J.C. Penney Case Analysis

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SWOT Discussion

Strengths:
J.C. Penney will be offering complimentary services with the addition of the “Town Square” into all J.C. Penney stores. Already they have been offering free children's haircuts every Sunday which has drawn much customer interest to the company. The new unique layout of the stores that Ron Johnson is pushing through will make the stores easier to navigate through. Customers will also have a unique experience from any other store with the additions of “Town Squares” and “Main Streets” into all stores. J.C. Penney is an old company and so people are familiar it, which will give it a step up when advertising its new retailing approach. With consistent prices, J.C. Penney will not lose as much money on the extreme sales that would occur very often with the old retailing strategy. Consistent pricing has simplified things on the consumer side, so customers are more willing to come in to the store and buy something instead of waiting for rock-bottom prices. J.C. Penney's choice of new spokeswoman Ellen DeGeneres will help promote the company more as DeGeneres is a very popular talk show host which many Americans watch.

Weaknesses:
Before the new retailing strategy J.C. Penney would have constant sales on most items. Now with consistent prices items are reduced in price infrequently which might scare off customers who came for the extremely low sales prices. The new unique layout which is unlike any other store might confuse customers because they are not used to such a radical new design. Several years will be needed to completely re-do every J.C Penney around the country. During this time sales will drop due to people not being reached with advertising about the new sales approach. Sales will also be lower until brand loyalty to the new brands brought in has been established. Customers have been alienated due to prices being raised and sales being reduced. The elimination of coupons has also turned many customers away from J.C Penney. There was no prior testing of the new retailing strategy. Before starting to change all of the stores at once a controlled test could have been done in one area where a few stores were converted and the new strategies, brands, and layouts were tested there. With the tests the “unexpected” drop in sales could have been predicted.

Opportunities:
The new retail strategy will allow J.C. Penney to attract more brands with the store-within-a-store idea. Brands will be able to gain more traction within J.C. Penney customer bases as they will be consistent, with brands not rotating through every so often. The new layout, complimentary services, and store-within-a-store improvements will make for a unique customer experience in every J.C. Penney store. No other companies offer these options and each J.C. Penney will be able to be different with the brands, services, and stores in it. The new retail strategy offers an opportunity to increase sales. Customers will no longer sit and wait for “rock bottom prices” when the prices are consistent and decently priced.

Threats:
Many people are having to budget their money very carefully with the economy right now. They do not have a lot of money to spend. The extremely low sales that J.C Penney used to be known for drew them to the store, but now that prices are higher they might be turned away to stores like Walmart that offer extremely low prices every day. Although there are still clearances and month long values, many items are priced higher than they were previously. Many customers have been turned off and alienated by the elimination of promotions and coupons that would reduce items in price even farther. These customers will turn to other stores such as Macy's which offer similar items at around the same price. There are many other department stores which sell similar if not the same items as J.C. Penney. Customers who do not like the direction that J.C. Penney is going will turn to these other stores. Some...
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