Company Description
JCPenney is a mass-marketing retailer of family and home products such as inexpensive clothing, jewelry, beauty products, and furniture. The company’s current financial situation appears precarious, based on a series of failures in the marketing environment over the last decades of its history. This brand already has 120 years of history, but only after 2020 JCPenney began to experience financial difficulties that put the company on the verge of bankruptcy (JCPenney, 2021).
So far, the brand has closed more than 200 stores due to debt accumulated during the company’s economic recession (Levitz, 2022). Although the brand is associated with one of the most trusted national household names in the retail industry, the commercial situation surrounding it requires intervention. Using current marketing and business theories, it is possible to identify the causes of the company’s recent failures and propose relevant strategies to revive its former relevance and success.
Theoretical Analysis of the Company’s Situation
The company focuses on the middle class and has many tasks and needs. As a result, the company strives to offer many family goods but is not limited to this. As additional offshoots of the JCPenney franchise, there are sub-companies such as JCPortraits that deal with artistic and business portraits for family and formal and office portraits.
The company also sells pharmaceuticals under the Eckerd brand, resulting from blending a personal pharmaceutical brand. The company also produces unique products under the auspices of exclusive brands such as Liz Claiborne and Worthington. However, this diversity does not detract from the problems that the company is experiencing. The economic upheavals of the last decades have taken a toll on the company (Hunter, 2021).
Much of the company’s precarious state is due to its troubled adjustment to the bursting of the economic bubble in 2008. Then, a significant part of the population of America with moderate incomes was financially disadvantaged, which affected the visits to the stores of this company, which fell sharply. The problems experienced by the company have become even more aggravated after the 2020 lockdown (Andreson, 2020). Then, during the pandemic, the company had to close several hundred stores. Such an economic defeat for the company is primarily due to the lack of adaptive mechanisms that would allow the company to remain active during the pandemic.
“Good Enough” Theory
In many ways, the company’s problems can be explained by the “good enough” theory. It can be likened to the principle of “Occam’s razor,” that is, the indivisibility of the indivisible (Karp, 2019). JCPenney has focused too much on fragmenting its brand activities to appeal to as many customers as possible.
Because of this, the company is paralyzed by its branching and unable to make swift and effective decisions on restructuring. This is most clearly shown by the financial losses that the company suffered during the lockdown period. The plethora of strategies they could use to save the company created more and more particularities and exceptions within a single subsidiary brand, which caused the management of the entire JCPenney system to become significantly complicated.
The company’s slowness as an entity is associated with the above abundance of services provided. The company is trying to cover the maximum number of possible markets related to home life. In this regard, the company’s intensive activity is dispersed into many subsidiaries, which cannot attract a sufficient consumer base. In 2020, the company experienced such an outflow of customers that, added to the losses after the 2008 crisis, put the company in a challenging financial situation (Meyersohn, 2022). In particular, the current problem concerns the conquest of a new audience, which occurs in those marketing conditions that the company has not yet had time to adapt to.
Non-Consumption Theory
Competing against non-consumption theory is also valuable in explaining the brand problems a company is facing. In 2011, having experienced a financial crisis with all the negative consequences, the company’s CEO attempted to renew the brand. The new brand strategy targeted a new demographic market segment that included a younger generation of consumers, the millennials.
As the researchers point out, this strategy was disastrous for the company, and JCPenney lost $5 billion trying to adopt this new consumer strategy. As a result, the move taken by the company’s next CEO was an attempt to win back the old-school customers of the company’s services. Both examples show how the fight against non-consumption can result in severe financial losses.
In 2011, the company was trying to target a new demographic that it considered more solvent. Non-consumption theory implies that the market uses an innovative strategy to attract people who are not interested in buying or have no financial opportunity to do so (Finette, 2023). However, due to this strategy, which was applied rudely and incorrectly, the company lost a significant part of the target audience that was still with it. As a result, both of the company’s major marketing moves to find demographics failed precisely because, in this way, the company only alienated previous audience segments from itself without attracting enough new customers.
The brands competing with JCPenney also have the opportunity to take over the companies and industries that cooperate with them against the backdrop of the company’s decline. A vivid manifestation of this problem is that in 2023, one of Sephora’s key beauty brands completed its contract with JCPenney and moved to Kohl’s, its major competitor (Siatkowski, 2021). This precedent is another example of disruption when a company finds a segment that has not been processed by competitors and wins the audience due to it (Swain, 2020).
