J.C. Penney’s “fair and Square” Strategy

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and growth through online sales.

Potential to regain customers.

Draw new consumers with exclusive brand labels, also provide new experience for loyal customers.

Threats

Competition from Walmart, Target, Macy’s and Nordstrom’s, taking up their market share.

Emerging challenge from international clothing retailers (Zara).

Probability of low quality service due to employee dissatisfaction.

RECOMMENDED COURSE OF ACTION

After J.C. Penney released its first quarter results, Johnson blamed marketing execution and said that the sales slump can be fixed by “educating” J.C.Penney customers better: “We have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores,” the CEO said in his released statement.[2] Customer feedback is really important, collect data at point of sales to know what customers are looking for and improve the customer experience based on the learnings.

J.C.Penney CEO Ron Johnson: “Coupons were a drug. They really drove traffic.”[2] The problem, from J.C.Penney’s perspective is that they didn’t understand consumers get sense of urgency as a result of discount coupons and short-term markdowns. According to a consumer research firm: “Consumers want deals, and they’re willing to wait for them. When you train customers to shop at big discounts, that customer is not going to change.”[2]

Shoppers may like the idea of predictable pricing in theory, practically it’s dull and lacks excitement. However manipulative, discounts and coupons build excitement. Instead of launching “Fair and Square” strategy store-wide, Johnson should have tested it first, with a certain product line maybe, but as this strategy didn’t work, they need to go back to high-low pricing strategy, offering coupons and discounts, because that excites the consumers. Offer “Fair and Square” deals for off-season products. Lastly, e-commerce is a big opportunity to invest on and reach a wider audience, consumer base by launching web-only exclusive collections. They have clearly been underperforming in this domain (Exhibit 4).