J.C. Penney to Implement Innovative Everyday Low Pricing Strategy
J.C. Penney announced that as of February 1, all of its merchandise will be marked down at least 40 percent in order to give customers immediate bargain pricing without having to wait for sales.
In a typical year, the retailer—like most retailers—offers hundreds of sales. But J.C. Penney CEO Ron Johnson believes that customers will be attracted to more predictable pricing when the company makes it available.
“Pricing is actually a pretty simple and straightforward thing,” said Johnson. “Customers will not pay literally a penny more than the true value of the product.”
It’s a bold move for Johnson and his first major change since he was appointed CEO in November. His reputation might ease the minds of investors and skeptics, though—before joining J.C. Penney he worked as vice president of merchandising for Target and led the innovation of the Apple Retail Store and Genius Bar when he was the company’s Senior Vice President of Retail Operations from 2000-2007.
The new strategy will be implemented as follows:
-J.C. Penney will use sales data from last year to calculate new prices on merchandise that will be at least 40 percent lower than the previous year. Those items will be considered “Every Day” merchandise.
-Sales will still exist at J.C. Penney, but not nearly as often as before. The retailer will now pick certain items to go on sale for a “Month-Long Value.” Sales will typically coincide with a particular time of year—jewelry will be discounted during the month of February, holiday decorations will go on sale in November, etc.
-Clearance sales will be incorporated to push items that don’t sell, but not until the first and third Friday of each month, when Americans usually get paid. Clearance items will be tagged “Best Prices.”
-Instead of layering stickers on price tags each time an item is marked down, each item will get a brand new, shiny tag when its price is reduced, clearly indicating whether the item is an “Every Day,” “Month-Long” or “Best Price” value.
-The retailer is throwing out complicated prices like $9.99 and only using round, whole figures.
In addition, J.C. Penney’s new advertising campaign features a new logo, a 96-page monthly catalog and new spokeswoman Ellen DeGeneres.
Sound confusing? That’s because it is a bit confusing, and alien to the retail world, to boot. But J.C. Penney’s intention is to simplify its pricing system while boosting business.
“I have been struck by the extraordinary amount of promotional activity, which to me, didn’t feel like it was appropriate for a department store,” Johnson said. “Once you start to promote, the only way to beat a promotion was to make it bigger.”
J.C. Penney shoppers won’t get the rush of “One-Day Sales” and other flashy pricing gimmicks that other retailers provide, but they will have the calming satisfaction of knowing that J.C. Penney’s deals aren’t only pushed through a narrow window of opportunity.
So think of this as J.C. Penney’s attempt at Zen and the art of customer maintenance.
If this new system proves to be popular with shoppers and improves J.C. Penney’s revenue, the company will finally be able to breathe a sigh of relief. According to the Associated Press, J.C. Penney’s revenue at stores opened for at least a year rose only 0.7 percent during the 11 months through December 2011. Competitor Kohl’s rose 1.1 percent and Macy’s jumped up 5.4 percent.
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.