EPIC REBRANDING FAIL(as Forbes.com called it)

About the J. C. Penney Company, Inc

Generates annual revenues of nearly $13 billion from its 1,100 stores

American retailer, founded in 1902, based in Plano, Texas

Claims to have ”broad assortment of national, private and exclusive brands to fit all shapes, sizes, colors and wallets”

Products: clothing, cosmetics, electronics, footwear, furniture, housewares, jewelry

Retail market in the USARetailing is struggling due to the housing market crash, the financial meltdown, high gas prices, and chronic unemployment

Online retailing takes over, with significant growth rates

Top players on the market

Consumer survey in 2013 - Market Force Information study

J.C. Penny history – ups and downsEarly history and incorporation - 1902 - 1959

Smooth start – gradual growthFun fact – Sam Walton, who later founded Walmart, started work here in 1940 opened the 1,000th store in 1928 (gross business had reached $190,000,000 (equivalent to $2.61 billion in 2014)

J.C. Penny history – ups and downsGrowth and success - 1960 - 1979

1962 – entered discount merchandising (until 1981)

1963 – first catalogue issued

Began to expand categories of products sold

1973 – peak number of stores – 2053

1974 – recession hit hard

Decision to focus on core retail stores

1979 – began to accept Visa cards

J.C. Penny history – ups and downsAcquisitions and internet store – 1980 - 1999

1984 - acquired the First National Bank of Harrington,

Delaware and renamed it JCPenney National Bank –

issued it’s own credit cards

1993 - the largest catalog retailer in the US

Numerous aqcuisitions – from drug stores to firearms

stores

1997 – Internet store

J.C. Penny history – ups and downsContinuous growth – 2000 - 2009

stores-within-a-store: Sephora

Focus on brand image

2007 – slogan changed from "It's All Inside" to "Every

Day Matters"

Several brands launched (in collaboration with

renowned fashion designers – Ralph Lauren)

CSR, social media (2010)

2010 – Present: Rebranding Chaos

A rebranding campaign every year

Confused customers, confused employees

Company proves unstable

Inconsistent strategy – changed every year

Degrading brand image

Initial situation (2011)Company did well in 2010 – 36% profit

growth compared to 2009

Cotton crisis – prices grew higher than ever

JC Penney raised earnings expectations and

shares started dropping

2011 – Ron Johnson (former Senior Vice

President of Retail Operations at Apple)

became CEO

Changes the entire market mix of JCP

Main goal – focus on market share

Changes brought by the new CEOFired Saatchi&Saatchi at the end of 2011new brands, new pricing schemes, exclusive merchandise,

new name (jcp) and a new ad campaign – “fair and square”JC Penney ran 590 promotions in 2011, consumers ignored

99 percent of them. For 2012, Johnson only wanted 12 promotions – ended up

to switching to “every-day low pricing”

This switch, although understandable if judged revenue-wise, led to a change in how consumers perceive JCP – from playing in the big league with Macy’s and Nordstrom, JCP ended up among mass retailers – like Home Depot, Target and Walmart

JC Penney’s Worst Day EverMay 16th 2012

Loss of 25 cents a share, 1.5x expectations

Sales of $3.15 billion, missing expectations by $250 million

Fired 10% of the employees at the HQ, hoping to save 200 million dollars

Rapidly losing market share to Macy’s

Why didn’t the plan work?Ron Johnson remained CEO for 17 months –

he failed to bring good changes in JCP because he tried to apply his successful pattern from Apple

Experts say that he made 5 critical brand mistakes:

1. Brand and culture go hand in hand – You must align employee culture with business strategy

2. Customers crave a consistent brand experience

3. Always build upon existing brand assets

4. You can’t transform a company without changing the culture

5. To turn around a brand - Turn it inside out.

What is JC Penny now?a discounting mid-tier retailer

or a quality brand establishment?

JC Penney is a broken company and a broken brand

For a company that desperately needs new brands, potential suitors will be less likely to sign on knowing their product will likely be severely discounted under what appears to be the newest strategy.