Introduction:
In hopes of revolutionizing their brand, JCPenney hired Ron Johnson, who reinvented retail at Apple, as the new Chief Executive Officer (Denning, 2013). This hope allowed for the company to gain the competitive advantage through merging technology and retail, as they attempted to broaden the JCPenney consumer base as well as reposition the JCPenney brand within the retail industry. Ron Johnson brought high hopes and potential for the company, however, he introduced changes too quickly. As a result of Johnson’s rapid change, consumers were reluctant and store traffic declined, which led to a 25% decrease in sales (Hartung, 2013). By focusing on the execution of Johnson’s plan, this paper will analyze JCPenney’s store innovation,
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Johnson wanted to replaced “fake prices” on merchandise and non-stop promotions and coupons with everyday low prices like Wal-Mart (Passikoff, 2013). This strategy involved getting rid of JCPenney’s high traditional coupon discounts and place the already low price on the sticker. JCPenney wanted exemplify that they were “fair and square” with their consumers as well as honest in their pricing. The change in pricing however, did not fare well with JCPenney’s customer base of bargain hunters (Denning, 2013). JCPenney customers did not understand that they were getting a good deal with the “fair and square” pricing because there were no coupons or dramatic markdowns (Tuttle, 2012). JCPenney failed to see that consumers wanted to see that they were saving money, which is all a part of psychological pricing. As a result of this change in JCPenney’s pricing strategy, $163 million was lost in the first quarter and the conversion rate dropped as well (Poggi, …show more content…
A variety of consumers consistently stated that they “were not used to the new JCPenney, did not understand what was going, and did not understand why the sudden change within the store was necessary.” In addition, older consumers were resistant to using mobile checkout systems, which was notably favored more by the younger generation who were not a part of the loyal consumer base. Customers were unable to locate store specialists and experts for assistance with merchandise because of the lack of dress code and checkout counters. As a result, customers were constantly complaining and mandating that their feedback be passed on to the store’s leadership team, or they would refuse to come back. This all reflected on the store’s customer service scores, credit card applications, and daily store traffic. Customer seemed unwilling accept the change within the
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The purpose of this memo is to show the affects of how Albertson’s is trying to implement many strategies in order to try, and compete with its powerhouse competitor Wal-Mart. This memo will contain information on steps Albertson’s is taking to gain back some of the market share that Wal-Mart has swallowed up. It will also describe Albertson’s planned innovations that will be what determines their success. Lastly it will discuss how through IT as well as a successful implementation of satisfying consumers demands, will possibly allow them to compete with the ever so powerful Wal-Mart.
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JCPenney is a chain of American mid-range department stores that is based out of Texas that started over 100 years ago. JCPenny has been successful for most of its time up until the last three to four years. The company is trying relentlessly to overcome the lingering effects of the makeover that former CEO, Ron Johnson, had implemented in order for the company to take a new direction in hopes of increasing sales. The new CEO, Myron Ullman, has taken a close look into the markets demographic segmentation along with the income segmentation in order to attempt to return the retailer back to its old self, which is to appeal to middle-market customers. A couple issues of major concern for the company are the dissolving of Johnson’s Boutiques, the price of their products, and overall revenue.