JC Penney’s Failure to Market Test Its New Strategy Was a Big Mistake

May 6, 2013 — Leave a comment

Former CEO Ron Johnson faced a monumental task in trying to revitalize the JC Penney Brand when he took the helm late in 2011. He failed to turn-around JC Penney and in fact the situation deteriorated during his 17 month tenure as evidenced by a 25% comp store decrease in 2012. In early 2012, Johnson unveiled an aggressive vision for a “new” JCP that included new brands, in-store shops and a new pricing strategy. For years, JC Penney had been losing relevance with the American public. However, the chain still had a loyal core group of shoppers who responded to aggressive sales.

Michael Graves Design at jcp1 - photo credit Chris Rupert

One of Johnson’s biggest mistakes was failing to test and refine his new ideas before rolling them out. In the first quarter of 2012, when the new strategies were announced, JC Penney was not yet in a dire situation. It was merely a dowdy, third-rate department store that needed to appeal to younger shoppers while maintaining its core customer base. The full-bore, across the nation re-branding and remodeling was way more aggressive than what was needed. He made big changes, extremely rapidly, without testing them like retailers and direct marketers usually do. Johnson has been quoted as saying, “we didn’t test at Apple.”

In a January 2013 post, I advocated that JC Penney needed to start to take a lean startup approach and rapidly test and refine new product, marketing and merchandising concepts. With over 1,100 stores, they missed a huge opportunity to market test new ideas and learn from customer response before making a big expensive bet rolling out big changes. Market Testing is a critical tool that should be used whenever possible to refine and improve ideas. Johnson mis-read the pace that JC Penney’s core customers were willing to change and the appeal of his ideas to new customers.

I believe that Johnson had some great ideas to re-make JC Penney’s. However, by failing to properly test and refine those ideas before they were rolled out nationally with great hype, we will never know if they would have worked in the long-term. Personally, I wanted his ideas to work. The future of JC Penney’s is very much in doubt. A return to the short-term sales promotional tactics of the past may stabilize sales for a while but is not a long-term strategy for success.

What do you think of JC Penney’s long term chances?

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