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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.

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.

“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.

The Price of a Woman’s Face

I was shopping one of my favorite retailers last weekend–Target. Big Red and I have a history. For years, one of my beloved pastimes is to grab a cinnamon dolce latte from Starbucks and just browse aimlessly up and down the aisles until something interesting lands in my cart. This particular weekend the spirit moved me in the cosmetic aisle and I scored six E.L.F. (Eyes, Lips, Face) items for six bucks. That’s less than how much I usually pay for a tube of mascara!

My weekend “score”

High off of my dollar-a-tube spending spree, I was fairly impressed with my purchase. But then I was quickly deflated when I started to add up the other products that currently have a home on my face. For one, I use a department store foundation ($25), which I have been conditioned to believe that I just cannot live without. Same goes for eye shadow (another $25). But my latest “big ticket” cosmetic purchase is an Arbonne makeup primer, which with tax and shipping set me back about fifty bucks.

My guilty pleasure

So even if I replaced my eyeliner, mascara, lip gloss, blush, powder and concealer with E.L.F. products, I put a grand total of $106 on my face each day.

I am a self-admitted make-up junkie, so I spend a bit more on cosmetics than the average Jo(an). According to the BIGinsight™ monthly survey, women spend an average of $16.22 a month on both skin care and cosmetics combined. That equals out to about $195 a year. Women ages 35-44 appear to spend the most, likely due to means or possibly motivation—a wrinkle (gasp!). Women 65+ spend the least.

You could probably guess that my favorite place to purchase cosmetics is Target. And although Walmart is King Queen when it comes to store shopped most often for skin care and cosmetic products for women of all ages, Target is more likely to crop up in the list among younger sets.  Drug stores are also popular choices across the board.

Discounters and drug stores are likely popular choices because they carry what a woman wants – at price points most of us ladies can afford. Cover Girl is ranked as the most popular cosmetic line for all age breaks, followed by Maybelline in most instances (women 65+ seem to rely pretty heavily on their Avon lady). Revlon comes in at #3 for women ages 25-34, 35-44 and 55+.

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

Source: BIGinsight™ Monthly Consumer Survey, Jul-11, N=8684

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

Consumer Buzz: Women’s Clothing

April 12, 2012 3 comments

According to new analysis by BIGinsight, department stores are more buzzed about than discounters when it comes to shopping locales for feminine apparel.* For this special report, we’ve applied the Net Promoter Score** metrics system to our April Consumer Survey data to show how consumers perceive their Women’s Clothing store of choice.

Here, we took the percentage of a destination’s detractors from the number of those who actively promote their Women’s store of choice, which helps us evaluate the strength of a retailer’s image for the Women’s Clothing category. And, among the Top 5 stores for this segment, we found that Kohl’s receives the most net positive buzz (NPS = 36.2%) from its customers, followed by Macy’s and JC Penney (see below). While Target’s NPS was significantly lower than its department store counterparts (at 2.6%), the discounter still garnered an overall positive rating. That other big discounter – Walmart – was the only retailer in the Top 5 to calculate a negative NPS (-10.3%)…ouch.

Net Promoter Score - Women's Clothing

It’s interesting to note that while the most buzzed about retailers are department stores by definition, each courts customers based on varying motivations. For the Kohl’s and JC Penney shoppers, price and selection are the key reasons to peruse their racks; for Macy’s, it’s quality and selection. At Walmart, customers shop based on price and location, while Target woos shoppers with a mix of price, selection, and location (shoppers seem divided between the latter two).

Women's Clothing - Select Reasons to Shop a Store Most Often

What analysts are buzzing about, though, is consumers’ reaction to JC Penney’s new “Fair & Square” pricing strategy. As it turns out, JC Penney’s customers just aren’t as likely to be lured by coupons and special deals when it comes to shopping the Women’s section. While Walmart and Target are the least likely to be motivated by this sales simulant, over at Kohl’s, we might see shopper anarchy if this department store darling adopts a similar strategy #kohlscashforever

Coupons/Special Sales Motivate Women's Clothing Purchases

*April 2012’s Top 5 Retailers for Women’s Clothing (Kohl’s, Walmart, Macy’s, JC Penney, Target) were analyzed for this blog.

**Net Promoter, NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld

The NPS which takes a simple question–Would you recommend us to a friend?–has helped countless organizations better understand “promoters” and “detractors” and paint a clear picture of their company’s performance through the eyes of their customers. By applying the Net Promoter Score*, executives can identify their customer base and move beyond “sufficient” to brand loyalty and growth.

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

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.

Valentine’s Day 2012: Do Macy’s Shoppers Have the Biggest Hearts?

February 6, 2012 1 comment

While it looks like consumers in general are feeling the love this Valentine’s Day, new analysis by BIGinsight shows that the hearts seem to grow fondest among Macy’s shoppers. For this exclusive report, we analyzed the Valentine’s Day plans among shoppers at five major U.S. retailers: JC Penney, Kohl’s, Macy’s, Target, and Walmart (non-grocery).*

While about three in five consumers (59.4%) overall are planning to celebrate February 14 this year, this number rises among Macy’s shoppers (68.2%). Hearts are also beating a little faster among Target (64.3%) and JC Penney (63.4%) buyers, while Kohl’s and Walmart are closer to the national average.

What really sets Macy’s celebrants apart from the rest is the amount they plan to spend on the ones they love. While the average consumer is allocating $126.03 towards gifts for significant others, children, friends, pets, and others, Macy’s shoppers are allotting about 30% more: $164.67. Every other shopper group we looked at for this report is planning to spend below average:

Valentine's Day 2012: Combined Average Spending Plans

So why are Macy’s shoppers’ spending plans so robust compared to the rest of the retailers we reviewed? We found a few interesting insights here:

Macy’s shoppers simply have more available to spend. The average yearly income of Macy’s shoppers exceeds the take home pay of the other shopper groups we looked at for this report.
Macy’s shoppers are wooing and less likely “I doing.” Macy’s (and Target) shoppers were the groups most likely to check the “Single, never married” box in the marital status portion of our survey, while JC Penney and Kohl’s shoppers were the most probable to be hitched. Come to think of it, I did receive more flowers, candy, and – most importantly – jewelry before I was married…
Sale shopping is less important to the Macy’s customers. In January, nearly one in five Macy’s shoppers reported that sales aren’t important to them when buying clothing, compared to just 9% of Kohl’s shoppers. BTW, Kohl’s customers are the most likely of these five groups to only buy clothing when on sale, probably accounting for at least part of why these deal-oriented shoppers have the most frugal Valentine’s Day budget. (Kohl’s Cash, anyone?)
Macy’s shoppers are more optimistic on matters of the economy. Nearly two in five (37.3%) Macy’s customers were very confident or confident in chances for a strong economy in January, 20%+ higher than general population (30.4%). Confidence among Kohl’s, JC Penney, and Walmart shoppers indexed below average, and as we all [should] know, low confidence does not spur spending.

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

And, click to view the original National Retail Federation press release: Americans to Pull Out All the Stops This Valentine’s Day.

* “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 in this report are not mutually exclusive.

Source: BIGinsight™ Monthly Consumer Survey – JAN-12 (N = 9317, 1/4 – 1/11/12)

© 2012, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp

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