JC Penney’s Million Women Walkout
While shying away from using the word coupon, JC Penney’s recent delivery of a $10 “gift” to its email newsletter recipients demonstrated that the beleaguered department store was finally bending to what its customers have been asking for all along: a deal. Since the commencement of its “Fair & Square” promotional strategy in Q1 of 2012, JC Penney has been fighting a losing battle with its dwindling customer base, trying to spoon feed shoppers everyday low pricing like its ice cream, while in reality they were tasting [insert your least favorite veggie here]. What did JC Penney forget? In this economy, consumers have the upper hand with retailers.
With sales set in a tailspin during the first half of the year, it’s obvious that “Fair & Square” was a costly turnabout for both JC Penney and its customers. But what price did JC Penney pay in terms of lost shoppers?
According to the Consumer Equity Index™ for the highly competitive women’s clothing segment, JC Penney’s share of female customers shrank 13% in the past year, leaving the department store with an index of 86.9 (baseline index = 100).* That equates to a loss of 1.3 million of the department store’s most loyal female women’s clothing shoppers.
With their million woman march out of JC Penney, these shoppers appear to have gravitated to Kohl’s (index = 104.5), Macy’s (116.1), Target (121.6), and even Walmart (112.2) for their women’s apparel purchases. Female shopper share for each of these competitors has increased over the past 13 months:
A million shoppers are a lot to lose in a year’s time – especially in just one category – but the numbers become even more sobering when you consider how much potential revenue JC Penney let slip from its grasp. With the average female spending more than $500 per year within the women’s clothing segment, an estimated $745 million in potential revenue has walked out of JC Penney’s women’s department over the past year – that’s a big share of purse, if you will.
JC Penney’s $10 gift comes at a pivotal time for retailing: the all-important holiday season. And with shoppers continuing to be drawn to sales, coupons, and promotions like moths to a flame, JC Penney is likely to see a short-term increase in the foot traffic it so desperately needs. However, while the department store indicates that this “gift” does not signal their return to couponing, if they want repeat customers, they may have to keep the coupons gifts coming.
* The Consumer Equity Index™ from BIGinsight™ is a year over year index showing growth or decline of consumer preference share. An index of 100 is flat, an index of 105 indicates 5% growth, while an index of 95 denotes 5% decline.
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