J.C. Penney’s “Insulting” Perception Problem
National retailer J.C. Penney has learned a tough crisis communications lesson: In dealing with the public, perception is reality.
Earlier this week, the retailer announced it is returning to a traditional pricing structure after it tried what some called a radical marketing and pricing strategy. Last year, the company declared it would no longer offer traditional sales and markdowns to customers, just standard low pricing. The explanation was pretty simple: We will no longer insult you, the consumer, with marked-up prices just to slash them every couple of months to make you feel better. Instead, our price will be low every day.
I admit I thought it was a good idea at the time. It signaled to consumers the company respected them. No more clipping coupons. No more rushing to the store for a sale that only lasted one day. No more games, just good deals. Ultimately, though, shoppers rejected the idea.
The Associated Press reports that next month, J.C. Penney is expected to announce its fourth consecutive quarter of big sales drops and net losses with the stock falling and the company’s credit ratings at junk status. As a result, the store will return to running sales and additionally will show a manufacturer’s suggested retail price and the Penney’s “markdown” price on sales tags.
So how does a company that supposedly changed its policies out of respect for the customer return to the original retail practices against which it railed and save face?
Last July, J.C. Penney CEO Ron Johnson told Bloomberg Businessweek:
“I thought people were just tired of coupons and all this stuff…The reality is all of the couponing we did, there were a certain part of the customers that loved that. They gravitated to stores that competed that way. So our core customer, I think, was much more dependent and enjoyed coupons more than I understood.”
While Johnson’s quote wasn’t horrible, dwelling on the fact that his customers just didn’t understand the great deals he was still giving them was not effective. When Johnson spoke to the AP this week, his quote wasn’t much better:
“Our sales have gone backward a little more than we expected, but that doesn’t change the vision or the strategy. We made changes and we learned an incredible amount. That is what’s informing our tactics as we go forward.”
In fact, the strategy has changed. Penney has backpedaled. What Johnson needs to do is talk about what he is doing for his customers and what he promises them going forward.
What if Johnson said something like this?
“Though the policy has changed, my commitment to J.C. Penney customers has not. We will continue to offer shoppers low prices on a great selection of merchandise every day. In addition, I’m bringing back seasonal sales, and, as a welcome back to our customers, I’m offering free children’s haircuts, free family portraits and a $10 in-store coupon. (All steps the store is actually taking.) I will continue to work to earn back the customer loyalty I value so much.”
Johnson must remember that, when dealing with a perception problem, it’s not always important to be right. Fair or not, the perception that J.C. Penney didn’t have sales, and therefore didn’t have bargains, hurt the store. Now, Johnson must make sure his customers know he has heard them and respects that they want the markdowns and bargains for which the store is known.
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