JC Penney has its old CEO, Mike Ullman, in charge of the company again. Abundant sales and coupons have returned, as have brands that disappeared for a spell. In many ways, the JC Penney of old is back. Whether this is a good thing for the company remains to be seen.
About month ago, within days of Ron Johnson being fired as CEO and Mike Ullman retaking his former position at the helm of JC Penney, Ullman quoted in the Wall Street Journal saying that there were no plans to bring back the old JC Penney. “I wouldn’t recommend that we go back to the way J.C. Penney was when I left,” he said. “Things change.”
Still, JC Penney has essentially done a huge about-face in recent weeks, and it’s understandable why: The short-lived Johnson era, with its no-coupons stand and new focus on hip boutique brands, alienated customers and damaged sales badly. For the three-month span ending May 4, JC Penney reportedly lost $289 million, with sales decreasing 16.4% compared to a year ago — which was itself an awful period for the retailer. To bring back customers, JC Penney has been bringing back its traditional, pre-Johnson pricing and discount strategies. This week, jcpenney.com was littered with old-school discounts—for instance, 50% to 60% off patio furniture, and 30% to 40% off clothing with the St. John’s Bay label, the retailer’s exclusive brand that disappeared during the Johnson era and was brought back in March.
Of course, there are those who view such discounts are straight-up frauds, based on artificially inflated list prices. Johnson himself would be in this camp. In January 2012, Johnson, the retail superstar who had helped turn Target and the Apple Store into huge success stories, promised to get rid of such “fake” prices and summarily slashed original prices by 40% or more. Shoppers weren’t crazy about the newly cheap list prices—because their arrival prompted the end of sales and coupons—and so in recent weeks the retailer has brought back “fake” prices in a big way. A side table that was priced at $150 in early 2013 was suddenly listed at $245—and will periodically go “on sale” for $150.
The consumer site MousePrint.org recently rounded up before-and-after prices for several JC Penney items as further proof of the return of fake pricing: A woman’s halter “tankini” was listed at $25 in January, and then in May, the same product featured an original price of $38, next to a “sale” price of $26.60; a six piece towel set listed at $30 last fall suddenly turned into a $55 towel set at some point over the last few weeks. On the JC Penney Facebook page, some shoppers have been voicing support for the return of markdowns and coupons, while others have grumbled that the pricing schemes insult their intelligence. One commenter reported seeing before-and-after prices on an item in a store:
Looked at a comforter that had a price change. Pulled off the “new” tag to see the “old” price. It was $70 now it’s $140. It’s not magically worth double overnight.
And yet this kind of inflated pricing was standard practice at JC Penney for years. When Johnson announced his dramatic overhaul to the business, he mentioned that less than 1% of store revenues came from items at full price. The takeaway for JC Penney shoppers today is that they should once more walk into stores with the mentality that nothing should ever be purchased at full price.
It’s not just JC Penney’s pricing that could have shoppers feeling déjà vu. Johnson called his no-sale, no-coupon policy “fair and square” pricing, and he introduced a new square-shaped “JCP” logo to match. Recently, though, the retailer seems to be downplaying the square logo and placing emphasis on a new logo that looks a lot like the old logo, with the full name “jcpenney” spelled out and no square in sight.
The changes are all part of JC Penney’s latest effort to reinvent itself, apparently not with another bold makeover but by looking to what’s worked in the past. “We’re quite a ways away from seeing a potential turnaround,” Lisle Davies, of the retail-consulting firm Grayson told the Dallas Business Journal. “A significant amount of damage has been done. It’s going to take time to see if the J.C. Penney consumer is going to come back, but she’s not going to come back tomorrow.”
That comment is especially interesting because JC Penney has already begun thanking consumers for coming back. After airing an ad apologizing to JC Penney customers in early May, the retailer has since moved on with a new commercial “declaring victory,” in the words of AdAge, for the return of its loyal shoppers. “We’re happy to say you’ve come back to us,” the ad’s narrator states. “Thank you.”
So have shoppers really “come back”? Well, some have indeed. Bloomberg News reported earlier this week:
Research suggests the retailer has had a “significant” increase in sales and traffic early this month, helped by newspaper advertising and aggressive coupon promotions, Cleveland Research analysts led by Jeff Stinson said today in a note.
Apparently, many of the consumers who hated “fair and square” pricing returned to JC Penney stores once the discounts and coupons—and inflated list prices—came back. From the company’s standpoint, however, there’s one big problem with bringing back the JC Penney of old: For years, it was viewed as a failing business model. The main reason Johnson was given such broad leeway to remake the company was because it was struggling so mightily.
Everything is relative, of course. JC Penney store sales were so pathetic during the Johnson era that, as the Wall Street Journal put it, “even a return to the bad old days of 2011 would be an improvement.”