The disruptor finds advantages for the segment that another company cannot offer, due to which it attracts a broader audience of those who were previously uninterested non-consumers (Jin, 2020). Research indicates that Sephora has merged with a company that appeals more to women’s shopping (Howland, 2022). This automatically removes another important customer demographic from JCPenney, which loses the opportunity to earn on the female shopper segment.
Applying the “good enough” theory, it can be assumed that the company has already lost essential segments of the demographic that resort to brands that they find more profitable or convenient. JCPenney has endured severe hardship due to sluggishness during the pandemic when more active companies have shown extraordinary mobility to reach new customer bases (Anderson, 2020). This critical period was an excellent opportunity to revitalize the company, which was missed, resulting in disruptor companies taking over the initiative. These companies hit the audience segments at the right time, showing that JCPenney is currently in danger of not returning to the trajectory of success. Therefore, the same disruptor theories should be applied more intelligently to turn them to benefit the company’s course.
Recommendations for a Future Course of Action
Initially, the CEO of JCPenney should pay attention to the segment of “non-consumers,” which can be attracted to their side with new value interests. Non-consumption is associated with the enslavement of people in the experiences of everyday life, which causes them to be unable to pay attention to a new product or investment area and not understand why they might need it. The company can develop advertising related to the already established values attached to the brand, emphasizing quality. If a marketing company combines an appeal to the middle class through quality and “homemade” goods but lowers prices, its competitiveness can increase dramatically.
Competing retailers like Target have grown in value precisely because they cater to the most mass-produced consumers ready to disregard poor quality. Such companies as Target successfully use the “good enough” strategy, in which the consumer can be satisfied with a product of low quality but affordable. Their advantage also lies in high mobility during the pandemic, which attracted customers’ attention in 2020-2021, after which Target secured a newly attracted audience.
A valuable strategic decision for JCPenney would be to encourage more purchases through scandalous price cuts while maintaining quality to raise consumers’ “good enough“ standards. In 2022, the company’s director announced that advertising price reduction strategies would be implemented (Horovitz, 2022). Suppose this is combined with good demographic targeting and slogans like “High quality and comfort, even more affordable.” In that case, the company can become a disruptor against the larger players in its field. If a brand highlights its 120-year-old history as a marketing point, it will give customers the illusion of reliability and encourage purchases.
The appeal to family values also seems to be the last selling point for this brand (Qian, 2020). By drawing parallels between its company as a family dynasty with a long history and a real family, the company will be able to achieve a response from the family segment of potential buyers. Company representatives in interviews mentioned that JCPenney was the right brand for many consumers to provide basic household items for the family, such as school clothes. By awakening this family connection in the collective unconscious of the consumer audience, there is an opportunity to awaken a potential non-consumer segment, turning it towards the brand.
As such, JCPenney needs to adjust its marketing strategies significantly to attract new customers and flatten the brand’s downward commercial viability trajectory. If a company does not use the “good enough“ theory to try to fit all possible services under its roof, it can become more mobile and adaptive to sudden economic shocks. This theory should be used to find an audience that can be poached from competitors, and this requires a temporary price reduction in sync with a family-oriented marketing strategy. If family demographics pay attention to a given brand’s reliability and accessibility, it will be possible to retain this audience, which was previously called away by other competitive brands. In this way, the company will be able to become a disruptor brand instead of being overtaken by competing brands.
References
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Horovitz, B. (2020). How JCPenney seeks to ‘reinvigorate’ at 120 years old. National Retail Federation. Web.
Howland, D. (2022). J.C. Penney is reinventing itself. Again. Retail Dive. Web.
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JCPenney is getting a new start in 2021, but its old problems remain. (2021). PYMNTS. Web.
Jin, L. (2020). How the Passion Economy will disrupt media, education, and countless other industries (part 1). Atelier Ventures. Web.
Karp, G. (2019). The ‘good enough’ theory and how you can apply it to your finances. MarketWatch. Web.
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Meyersohn, N. (2022). JCPenney was once a shopping giant. Can it make a comeback?CNN. Web.
Qian, B. (2020). Lessons in market strategy: JC Penney. Golden Selection Technology. Web.
Siatkowsky, A. (2021). Kohl’s is getting a major glam up, which is bad news for JCPenney. Web.
Swain, G. (2020). Disruptive marketing: What it is and how you can benefit from it. Insightly. Web.