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JC Penney’s Million Women Walkout

October 30, 2012 Leave a comment

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.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

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Can an iPhone 5 Save JC Penney?

It seems that Apple has the Midas Touch, and when JC Penney brought former SVP Ron Johnson on board in late 2011, it was heralded by many as a genius decision. Long relegated to the back of consumers’ minds [along with Sears], it appeared that this department store dinosaur was finally making a conscious effort to reinvigorate its stodgy image and arming itself to compete with its more present day foes: Macy’s, Kohl’s, and TJ Maxx.

With the advent of m-commerce, social media, and increasing connectivity, it seemed that this marriage between an Apple exec and JC Penney was a solid union – at least enough to advance the department store into 21st century retailing. However, as 2012 has progressed, it has become clear that the new “Fair & Square” JC Penney has gotten off to a very rocky start.

While JC Penney certainly has taken some steps in the right direction – focusing on exclusive brand names from the likes of Nicole Miller, Liz Claiborne, Mango, and even the Olsen twins takes a page from Kohl’s and Macy’s successful playbooks. Today’s consumers demand quality products at great prices, and they want to feel good about their purchases when walking out of the store. Here’s where JC Penney missteps: they have eliminated the excitement from the shoppers’ buying process. Having an extra 10-20% off coupon or buying an item on sale – which Kohl’s and Macy’s offer in abundance – gives the shopper the feeling that they’ve one-upped the retailer, i.e. the customer wins.

This shopping euphoria is essential when marketing apparel in an uncertain economy. Consumers already had closets full of clothes, and when it came time to really trim budgets during the “Great Recession,” apparel was one of the easiest budget cuts to stomach. It’s interesting that even during a downturn in the economy, electronics sold – maybe with a little less frequency and at somewhat lower price points, but the latest HDTVs, tablets, notebooks, smartphones, and all things iOS were, and continue to be, hot selling items. Budget-conscious consumers could justify the purchase of a new TV or computer; these were items that the whole family could enjoy, helped us multitask, and in some cases, assist with homework. In other words, electronics were fun, practical, and educational. Consumers literally couldn’t buy into this same reasoning when it came to apparel or home goods, categories that JC Penney so desperately needed to move on the selling floor.

When Johnson joined JC Penney last year, it appeared that the Apple “ego” followed him as well. Apple is an innovative brand with a heady following, and its retail outlets, which Johnson cultivated, served to build on this loyalty and brought out the curiosity in others – they were what shoppers demanded and gravitated toward.

JC Penney lacks the Apple cachet, and its “Fair & Square” overhaul – ditching coupons and weekly promotions in the process – failed to make a compelling argument as to why shoppers needed to check out their revamped stores. Sure low prices are great, but the new normal directs shoppers to seek out that extra incentive when it comes to buying non-essentials like apparel and home décor. The “new” JC Penney already has proof of this – just look at its successful free haircut promotion for Back-to-School; the operative word here, of course, is free.

A glance at what motivates shoppers to make apparel purchases shows us the continued importance of instore promotions and coupons in this category. According to BIGinsight’s semi-annual Media Behaviors and Influence™ survey of 25,000 consumers, apparel sales and promotions are the #1 driver for shoppers of many of the top U.S. retailers, including JC Penney, Kohl’s, Macy’s, Gap, H&M, and Nordstrom – yes, even promotions are key with luxury shoppers. And, in instances where instore promotions aren’t the top motivation for apparel purchases, they are still likely top of mind. At TJ Maxx, for example, while 42.3% rely on word of mouth, nearly as many (40.4%) value a good sale.

While word of mouth is the #2 influencer for apparel purchases among JC Penney shoppers (at 36.3%), coupons are almost as important (35.5%). JC Penney customers’ attraction to apparel coupons is stronger than that of the general population (30.7%) as well. Coupons don’t carry nearly as much clout over in Apple’s wheelhouse – electronics – so it’s plain to see why Johnson was so quick to axe those money-savers at JC Penney.

