Grab the oxygen mask. While J.C. Penney tries to stop its free fall, torches and pitch forks are pointed at CEO Ron Johnson.

Here are a 5 things businesses can learn:

  1. Be careful what you wish for.
  2. Bring  data to support your position.
  3. Keep your customer top of mind.
  4. Communicate. Communicate. Communicate.
  5. Pretty doesn’t make marketing effective. It’s the message stupid.

While there is no doubt that Penney’s needed change to stay competitive — was his radical reinvention strategy just too radical? Was it a “communications problem?”

“Improvement merely lets you hit your numbers. Creativity is what transforms,” said Johnson in a March 2012 Fortune article about his coming out party.

In my nearly 30 years of experience working with companies big and small, this statement is true. And working with an organization in the midst of transformation can be exciting. But, retraining behavior is extraordinarily difficult.

From a business standpoint, you have to have enough financial runway and latitude to drive a new strategy forward long-enough for stickiness. (JCP didn’t.)  From an emotional intelligence standpoint, that stickiness and new behavior can be incredibly tough to achieve — after generations of conditioning a set of shopping behaviors. (There was little communication on what specific actions JCP wanted customers take. And no sales, meant no call to action or motivation to “buy now.”)

JCP forgot something incredibly important — ASK YOUR CUSTOMER. (What do you want and how do you want it? Then, market-test the heck out of the concept to see if their buying behavior matches their wish list before launch.)

People like to feel like they are getting a deal. It’s psychological. It’s shopping 101. By competing on price, JCP had to make an incredibly clear and compelling case to the consumer. It didn’t. It’s a major fail whale.

And while I love beautiful marketing pieces, all of JCP’s environmental, scene driven photography didn’t sell one blender. Why? Because there was no compelling copy to describe the item, no customer benefit and no clear pricing.
Another multimillion dollar marketing mistake.

Customers are dropping like flies and credibility is gone. It will be a long-climb for JCP to recoup its losses.

J.C. Penney analyst: ‘CEO has to go’

Dallas Business Journal by Steven R. Thompson, Staff Writer

Date: Wednesday, July 11, 2012, 5:30am CDT

After J.C. Penney cut 350 employees from its Plano headquarters Tuesday, retail analysts said they are unsure how the company can continue to follow through with its transformation strategy. One analyst even said it was time for CEO Ron Johnson to leave.

“The next step is the CEO has to go, I guess,” said Howard Davidowitz, chairman of New York-based Davidowitz & Associates, a retail consulting and investment-banking firm. “Because if it stays like this, the question will be, ‘What credibility does he have to do anything?’ He will have lost all credibility.”

Davidowitz has previously made his position on the J.C. Penney transformation clear, saying Johnson “caused incalculable damage” to the department store chain.

Other retail experts expressed more optimism about J.C. Penney’s plans, even as they said they were uncertain about the company’s turnaround.

“It is probably more of the same as they try to reduce their cost, but they are under a ton of pressure,” said Dwight Hill, managing partner at the Plano-based The Retail Advisory. “I am still fairly bullish about their strategy, but I’m not sure Wall Street is going to be patient enough for them to continue to go down this path.”

J.C. Penney (NYSE: JCP) said Tuesday’s job cuts were part of the company’s plan to cut $900 million in annual expenses by the end of 2012. J.C. Penney executives declined requests for an interview.

The company needs to do a better job of communicating that the layoffs are part of a “multi-stage turnaround process,” Hill said.

“With sales dropping as they are, they have an even greater need to reduce this SG&A cost,” Hill said.

The drop in sales is mainly due to the lack of coupons, Davidowitz and Hill agreed.

“They’ve begun to realize the coupon and sales addiction probably runs far and deep,” Hill said. “And customers don’t want to go cold turkey.”

Davidowitz didn’t offer many solutions for J.C. Penney, saying, “I’d have to spend months figuring out what to do because the mess is so deep.” He still can’t believe that J.C. Penney would abandon its core customer so quickly in order to test a new pricing and marketing strategy.

“People in retailing fight for decades to get market share,” Davidowitz said. “And here’s the reason, because it costs a fortune to get a new customer. You advertise, you spend a fortune to get a new footstep to give you a chance. It’s what retailers work on every day, ‘Let’s try to get this customer to give us a little opportunity.'”

http://www.bizjournals.com/dallas/blog/morning_call/2012/07/jc-penney-analyst-the-ceo-has-to-go.html?s=print

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