Morgan Stanley analyst Michelle Clark just issued this brutal note to investors that says JC Penney’s rebranding—its third in as many years—coupled with its complicated new pricing strategy is driving away it core customers. It may take the store several quarters to get them back:Consumers’ perception of JCP’s new pricing regime is worse than we (and the market) thought. Looking at shoppers who have been to JCP since 2/1 (i.e. since the intro of new pricing), more cited higher prices (rather than lower) at the dept. store. In fact, only 16% of shoppers associated ‘Best Prices’ w/ JCP and cited prices as being lower. Furthermore, customers cited bargains as harder to find and fewer aisles w/ deals.
JCP shoppers find ‘Best Prices’ hard to understand, difficult to compare to other prices (both non-sale and deal), and low value for money.
The emphasis is ours.
Revenue at JCP declined 20 per cent in Q1 2012, the company reported. Under CEO Ron Johnson’s new direction, first quarter traffic was down 10 per cent and 80 per cent of the chain’s Facebook comments are negative.
The new advertising and its “Fair and Square Pricing” campaign came from Minneapolis ad agency Peterson Milla Hooks, after JCP parted company with its longtime shop, Saatchi & Saatchi.
(The only good news: at least its lesbian mum ads seem to be working.)
Management seems to have gotten the message, however. After widespread customer protests, they’re considering going back to the coupons that customers love.
- JC Penney Adopts New Logo—Its 3rd In As Many Years
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