So can an iPhone save JC Penney? Can a marketing approach borne from Apple revive a struggling department store? Can pigs fly? Clearly not. What works for Apple – what used to work for Ron Johnson – simply has no place in JC Penney’s strategy. Today’s apparel shoppers have honed their bargain-hunting skills and crave a good deal on their terms. Instead of trying to force “Fair & Square” on the buying public – much like the launch of a great, new, innovative product à la Apple – JC Penney really should have first become more attuned its target customers.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

The Not-So-Jolly Holiday Outlook for JC Penney Shoppers

September 25, 2012 Leave a comment

2012 hasn’t been kind to JC Penney. And, it doesn’t appear that Q4 will get any better for the department store, which has struggled to shake up its stodgy image this year and in the process has rattled its core customer base. According to the Prosper Spending Index, JC Penney shoppers’ outlook for holiday gift spending falls below that of the general population, with an index of 95.9 (baseline index = 100).* Among JC Penney shoppers with holiday spending plans in mind, two in five (44.2%) plan to spend less on holiday gifts this year than they did for 2011, while fewer than one in ten (7.4%) plan to spend more.

As could be expected, the holiday spending outlook is similar among those shopping Walmart (index = 94.4). Still, a slightly larger proportion of shoppers at the discounter, known to cater to more cash-strapped, lower income households, plans to spend more for the upcoming holiday season (9.5%) compared to JC Penney shoppers (7.4%).

Among the customers analyzed, shoppers at Macy’s, a retailer which has arguably benefited from JC Penney’s EDLP strategy switch-up, maintain the most positive outlook on holiday gift spending, with a Prosper Spending Index of 110.9. TJ Maxx loyalists also hold a brighter-than-average outlook (index = 106.3). Target (102.4) and Kohl’s (101.0) shoppers’ holiday spending plans are in line with the overall average.

So we know JC Penney shoppers will be trying to cut back on their holiday gift spending this year, but just how do they intend to accomplish this?

Memo to Ron Johnson: Your shoppers (or what’s left of them) are still motivated to buy based on sales and coupons.

Among JC Penney customers, nearly half say they are shopping for sales more often (45.4%) and/or are clipping coupons (42.1%) in efforts to help balance their budgets – higher than the overall average. Among the retailers mentioned, Kohl’s shoppers – rabid for that Kohl’s Cash – are the only ones eclipsing both of these figures.

With economic uncertainty pervading consumer mindsets, today’s shoppers – JC Penney’s included – continue to possess an innate need to feel good about spending their hard earned dollars, particularly when it comes to spending on those not-so-essentials like gifts and apparel. And in shoppers’ “feel-good” toolkit are coupons, weekly promos, and special sales. These items are, of course, generally absent from JC Penney’s promotional strategy – setting the department store up for additional customer loss during the critical holiday season.

Think about it like this: getting a $60 sweater on sale for $30 is something to write home tweet about. Simply buying a sweater for the $30 ticket price? It’s a little ho-ho-hum.

* Holiday outlook insights are based on celebrants who have holiday spending plans in mind.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

June Insights – Hot Off the Press!

June 18, 2012 1 comment

Early each month, we release our Executive Briefing – complimentary topline insights from our latest Monthly Consumer Survey of more than 8,000 consumers.

BIGinsight June Executive Briefing

Click to view this month’s Executive Briefing

And, we’ve just released our latest edition for June. Here’s what you may have missed:

– As the summer weather heats up, confidence in the economy cools off. This month, just 31.3% feels very confident/confident in chances for a strong economy, down from last month and marking the second consecutive month of decline for this indicator.
Good luck, Class of 2012: With the official U.S. unemployment remaining a discouraging 8.2%, an increasing number of consumers foresee a rise in layoffs over the next six months compared to May.
– May’s dip in practicality appears to have been just a “blip” on consumers’ spending radar. Additionally, practicality remains elevated from the June readings we recorded during the recession, suggesting that fault lines in the macro-economy are still rattling spending plans on a micro level.
Pain at the Pump: No gas price “fireworks” expected to set off for upcoming the holiday. Drivers are anticipating an average pump price of $3.75/gal by the end of June, 20 cents lower than their prediction for the close of May.
– Walmart wins in Women’s Clothing, while JC Penney is slipping.
– Consumer Migration: While Walmart’s travails are well-documented in Women’s Clothing, does the big discounter’s outlook look any brighter over in Men’s section?
– 90 Day Outlook is looking UPward compared to the past two years.  However, with spending for the majority of merchandise categories weakening compared to May, look for practical consumers to continue to exercise caution when spending.
– What’s Hot? Saving is in style, with Coupons taking the top spot in our list of What’s Hot for June. [#attentionJCP]

To sign up to receive the monthly BIGinsight™ Executive Briefing, please click here.

