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 USA

Retailing 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 downs

Early history and incorporation
- 1902 - 1959
Smooth start gradual growth
Fun 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 downs

Growth 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 downs

Acquisitions and internet store 1980 1999
1984 - acquired the First National Bank of Harrington,
Delaware and renamed it JCPenney National Bank
issued its 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 downs

Continuous 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 CEO

Fired Saatchi&Saatchi at the end of 2011
new 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 Macys and Nordstrom, JCP ended up among mass
retailers like Home Depot, Target and Walmart

JC Penneys Worst Day Ever

May 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
Macys

Why didnt 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 cant 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.