JC penny's concerns and opportunities analysis (Essay Sample)

JC penny’s concerns and opportunities analysis Institution affiliation Student’s name Date JC Penny is one of American biggest department stores with over two thousand store with over one hundred and ten-year-old heritage. Started by James Cash Penny in Wyoming mining town as "the golden rule". J c penny grew over the years amassing over one billion dollars in annual profits. The company started as a one stop shopping for soft goods like clothes, sportswear, and hard goods like appliances, hardware, and electronics. During the tough times in the eighty’s, the company strategized shedding off the hard goods department to concentrate on soft goods, a move that positioned it strategically as a fashion-oriented department store( Ofek, & Avery, 2012). However the company lost momentum towards its one-hundredth anniversary, more price oriented mass merchandisers sprout up to take care of the small budget lower end of the market. At the same time, the higher-end department store was pushing it from the top catering categorically for the highly mobile middle class, and the dilemma meant JC Penny was becoming more and more alienated. JC Penny situation deteriorated with the recession of 2008, the brand became outdated with its stores disorganized, old and faded. As a result of dwindling market share, slumping earnings, stores closing and reduced sales, William Ackman (.2) gained an eighteen percent majority shareholder in the firm with the intention of turning around the fortunes of the company. To do so, he sought the services of former Apples retail store Guru Johnson, touted as determined creative and resolute. He was seen as the ultimate rescuer of the plummeting store. Johnson era was characterized by missed strategy, loss of customer base and the stores revenue deteriorated further. This paper seeks to analyze JC Penny opportunities and concerns. The article will review JC penny’s problem briefly and then delve on concerns and opportunity and finalized by a recommendation on the way forward. Overview of JC Penny problems The influx of social media changed the landscape by which retail market operates. In 2010, JC Penny was unable to handle traffic on its website and social media, thereby angering customers who turned to competition which had a seamless flow of services. The highlighted the fact that JC Penny was unable to utilize new methods that competitors were enjoying. Failure to understand the consumer trend and build a working relationship with customers became the genesis of the company's financial troubles. The problem was compounded by the emergence of small-scale dealers located in the malls (see Exhibit 2). The competitive middle market posed challenge for JC Penny, heavy discounters like wall-mat, Macy's, kohl's were eating into its market both from low end and high end the average customer visited the store only four times a year, and their profit was below under par (Signorelli, 2003) Johnson's attempt to invigorate the store did not go well with the core customers who had largely been families on a budget who looked for quality items at reasonable prices (Ofek, & Avery, 2012). The company's attempt to appeal to the young trendy fashion conscious young Americans did not go well as this alienated the core customers. This positioning was not clear on the target segment, and JC Penny ended up with no clear segment that it serves. Their attempt to change the looks did also did not go down well with the customers as the old ones termed its same place with higher prices while the same place with a few new brands. Thus, JCP lost both consumer groups. Before the attempted revamp, old customers were accustomed to waiting for sales from private or exclusive brands, they were able to be patient, but new strategy changed that, and it is no longer clear what the retail store stand for. The execution of the new strategy was poorly done, and JCP had three logos in three years making customers question what the brand stood for. When it introduced 'fair and square pricing' most consumers did not believe in it as they were not told the real costs. All these factors worked to JCPs disadvantaged and heralded failure for the veteran executive of Apple Inc. and Target Corp, Ron Johnson. Towards the end of 2014, there was growing need Concerns for J C Penny One of the primary concern for J C Penny is to position itself strategically and identify a segment of the market that it will serve. Various competitors have encroached its traditional market and gaining the old market back may be futile as the new players are already revolutionizing the market (see Exhibit 3 and 4). A significant threat to physical stores which Johnson believed are still relevant is the online shopping, this area bring in direct competition to establish stores as they enjoy marginal operating costs compared to their brick and mortar versions. Another concern for JC Penny is communication, at the height of rebranding JC Penny, suffered an identity crisis, changing logo three times in three years was even more confusing. Customers were not sure whether the outlet was positioning toward the low-end discount market or high-end segment. The old customers became more and more confused with changing prices because JCP neglected the sector for new customers the old customers therefore opted to shop at the competition. The confusion trickled down to employees who got confused by the new three-tier pricing model of ‘fair and square". The new paradigm also did not go down well with the old customers accustomed the old coupon method. As a concern, JCP needs to work on its communication to ensure customers are fed with information gradually, and crisis does not take place. Opportunities for JC Penny One significant opportunity for JC Penny is the online marketing also known as "Omni-channel." The retail market is growing, and the earlier J C Penny realized this occasion the better. Its competitors like Macy's have invested heavily in E-commerce operation. A new trend in purchase culture involve consumers accessing the stores through the website and making an order without having to walk physically into the warehouse. Even though JC Penny pioneered multi-channel commerce with its catalog and web sales, its e-commerce performance has plummeted over the last years and has been marred by system f...