And, to view the latest BIG Executive Briefing in its entirely: June 2012.

Source: BIGinsight™ Monthly Consumer Survey – JUN-12 (N = 8760, 6/5 – 6/12/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

“Fair & Square” Revisited

June 14, 2012 9 comments

When we first took a look at the new JC Penney “Fair & Square” strategy back in March, the initial read was so-so from the consumer standpoint. In our monthly “Hot or Not?” feature, more deemed it “not” (58.3%) than “hot” (41.7%), though JC Penney Women’s Clothing Shoppers* seemed the most willing to give the strategy a chance, particularly compared to Kohl’s, Target, and Walmart shoppers.

Flash forward to June…

In the wake of JC Penney’s disastrous Q1 earnings report, we decided to again poll our nearly 9,000 consumers for an update on their “Fair & Square” feelings. As you can imagine, it’s not faring so well; over the past three months, those who think JCP’s new direction is “hot” dropped nearly 14%:

Hot or Not? JC Penney's "Fair & Square" Ad Campaign

But the real issue here is how “Fair & Square” has affected JC Penney’s consumer share. A look at 10 years of BIG historical data on the current Top 5 Women’s Clothing retailers tells three tales:

1. The Decline of Walmart
2. The Rise of Kohl’s
3. The Macy’s / JC Penney Clash

Women's Clothing - Shop at Most Often

Let’s leave Walmart and Kohl’s out of the story for once and make JC Penney and Macy’s the main characters. As you can see, since Macy’s nationwide conversion in the mid-2000s, these two department stores have been tangling pretty consistently for third place in this category – with JC Penney generally the victor. However, a magnified look at each retailer’s performance over the past 13 months shows just how damaging “Fair & Square” was for JCP’s customer base:

Women's Clothing - JC Penney / Macy's Snapshot

Instead of driving shoppers to its stores, “Fair & Square” sent its customers right into the arms of competitors. #whatanightmare

* A selection of Women’s Clothing retailers was analyzed for this report. “Women’s Clothing Shoppers” are defined as those who shop most at a given retailer for Women’s Clothing (an unaided, write-in response).

Source: BIGinsight™ Monthly Consumer Survey – JUN-12 (N = 8760, 6/5 – 6/12/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

A Mom Blog

Wife, grandmother, daughter, sister, aunt, friend, godmother, and sometimes just “mom”…we maintain a lot of connections to all of these special women in our lives, so what better way to show our appreciation for all of the mothers than a day just for her?

Not even this year’s escalating gas prices have put the brake on spending for Mother’s Day, which is the third highest-spending holiday that we track for the National Retail Federation (behind Christmas/Hanukkah/Kwanzaa and Back-to-School). And for this special analysis, we’re taking a look at Mother’s Day spending by specific store shoppers* at several major U.S. retailers.

Consistent with our Valentine’s Day findings, Macy’s shoppers are planning to spend the most on mom this year at $222.51, much higher than the overall average ($152.52). Costco shoppers index higher as well (at $164.96), while Target ($154.53) and JC Penney ($156.30) shoppers are expected spend consistently with the typical U.S. shopper. Walmart, Sam’s Club, Amazon.com, and Kohl’s shoppers are aiming for the biggest bargains for their bucks this year:

Mother's Day 2012: Combined Average Spending Plans
Interestingly – but perhaps not-so-surprisingly – Amazon.com customers are the most likely to head online for Mother’s Day gifts this year. Forty-seven percent of these shoppers are hitting the Internet just for mom this year (their top destination), which vastly eclipses the 25.6% planning to take to the web among the general population. And for more on the Mother’s Day online shopper, see the Shop.org Blog: Key dates and tips to target the online Mother’s Day shopper in 2012.

Planning to Purchase Mother's Day Gifts ONLINE
What else can we expect this Mother’s Day?

