Not surprisingly, U.S. retail industry stocks have been on a down trend, due more to recovery euphoria fantasy self-correction than any particular government data or industry reports. The S&P Retail Index has declined more than 7% and the S&P 500 has declined more than 3% in the past ten days. JC Penney (JCP) has beaten them both with a 15.3% decline, which put the JC Penney stock at the losing end of retail stock declines, and at a 52-week low at the close of Wall Street on Friday. The JC Penney brand makeover is in mid-transition and Wall Street's game of make-as-much-as-you-can-as-quick-as-you-can generally has no patience for transitions.
Earlier this month, JC Penney became a strategic partner by providing financial sponsorship to the FIRST (For Inspiration and Recognition of Science and Technology) Robotics Program. On Saturday, American Idol heartthrob Constantine Maroulis performed along with the Broadway cast of "Rock of Ages" at the Manhattan JC Penney flagship store to kick off the summertime "Broadway in Bryant Park" performances.
While community involvement has always been an important part of the JC Penney mission statement, strategic corporate giving really should be aligned with causes that also appeal to its customer base. The match between JC Penney, rock 'n roll fans, and robot geeks (and their dads) isn't obvious. At least it's not obvious to me.
While exposure to these different audiences might bring them into the JC Penney stores, will they find anything that they want to buy once they get there? When I think JC Penney, I think Midwestern soccer mom, not robot building science geeks. The funny thing is that there are plenty of Midwestern soccer moms in Constantine's fan base, but that's exactly the kind of customer that the New York JC Penney store doesn't cater to, with its proprietary product lines and designer labels.
The point is, just as Sears seems to be suffering from an identity crisis, JC Penney is another great American brand that may need a big splashy public image makeover. JC Penney's brand positioning right now is "Style You Want. The Quality You Expect. The Price You Love." However, I'm not sure the average American consumer generally associates the words "style," "quality," or "price" with JC Penney. They seem to deliver a not-great, not-bad experience on all three points, which is not enough to make any of them a unique selling proposition.
Mike Ullman came out of retirement in 2004 to help the JC Penney chain regain its relevance. The changes are happening inside the stores, but are they happening inside the minds of the customers?
The good thing about being around forever is that everybody knows you. The bad thing about being around forever is that everybody thinks they know you, no matter how hard you work to change yourself.
It seems like JC Penney is in the middle of a brand transition period and will probably announce to the world what its new brand positioning is when the timing is better. Unfortunately Wall Street really isn't oriented towards long-term results and JC Penney isn't a very sexy stock in the short-term. Even though JC Penney's stock isn't moving in the right direction right now, overall the company probably is.
See Also:
- JC Penney Complete Same Store Sales Roundup 2010
- JC Penney's Brand Makeover
- James Cash Penney - Principles in Business
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Comments
I totally agree with your observations and conclusions. What I disagree with is JCP has been struggling with image for the last thirty years. Although they have elevated their apparel image recently, it is far from clear or compelling.
There attempt to take on current brands tends to be young and perhaps they believe in transition which takes time. I’m not sure that time is on JCP side. What is apparent is that Kohl’s went from last to first as a junior department store venue and passed JCP along the way.
The secret of success is to take a position in retail that will appeal to the demographics you believe in and consistently design stores and select product which speaks to that consumer. To transition in and out of ideas and looks disappoints consumers and sends them to retailers they can depend on.
The FIRST sponsorship may seem like a disconnect to you, but as the mom of a son who loves robotics and participates in FIRST leagues, it makes sense to me. JCP is in transition to a more fashion-forward store, but they don’t want to lose the allegience of their most loyal customer – moms. Today’s moms look for fashion AND want to shop at a retailer who’s connecting with community in unique ways.
Another reason to affiliate with FIRST is their connection with the LEGO brand. LEGO is one of the hottest toys right now. Perhaps JCP intends to exploit this partnership.