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.
Some core competencies that must be exploited are: Brand Kmart is an existing well-known and trusted national brand in USA Kmart has private label and designer clothing that is well endorsed Infrastructure Kmart has a large number of well-located, low-cost, leased stores in urban far away from competitors through out the country ( Appendix B ). Staffing Confidence by the market in Kmart is created by the achievements of its staff and management. With the turn-around strategy in place, new blood has been put into the top management structures. In any renewal there will be retrenchment as unprofitable stores are closed. This can be used as an opportunity to retain and move high performing staff to where they are needed and to get rid of non-performing staff. Anderson the chairperson of Kmart is well supported by Wall Street and the board of Directors. These new staff members enter the company with needed skills to address problems in certain areas that previously were poorly managed such as inventory control and merchandising. Store locations, layout and Performance Stores conveniently located away from competitors like Wal-mart and Target therefore less to compete for customers face-to-face. There are 250 non-performing stores who have already been identified as being more cost effective to close than continue with running costs. Expertise exists in-house for the planning of store layout and appearance to meet different customer segments. This concentration of effort will enable focus on key areas Technology Kmart has already invested in good retailing systems. The system can be use to control inventory, supplier payments, track customer buying and monitor income versus profit margins across all stores. Research and Development The planning department is well established and in cross-functional to provide various perspective. The planning department to ensure that strategies at all levels are executed can further use the access to past data and knowledge of changes in buying patterns. Financial Backing JP Morgan Chase has agreed to support Kmart to avert the current threat of closure due to bankruptcy.
By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didn't perform an accurate SWOT analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the world's number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by cutthroat pricing and solid logistics, Kmart's complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmart's IT budget continued to shrink – not just once, but several years in a row. While Wal-Mart's logistics and supply chain management got sharper, Kmart's stagnated. And while Wal-Mart was able to squeeze more value out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.