Like many Americans, I love a good deal. I recently received a 30% coupon from Kohl’s. While I didn’t think I needed new clothes, Kohl’s thought differently, so I shopped. After my purchases were totaled, the receipt showed that I spent $150, but I actually saved just over $1 million (dollar amount may be slightly exaggerated for comedic effect). I felt great. Take that Kohl’s, I won!
When I shopped at J.C. Penney recently, I got to the register and there were no point of sale savings and no surprises. I spent exactly the amount of the price tags added up. How disappointing. Take that Marissa, JCP is the declared winner on this one.
I know that clothes from Kohl’s are only worth what I paid (if that) and not the “savings” shown. J.C. Penney thinks I’m smart enough to know this and created a new pricing structure for smart people like me; no tomfoolery here! While I appreciate the vote of confidence, what they didn’t take into account is everything other than price that goes into the shopper experience. The shopper journey, decision path, and emotional response to sales guides consumers everyday and is a critical component in predicting what will and what won’t work in retail.
I can live with the fact that they didn’t ask how I personally felt about this change, but they must have asked some of their customers, right?
Wrong, they did not. When asked why J.C. Penney didn’t conduct any market research to test this pricing structure, CEO Ron Johnson replied:
“We did not believe to increase our cost structure to run a test, which is going to take time, was a prudent decision. We just decided let’s get on with our future, which means let’s get the pricing right; let’s get our expense rate right; let’s get our brands there, so we can go forward.”
Well, Mr. Johnson, that is certainly one approach. He is right – research costs money and takes time. JCP skipped that step and got on with the future. However, I do not agree it was a prudent decision, and neither do my fellow shoppers; the 20% drop in sales last quarter can attest to that. And, it does not matter if the pricing is right, if no one is going to the store, or they are not going back after a disappointing shopping experience like mine.
Although J.C. Penney didn’t invest in researching this change, The Pert Group did. In February 2012, shortly after JCP implemented this change, The Pert Group asked several questions on our monthly omnibus survey about it. It’s not surprising that sales are down considering that seven in ten indicated that store sales or coupons are extremely or very important when deciding which department stores to shop at (71%), when to shop at a department store (71%), and which products/clothes to purchase at a department store (73%).
Interestingly, two-thirds of participants (68%) reacted positively to the concept of the new pricing structure. While they have some beautiful marketing materials and fun commercials, they have not communicated these changes in a way that customers understand what is happening, and how it benefits them.
Innovation is crucial, especially in the brick and mortar retail environment these days. Kudos for JCP for doing something bold and committing to it. But Mr. Johnson, it’s not just about getting your brand “there.” Your brand is your identity and is a critical component in how your customers understand and interact with you. It’s about understanding your customers’ needs, wants, and behaviors, and understanding how changes impact your brand so you can keep it strong while getting it “there.”
There is a variety of market research, both in the consumer and shopper insights realm, that could have helped to refine this program and given it a chance at success. Want to learn more about what types of custom market research can help your brand? Contact me.
