J.C. Penney's Plan to Lure Back Its Lost Customers

Earlier this year, J.C. Penney (JCP) CEO Ron Johnson made an about-face on his "no coupons" pricing strategy after recognizing that it was driving away once-loyal customers. Now the company is making another bid to regain lost shoppers by bringing back many of the clothing brands that it ditched as part of its makeover.

Speaking before Bank of America's 2013 Consumer and Retail Conference, J.C. Penney CFO Ken Hannah acknowledged that the revamp of its clothing collections had scared off some of the retailer's core customers.

"You're going to see some assortment that was edited out that the customer has been screaming loud and clear that's been missing," he said. "So the basic denim, khakis, St. John's Bay for women -- [that was a] huge, huge miss when we edited that out and didn't offer an alternative for that customer. They voted with their money and took it somewhere else, and that's something we need to address."

Hannah said that these phased-out brands will start returning to stores next month.

It's the first time we've heard a J.C. Penney executive acknowledge that the company's apparel revamp has been a serious misstep. But as Hannah notes, customers have been complaining for a while that the new JCP no longer caters to their fashion tastes. Last week we ran emails from several disgruntled shoppers who said they stopped shopping at J.C. Penney because they no longer found clothes they liked there.

In fact, many of those emails specifically identified the removal of the St. John's Bay brand as their cause for leaving. With the brand -- and other "basic" clothes -- coming back, will those former customers give J.C. Penney another chance?

Readers Weigh In

Tiffany Hiza says she's happy to learn that St. John's Bay would be making a comeback.

"I would be very excited to see the St. John's Bay line return!" she writes. "They had some of the best fitting tank tops and tees on the market that seem to fit a 'real woman's' body regardless of age... [I'm] hoping to see the sales and merchandise I liked return soon."

Another former customer, Jane Malone, also indicated that the brand's return could get her back in the stores.

"If the clothes I love come back I will give JCP another chance," she writes.

Hilarie Ryals was more cautiously optimistic, and told us that the retailer would need to do two things with the relaunch if it wants to win back its wayward customers.

"Number one, they must commit to offering the same fit, quality, and classic design as before," she tells us. "If they offer items that are poor quality, use weird trendy colors and styles that don't fit well, the relaunch will fail."

Secondly, she says the company should apologize.

"They must acknowledge that they made a mistake and offer an apology to the customers," she writes. "As silly as it may sound, you have no idea of the negative emotional impact that JC Penney caused their long-term core customers who were kicked to the curb by the discontinuation of legacy brands such as St. John's Bay."

Striking a Balance

Clearly the old brands are important to J.C. Penney's disaffected customers, and it sounds like bringing those options back may indeed get some of them back in stores.

But it's worth noting that the new styles have some appeal, too. Johnson has spent weeks talking up Joe Fresh, a Canadian apparel brand that is the latest to get the "store-within-a-store" treatment at J.C. Penney. The brand officially debuted last Friday, and early reports indicate that the new collection was well-received by shoppers over the weekend. That's a bit of much-needed vindication for Johnson's strategy and suggests that he's not about to ditch his prized boutiques in favor of the old standbys.

We're eager to see how stores strike the balance when the "basics" make their comeback next month, and we'll also be interested to see if the move actually succeeds in winning back lapsed customers. But shoppers hoping to see a complete return to the "old" J.C. Penney shouldn't get their hopes up.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

The 10 Oddball Quotes From JC Penney's Fired CEO
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J.C. Penney's Plan to Lure Back Its Lost Customers

"The first and most encouraging thing to me is I am completely convinced that our transformation is on track. We are making extraordinary progress in everything we're doing."

"In haircuts, it's pretty incredible. Today we will cut on our tenth day of this effort to help Americans look better, help the kids look better. We'll do our 500,000th haircut, free haircut. And today customers will book their millionth appointment during the month of August to get a haircut.

"We're reducing the money on television. We'll still run television and we're investing heavily in the traditional traffic driving median, so be in the newspaper and we think that's going to be good."

"We're going to go paperless. ... Imagine a retail store without any paper except the signs, because everything will be done digitally through iPods and iPads and those are our priorities and those are all priorities within the next 12 to 18 months."

"Well, for the first 10 days with our new marketing, our traffic is down 7% to last year, which is a dramatic improvement."

"We're inspired by Selfridges. Selfridges is the leading department store in the world. You ask any retailer what's the number one department store? They will all say Selfridges."

"It's a place to refresh and we're going to have coffee bars and juice bars and place to get food, that's 25-square feet of space, but by putting out a few tables that have no cost, where we used to have cash wraps, no one has to leave the store if they want to refresh, they can grab a cup of coffee while someone shops and continue to stay in the store and continue to shop."

"We've rolled out Wi-Fi, but we really don't have a lot of use for it."

"What happens in a big mall of a 1 million square feet, about 600,000 square feet goes to the anchors and the common area which leaves about 400,000 square feet for the stores and the stores average 3,000 to 4,000 square feet. So, you run the math, you have about 100 to 120 stores in a typical mall we're in. We'll have just as many shops with inside JCPenney and that's what we call it a specialty department store. It's like a mall within a mall.

"Yeah, we're very anxious to communicate our pricing to our customer and we have failed at that, right? They were confused. Now, we have a pricing strategy that they understand. We have done focused groups around the country over the last 30 days with our new pricing strategy and they all say, we get it, whereas before, they were confused."

"At Apple our stores were busy when we only had Macs. Then we added the iPod; they got busier. We added the iPhone; they got busier yet. We added the iPad, and they got busier. The same thing will happen here. Next spring it's Joe Fresh, Martha Stewart, all our new partners. It will be just like Apple: boom, boom, boom."

As analyst Bill Dreher of Newedge USA told Johnson on the call, "I want to applaud you for creating one of the most exciting stories in retail write-down."

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