A Strategic Mistake That Still Haunts JC Penney | Forbes

Apparently, J. C. Penney’s strategic mistake came from a misunderstanding of a crucial difference between retail stores and Apple stores: Hype! Apple’s Word-of-Mouth (WOM) and buzz marketing machine — and unique products — already hype its customers. They know what they want; they don’t need conventional sales promotions to be lured to the stores.

But retailers like JC Penney don’t have a similar marketing machine, and its products aren’t unique either; they are carried by Macy’s, Kohl’s, Wal-Mart, and Target – to mention a few.

This means that JC Penney’s customers have yet to be hyped by traditional sales promotions, something Ron Johnson inhibited by introducing everyday low price and eliminating store coupons.

Clearly, Mr. Johnson assumed that a revamped J. C. Penney with steady prices would attract customer crowds to its stores, as is the case with Apple. But the strategy didn’t work, as evidenced by the company’s string of disappointing sales and earnings and sales reports—see tables at the end.

To be fair, far too many thing things have been changed since 2012 to put the blame  for JC Penney’s recent woes on a single old strategy. Amazon and other online retailers have continued to chip sales away from traditional retailers. Ron Johnson is long gone, and the new leaders brought back the old fashioned pricing strategy, and some of the old merchandise.

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A Strategic Mistake That Still Haunts JC Penney.