JCPenney is abandoning millennials as it weathers an identity crisis

  • A JCPenney executive told The Wall Street Journal that the company “took its eye off of its core customer” – the middle-aged mum – in its effort to appeal to millennials. It is now trying to win back these shoppers.
  • JCPenney‘s most recent CEO, Marvin Ellison, resigned in May. Ellison was credited with leading the company through a major turnaround effort, but he left before it was complete.
  • Ellison targeted younger shoppers by rolling out new initiatives such as millennial-focused private-label brands and in-store locations of Sephora beauty shops.

JCPenney wants its core customer back.

In an interview with The Wall Street Journal, Mike Robbins, JCPenney’s executive vice president of supply chain – and one of four executives filling the role of CEO while the company searches for a replacement for Marvin Ellison – said that the department store “took its eye off of its core customer” in its bid to appeal to millennial shoppers.

The core customer he’s referring to is the middle-aged mum.

Data from Kantar Retail showed that the average age of JCPenney’s shoppers was 51 years old in 2016. Macy’s was 50, Nordstrom’s was 44, and Kohl’s was also 51. At an analysts’ day in 2016, JCPenney said that 55% of its revenue came from older customers with incomes above the US median. The remaining 45% came from mothers with younger children.

The company was tasked with keeping these two groups loyal while simultaneously adapting to changing shopping trends in order to lure in younger millennial and Gen Z shoppers.

But Robbins said that he believes that the pendulum swung too far in the direction of those younger shoppers.

“We did lose our way,” he told The Journal, blaming the company’s push to win over younger shoppers for its current woes. The store has been unprofitable for 15 of the past 17 quarters.

JCPenney did not immediately respond to Business Insider’s request for comment.

JCPenney is ‘creating an experience that isn’t right for anyone’

Ellison, who resigned as JCPenney’s CEO in May, rolled out new initiatives such as adding millennial-focused private-label brands and more in-store Sephora locations to appeal to younger shoppers. These new apparel brands were given prime space near store entrances and crowded out the established labels favoured by its older customers, such as Liz Claiborne, Worthington, and St. John’s Bay, The Journal reported.

While Ellison has been credited with leading the company through a major turnaround effort and trimming its heavy debt load down by $US1.6 billion from nearly $US5 billion, he jumped ship at a crucial point for the business, and the company is still struggling to find its place in the retail landscape.

“JCPenney hasn’t created an experience that solidifies a place in consumers’ shopping habits,” Kathy Gersch, executive vice president of the consultancy firm Kotter, told Business Insider in May.

And it is not clear exactly who they are trying to appeal to.

“They are creating an experience that isn’t right for anyone,” Gersch told Business Insider in July. “They are trying to serve too many people at the moment.”

Part of the issue here is that JCPenney has passed through a string of CEOs in the past few years, each with their own vision for the company. The customer can feel that inconsistency, Gersch said.

When Ellison’s immediate predecessor, Ron Johnson, tried to make the store more upmarket during his time as CEO, he was also accused of alienating core customers. In this case, the results were catastrophic, leading to a $US1.42 billion operating loss in 2013 and leaving the company drowning in debt.

For now, the main priority should be committing to who the customer is and sticking to that, Gersch said.

“If you commit to no one, you end up losing all customers,” she added.

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