JC Penney drops coupons and loses loyal customers

When JC Penney dumped its old logo and went to the JCP-in-a -box it did more than change its look — it completely abandoned its merchandising strategy. As a result they lost $167 million in the first quarter with thousands of shoppers just staying away.  What where they thinking?

Ignoring existing customer motivations kills the brand connection

This is a classic merchandising blunder — you think your great new marketing ideas (which make you more like Target) will work to reposition an older brand and attract new customers. But the key to continuing sales volume is existing customers. They have an ingrained shopping behavior and they are buying from you.

Just look at how coupons work. They come out weekly,  you can combine them with additional discounts, and they drive people to the store because they time based with a fixed expiration date.

The key drivers are: a discount from the actual retail price, time sensitivity and the ability to combine it with other sales and offers, but in all cases you have to go to the store.

SO what’s the driver with the new methodology? Lowest prices all the time? This may be true but it’s not time sensitive, so there’s no motivation to go to the store.

Brand Loyalty + Merchandising Behavior

The entire system by which existing customers went to the store ended and so did sales. Behavior is what drives marketing: response to marketing drives sales but customers want to feel they are in control and making choices. Now that’s gone, too.

Old Customers + New Customers – you need both!

How could they think that replacing discount coupons with “Best price Fridays”  would drive anyone, who’s completely addicted and truely motivated to use coupons, into their stores?

My partner Simone had been a regular Penney’s shopper, using the coupons to get additional discounts on clearances and sales. She often got more than half off on kids clothes at the right time. Now she’s not been in there since February.

What the heck does Best Price Friday mean?

When you remove the system that motivates and builds a brand and buying relationship with a loyal customer, you  are abandoning your primary loyal customers.

Hoping to get new customers with a new look and new positioning is not bad but you cannot abandon those already shopping with you. You need to develop a strategy that does not abandon behaviors and loyalty to your brand but also bring something new that gets the attention of the shoppers you want.