of serving the public well has nothing to

fear from the competition.”

— James Cash Penney

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Growth periodSales had reached $250 million and JCPenney had 1,496 stores, in nearly every state

Reached 2,053 active stores, 300 of which were full-line establishments

Positioned itself a department store, and discontinued all product lines outside of fashion apparel and home goods

Successfully transitioned to become one of the biggest names in department store apparel

1936

1973

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1982

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• JCPenney’s success could not be sustained in the 1990s

• Management lost focus on the company fundamentals and lost its brand identity

• For the first time in the company’s history, a decline in sales occurred

• Historically, the retailer attracted middle-income families and had a strong private label program.

• In the late 1990s, the retailer modified its inventory to appeal to higher-end department store customers and put more emphasis on brand names

1990s—Growing stale

DECLING

SALES

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• Heading into the new millennium, growth further declined for the retailing giant

• In order to compete, JCPenney launched hundreds of sales per year.

• Executives believed loss of volume was due to location, and underperforming stores were relocated from mall locations.

• New stores opened with at-the-door parking to contend with discount competitors Kohl’s, TJ Maxx and Target.

• Despite these efforts, from 2003 to 2011, JC Penney’s sales declined by a whopping 45% from $32.3 billion to $17.8 billion.

Priced to move

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• In November 2011, JCPenney’s CEO Mike Ullman was ousted and replaced by Ron Johnson

• The man who brought high-end designer wares to Target and who made Apple’s retail stores into an unexpected phenomenon.

• Believed that rebranding JCPenney’s image to be more “hip” would save the company.

Changing of the guard

Ron Johnson

"The first and most encouraging thing to me is I

am completely convinced that our transformation is on

track. We are making extraordinary progress in everything we’re doing.”

— Ron Johnson

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Personality - “Focusing strategic initiatives around the elevation of JCPenney brand”

Price - “Establishing “fair and square” approach across all platforms”

Place and Presentation - “Creating a relevant and inspiring shopping experience”

Product - “Obtaining market share by appealing to every American”

Promotion - “Capturing customers’ attention through amplified messaging and media”

5 Point Project Scope1

Johnson broke down his plan into the retailing P's:

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Elevation of the brand• Rebranded the old-age retail store by removing “Penney” from its

name, and reducing its moniker to simply “JCP.”

• Came paired with a sleek red, white and blue logo that channeled the feel of the American Flag

• The logo shape took on a boxy shape, going hand-in-hand with Johnson’s infamous “Fair and Square” pricing strategy.

• New brand name and logo was not tested prior to its launch, the first indicator of the over-confident manner in which Johnson would move throughout his tenure at JCP.

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• Johnson wholeheartedly believed customers would accept the shiny refurbished version of the brand with open arms

• In reality, the company had a 113-year brand that was deteriorated in the minds of its customers

• The radical rebranding effort was too abrupt, and made loyal customers feel unwelcome.

Total flop with customers

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• The second phase of Johnson’s project was “Establishing a “fair and square” approach across all platforms”

• Pricing program that completely abolished JCP’s traditional sales strategy which offered customers a never-ending stream of sales, coupons, and rebates.

• Implemented three levels of new prices offered to customers: Everyday Price, Month-long Values, and Best Prices

• Promotions were reduced to just 12x per year— a drastic

change for JCP’s core consumers who were offered 590 promotions in 2011.

“Fair and Square”

590 12!

reduced

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• Fair and Square intended to show the company would not play into the popular gimmick of high-low pricing

• Johnson drove away and confused customers who were accustomed to coupons, deals and aggressive promotions

• He failed to understand that JCP’s established customers enjoyed the thrill and challenge of finding a deal

Total flop with customersPersonality

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Inflated ConfidencePersonality

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• Johnson had failed to pilot the new pricing strategy in a smaller region prior to a national rollout.

• He had an inflated sense of confidence stemming from his tremendous success at both Target and Apple, which led to implementing ideas without adequate testing.

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Stores-within-a-Store• The third major facet of Johnson’s vision for JCP was

“Creating a relevant and inspiring shopping experience.”

• Johnson decided to implement stores-within-a-store (SWAS)

• Johnson envisioned 80-100 branded retail shops and services placed

• Johnson made major investments in new infrastructure, merchandise, and advertising necessary to make his plans come alive

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• They were crippled by hundreds of custom legacy applications whose maintenance took up 95 percent of their $400 million IT budget in 2011

• The Project Management team agrees with the vision of his strategy, however, we believe it should have been implemented over more time.

• We believe the partnership with the boutique brands and JCPenney as a retailer is a win-win for both parties

Partial flop with customersPersonality

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Cotton Kills• The fourth point to Johnson's plan was to “Obtaining market

share by appealing to every American”

• Johnson wanted to enter the high-end home furnishing and clothing business

• Cotton prices would increase dramatically due to flooding and shortages on cotton farms worldwide

• Affected consumer purchasing power and increase inventory turnover for the company.


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• Middle class Americans will not spend $3000 on a couch.

• In turn, they will shy away of stores that carry expensive merchandise they cannot afford.

• Market analysis and foresight can be used to act quickly in reducing the impact of rising material cost.


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Advertising • The fifth and final point to Johnson's plan was to “Capturing

customers’ attention through amplified messaging and media”

• Using traditional print and TV platforms the company increased advertisings spending to a record $504 million dollars

• This led to $289.1 million dollars in TV spending and another $124.5 million on print.


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• This resulted in an increase in cost of goods sold (COGS) of over 60% of total revenue.

• Limited Social Media and online engagement


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Summary and Conclusion• Johnson’s 5-step program was a major departure from the

existing JCPenney business model and represented the largest platform project in the company’s history.

• Failed to include appropriate change management activities

• leverage a J-shaped project lifecycle that starts slowly , proceed slowly, and then finish rapidly.

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Conclusion

Jc penney ppt draft new

Leadership & Management

Transcript of Jc penney ppt draft new