– While Walmart shoppers are the most likely to head to discounters (34.7%) among the retailers we analyzed, department stores (38.4%) and specialty shops (35.2%) will be top destinations for loyalists to the big W as well.

– Specialty stores will be the most popular gifting locales for Target, Kohl’s, JC Penney, Macy’s, Costco, and Sam’s Club customers, though Target, JC Penney, and Macy’s shoppers are nearly as likely to head to department stores, too.

– Among those armed with tablets, Macy’s and Target shoppers are the most likely to use this device to assist with finding the perfect gift for mom. Three out of five (61.7%) Macy’s customers will use their tablets to research or buy products, redeem coupons, or look up retailer information, while 56.8% of Target shoppers say the same. Overall, 51.2% of shoppers who own tablets will use these devices to shop for mom.

* “Shoppers” are defined as respondents who indicated that they shopped a retailer most often for at least one major merchandise category (including Women’s, Men’s, or Children’s Apparel, Shoes, Electronics, Heath & Beauty Care, etc.), unless otherwise noted. Shopper groups analyzed for this report (Walmart, Kohl’s, JC Penney, Target, Macy’s, Costco, Sam’s Club, and Amazon.com) are not mutually exclusive.

Source: BIGinsight™ Monthly Consumer Survey – APR-12 (N = 8724, 4/3 – 4/10/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

“Fair is Fair” but is Square…well…Square?

March 22, 2012 8 comments

As any self-respecting child of the 80’s knows – “Fair is Fair.” Doesn’t the theme from that nearly 30 year old [ack!] cult classic take you back? Pat Benatar, anyone? Supergirl? An undying love for Christian Slater? But I digress…let’s hop out of the DeLorean and evaluate what really got me thinking about “Fair is Fair”:

JC Penney’s new “Fair & Square” Ad Campaign

The complete overhaul of JCP’s marketing, merchandising, and promotions plans certainly made headlines in the retail community, but what do consumers really think about this strategy switch-up? In addition to being practical and realistic in their purchasing, today’s shoppers are also “intelligent”: researching products, comparing prices, stalking sales, and couponing like crazy.  And, consumers are all the more informed when aided by their mobile devices. Knowing all this, it seems that JCP’s new “Fair & Square” approach might be as dated as a Flock of Seagulls hairdo. So who’s buying what JCP’s selling?Hot or Not? JC Penney's "Fair & Square" Ad Campaign

In our March Consumer Survey of more than 9,000 consumers, we put JC Penney’s “Fair & Square” Ad Campaign to the test in our monthly “Hot or Not?” feature. As it turns out, more deemed it “not” (58.3%) than “hot” (41.7%) – placing “Fair & Square” in the middle of the pack compared to the other items we polled this month.

But who are the two out of five customers who have at least had their interests – if not their wallets – piqued by “Fair & Square”? These shoppers are more prone to be women (59.9%), married (53.2%), middle-aged (46.7 years, on average), and earning about $56,000/year…sounds like JC Penney’s typical Women’s Clothing shopper.

Is that not interesting enough for you? Let’s take a look at “Fair & Square” from a different perspective – Women’s Clothing shoppers from competing retailers.* Interestingly, fewer shoppers at Walmart – home to the somewhat similar EDLP pricing strategy – warmed up to the idea of “Fair & Square.” Macy’s, Nordstrom, and Old Navy shoppers were relatively more excited by the concept than Kohl’s or Target loyalists:

JC Penney's "Fair & Square" Ad Campaign is HOT

From this standpoint, it appears that most shoppers have a so-so opinion of “Fair & Square” so far. Perhaps they’re walking into JCP to see what all of the fuss is about, but whether or not they’ll convert to the retailer over the long haul remains to be seen – as does the department store’s ability to retain its current customer base.

Ah, Love Retail is a Battlefield.

For more information on this data, please contact BIGinsight™.

* A selection of Women’s Clothing retailers was analyzed for this report. “Women’s Clothing Shoppers” are defined as those who shop most at a given retailer for Women’s Clothing (an unaided, write-in response).

Source: BIGinsight™ Monthly Consumer Survey – MAR-12 (N = 9242, 3/6 – 3/13)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

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