J.C. Penney Resorts to Pleading
When sales don't work, there's always begging -- at least that's what J.C. Penney seems to think with a new advertising campaign that pleads with shoppers to return to the department store.
Although I think former CEO Ron Johnson's idea to go with an everyday-low-pricing strategy wasn't a bad one, the outcome was disastrous. Shoppers fled to rivals Macy's and Kohl's, and Penney's earnings were a disaster as it lost $985 million in 2012.
The strategy shift was based on the premise that consumers were smart enough to see through the shenanigans of raising prices only to lower them for a "sale." Johnson thought shoppers would prefer being able to shop anytime in his store and get a low price every day. He was wrong.
So Johnson was unceremoniously ousted and Penney is back to playing the same game as everyone else. Now it's offering up a cloying mea culpa of sorts to customers: We changed, you didn't like it, so we changed back -- please, please, please come back to us!
I've savaged Sears Holdings over the years for the games it's played to juice sales at its stores, but I thought its recent ad campaign for Kmart was at least a humorous, memorable way to reverse the dwindling sales trend it suffers from each and every quarter. It didn't resort to soft-focus,
glances, and attempts at heartstring-pulling images of moms and little kids. It went straight for the funny bone.
It's great that Penney finally heard the message its customers delivered and is willing to react to it in a bid to get them back. That's what management teams need to do. But like the pleading boyfriend whining for his girl to return to him, it's just so unseemly to see this once-venerable retailer on its knees begging for customers to give it a second chance.
Flush with cash from borrowing $1.75 billion and having financier George Soros take an 8% stake in the company, the department store chain could have better spent the money on an effort that didn't make it seem so desperate. Its financial condition may indeed be dire, but no one wants to be with someone that comes across as being that needy.
Is a turnaround imminent?
J.C. Penney's stock cratered under Ron Johnson's leadership, but could new CEO Mike Ullman present the opportunity investors have been waiting for? If you're wondering whether J.C. Penney is a buy today, you're invited to claim a copy of The Motley Fool's must-read report on the company. Learn everything you need to know about JCP's turnaround -- or lack thereof. Simply click here now for instant access.
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