Square, But Not So Fair.


Source: Davis McCardle/Getty Images

I hate to say it, Ron Johnson, but I told you so. When Johnson was brought on as CEO of JC Penney, in order to give the brand a major overhaul, I was extremely skeptical. It comes as no surprise to me that Johnson failed in his mission to introduce a new pricing model to the antiquated department store, and now, is subsequently abandoning his post as CEO. Think about it, JC Penney has been around for decades, operating under the same value-based structure that is driven by the mass of coupons that can be found in the sectionals of your local newspapers. All of a sudden, Johnson changed that business model, which customers had grown to expect and appreciate–what did he think was going to happen?

First of all, re-branding JC Penney in any way or form was not a good idea. The fact that it’s been around forever, with the same mission and objectives, in addition to the products it sells, is a clear indication of that. Consumers have a set image of JC Penney in their minds–they associate it with particular words and experiences that they have accumulated over the years–and I can tell you one thing, those words are not “trendy” or “cutting-edge.” Johnson was trying to push a brand identity onto the department store that it simply could not stand up to.

A major issue with the re-branding of JC Penney was its pricing strategy. For years and years, shoppers would print out their coupons, or cut them out of the newspaper, and wait for the sales to hit, rather than purchasing the items at full-price. With the introduction of “fair and square” pricing, sales and coupons were eliminated altogether, replaced by, what JC Penney claimed to be, everyday low prices. But this did not bode well with consumers. Ultimately, it ended up being a sneaky way for JC Penney to mark-up its products, so as to make room for discounts down the road. The thing with consumers, though, is that they can be fickle, and oftentimes illogical in their purchase behavior. Customers’ perceived quality of a product, and the subsequent emotional equity attached to that product, is often determined by its price. For example, if a woman is browsing JC Penney for a new purse, she will likely think that the $100 option is of higher quality than the $25 option. But wait, it gets better. When that same $100 purse is discounted to $25, the woman feels like she is getting a great deal, and has justified the purchase in her mind. It is all very complicated. What JC Penney did in the process of its re-branding was remove the credibility that used to be associated with the products sold at its stores, and with it, the reliability that customers felt towards the brand.

I don’t know about you, but JC Penney’s “fair and square” slogan doesn’t sell me. Apparently the department store has begun to pick-up on the discontent of its customers, as it has sent out a slew of public apologies for its recent changes. Looks like the day of the coupon has returned. Happy shopping!