J.C. Penney: Remembering The Golden Rule?

After a year and a half of missteps, J.C. Penney may have gotten something right with their new commercial:

Remembering the Golden Rule

Here’s a fun fact: the first store opened by the J.C. Penney company was called The Golden Rule.  The idea was to run a business where customers were treated fair and square.  This could have been a running theme over the past year, as the new “JCP” sought to push low price points.  The disastrous mis-marketing of the last year instead tried to divorce JCP from any connection of the pre-2012.

That was a mistake.  This ad, on the other hand, mixes old images of J.C. Penney stores with modern Instagram-ish clips of young customers.  The final image of the commercial includes the company’s full name, J.C. Penney, rather than the JCP square logo that had punctuated previous ads.

The design is still minimalist, but there is no doubt that the commercial embraces J.C. Penney’s past.

Owning the Mistake

Frank apology ads are usually the domain of politicians.  This ad makes as frank an admission as a company can in a television spot.  Most of J.C. Penney’s failure came from trying to dictate to consumers how to shop; this level of honesty sends a message that the company understands why customers left and won’t insult their intelligence by  pretending like the last year and a half didn’t happen.

Will It Last?

It’s easier to make a good commercial than to save a business that has alienated many customers.  The last 18 months showed that customers do not hold blind allegiances to their department stores, and that their shopping habits are not set in stone.

Those customers might come back to J.C. Penney, but there real challenges remain for a department store still stuck between the discount prices of Target and Wal-Mart and the loftier tags of Nordstrom’s and Macy’s.  Johnson may have been a bad CEO for the company, but there were plenty of others who didn’t know how to turn the rudder, either.

At least they should have an idea about what doesn’t work.

Failure at JCP

Ron Johnson is out as J.C. Penney’s CEO.  The hallmark of Johnson’s short tenure was a radical shift away from the mid-range department store that J.C. Penney had been for years in favor of the more cosmopolitan “JCP,” an attempt to identify at once as both upscale and discount.

The failure is predictable to anyone who has observed JCP closely.  (I have, because I have owned stock in the company, had old friends who work at corporate HQ, have shopped there almost religiously since I knew how to spend money, and most importantly because my Dad and sister worked there for a combined 44 years.  Most of that time belongs to my Dad.)

Johnson’s background involves Target and Apple, and that’s telling – especially the Apple connection.  The most obvious visual changes was the stylized retail environment and the iPhone-powered mobile checkout units that replaced some counters.  The pricing structure famously moved from a sale-driven model to more stable prices that were never slashed – not even for Labor Day or Memorial Day.  There were more nuanced changes, too: St. John’s Bay left the shelves.  The styles got trendier and skinnier.  The labels came to dominate the product; buying “Arizona Jeans” was more important than buying a pair of jeans.

It sounds a bit like Apple, doesn’t it?  Remember the late Steve Jobs’s War on Flash;  The Apple mogul said he didn’t care what websites like YouTube used, he didn’t think Flash was worth supporting on iPhones, iPods, and eventually iPads.  Apple customers must accept that Apple sets the rules for the walled garden.  And they do: Apple is a very large and valuable company.  Here’s the problem, though: Apple customers are different from typical customers.  They are early adopters, and are even willing to spend more for style points.  They don’t necessarily spend like drunken sailors, but price is not the main driver.

If an Apple user were more price conscious, they might end up buying a cheaper Dell or HP laptop over a MacBook, or an Android phone or tablet instead of an iPhone or iPad.  In fact, that’s probably a big reason Android enjoys higher market share than iPhone.

J.C. Penney legacy customers have shopped sales and sought low prices for generations.  Changing the store’s philosophy would have worked if they were the only player in the space, or if JCP customers had the unwavering loyalty of Apple disciples.

Stuck in between discount clothing stores like Wal-Mart and Target and higher-end department stores like Nordstrom, there’s no doubt that J.C. Penney needed a facelift.  Johnson tried to perform a face lift, breast augmentation, and liposuction at the same time.  One wonders if Johnson ever shopped at J.C. Penney before his time as CEO.

A better strategy might have started with more in-depth analysis and testing in select markets before rolling out national shot-in-the-dark initiatives like the the “No Coupons Ever” debacle.  Had Johnson been more patient, he might have been able to carry out smaller changes, such as incorporating online sales into the in-store shopping experience or redesigning the retail environment without alienating the core shopper.

Instead, Johnson’s year and a half of leadership led to a rudderless company that somehow felt it could dictate terms to its customers.  Brand loyalty, for most people, extends only so far as price; not every brand can sell the way Apple does.  Learning that lesson cost Ron Johnson his job.