JC Penney made a bold move in launching an ad campaign effectively apologizing for abandoning its core customers in recent years. Last month, the JC Penney's Board sent a powerful message when it ousted CEO Ron Johnson and looked to the past for his replacement: former CEO Myron "Mike" Ullman. While the appointment was a shock to most, there were many who believe Ullman was on the right track when he was retired in 2011. Whether you thought Johnson just needed more time or not, the new ad makes it perfectly clear -- the company is admitting it made a mistake.
Ullman recognizes that JC Penney has a long history of connecting with its customers. He knew that women would appreciate the convenience of shopping for the entire family in one trip and under one roof -- and stayed steadfastly focused on providing consistent value to customers during the important retail seasons of Mother's Day, Back to School, and holidays. Ullman also recognized the lure of the Home Department and that once women came into the store for new sheets and towels, they could get her to also shop for their children and/or husband. The Texas-based department store was one of the first big retailers to grasp the power of delivering on fashions trends at a fair price and creating an emotional connection with all of its customers. Ullman's business model allowed Penney's to weather the boom of online retailing that shuttered many brick and mortar retailers. Today, JC Penney is still one of the best places to shop in smaller, middle America markets for the latest fashions and accessories, both in-store and online.
Another example is JC Penney's multicultural marketing, which long ago embraced the influence of Asian culture on fashion, as well as Asian-Americans as valuable customers. Penney's recognized that Asian-Americans are the fastest-growing segment of the U.S. population, not to mention one of the wealthiest and most fashion forward. The spending habits of Asians make them one of the most coveted among marketers -- and under Ullman, JC Penney led the way.
The 1990s were a particularly important time for JC Penney because it recognized Asians when much of the industry hadn't yet accepted the concept of multiculturalism and the need to take a special approach for each minority group. Under Ron Johnson, however, JC Penney followed the model of high-end brands and defined multiculturalism as merely showing a diverse mix of models in the same ad. Featuring young groups of "friends" of all races and ethnicities in one shot, these colorful TV and print ads always seemed forced and artificial. Most large companies understand the need to develop targeted strategies to appeal to audiences according to race, gender, sexual orientation and other demographic designations.
As JC Penney begins a new era, Ullman should go back to the company's roots and focus on a few keys that made it a giant in retail sales and marketing:
- Reconnect with its customers: JC Penney has been a go-to destination for bargain hunters -- a significant and rising number of which are multicultural women. The company foolishly ignored its base at a time when Groupon and LivingSocial redefined Americans' shopping behavior. JC Penney should return to its roots and try to win back Asian-American and Hispanic women.
- Create smart partnerships: One of Johnson's first forays into partnering with a recognizable brand was with Martha Stewart. Her image problems aside, the product line had become diluted through overexposure and is a perfect symbol of Johnson's failures to align the JC Penney brand with the right partners. Meanwhile, Kohl's has been putting pressure on JC Penney by collaborating with Vera Wang, Jennifer Lopez, Daisy Fuentes, Narciso Rodriguez and Derek Lam.
- Global Strategy: Penney's strength is that it's a national retailer many people know and feel comfortable with. Connecting its retail stores with the local communities they serve will build upon an already strong loyalty base.
- Pay attention to all your touch points: It can be argued that Johnson greatly improved the advertising, catalog, and website. But if customers' experiences with the products or at the brick and mortar stores are not aligned with their new expectations, these customers will never come back. This should have been so apparent to someone who came from Apple.
JC Penney has more than 100 years of retail success. It survived the Great Depression, multiple recessions, two World Wars and countless changes in the continuously evolving fashion world. It would be a shame if 17 months of regression wipes out the strides the company has made to be an inclusive, dynamic and trend-setting industry leader.