JCPenney: EMBRACE

From January 25-26, 2012, JCPenney announced its plans to become “America’s favorite store”.3 As of February 1, it introduced a new pricing and promotional strategy, as well as a new personality for its overall company image. Then began the implementation of the remaining three pillars (product, presentation, and place) of the overarching JCP transformational strategy, which used the six P’s of retail to serve as the foundation for seamlessly repositioning the brand.

Indeed, Johnson’s critics are not few in numbers: articles which ran throughout his controversial reign, such as Business Insider’s “How 4 Ex-CEO Ron Johnson Made JCPenney Even Worse”, and MSN Money’s “Ron Johnson's 5 biggest mistakes at J.C. Penney”,5 were not forgiving in assessing his brief stint at JCPenney. But post Johnson’s departure, JCPenney’s financial predicament continues to deteriorate: despite a recent 0.9% surge in its October sales, the company still faces the threat of liquidation, a result of poor gross margins and excessive borrowing. Ivan Kenneally writes: “Much of Ullman’s turnaround strategy for JCP amounts to a grand undoing of the damage 6 wrought by former CEO Ron Johnson’s disastrous tenure.” But “a failure so epic that experts and critics now question whether the 111-year-old retail chain will survive at all”,7 in my view, is not an accurate way to describe Johnson’s ambitious plans for JCPenney. In fact, rather than be completely discarded, his strategy, if revised and crafted to better capitalize on JCP’s existing strengths - such as its real estate and familiarity with managing successful private labels like Arizona® jeans - has significant potential. Had his new approach been implemented gradually and first aimed specifically at the Millennial segment of the current and future customer base, JCPenney may have been more successful at becoming “America’s favorite store”.

JCPenney’s current financial situation is undoubtedly grieve, but there is still room for a theoretical business proposal. In this case study, I seek to create a Millennial retail strategy built upon Johnson’s six P’s, advancing them as the embodiment of the first guiding principles for any business wishing to remain relevant in today’s Omni Channel world. My specific proposal - that is, the creation of a new and exclusive JCPenney private labels targeted at a distinct age group within the Millennial segment - is supported by a detailed profiling of this consumer, an analysis of the private label strategy and current retail industry trends, and a reexamination of some of Johnson’s more promising strategies.

Ron Johnson’s 6 P’s – First Principles of a Great Millennial Retail Strategy Misplaced “[Ron Johnson’s] was a great idea. But you have this massive structure that you need to support. Revenue supports your structure.

You’ve got to make sure that the new model works before you destroy the old one.” 1 -David Cush, Virgin America CEO

Many commentators of the JCPenney turnaround saga led by ex-CEO Ron Johnson confuse themselves by mixing two types of business failures: (a) failures resulted from a lack of long-term business vision, and (b) failures resulted from radical, wholesale disruptions of operating platforms. Although both categories can put a firm’s economic viability in jeopardy, Johnson erred mainly on miscalculating the operating risks JCPenney would be exposed to from his complete overhauling of the firm’s merchandise pricing structure. Specifically, in introducing his revolutionary change, Johnson neglected to first understand what his target customer wanted, to test his strategy before actually implement2 ing it, and to realize “the power of markdown price”. His mistakes ultimately caused devastating financial stress on the company, leading to a premature termination of an otherwise visionary transformatory experiment.

Anne Chen

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Parsons the New School for Design YMA FSF Scholarshipo Case Study: Embrace by JCP

Table of Contents

……………………………………………………………………………………………………… i Introduction The Millennials: The “First Truly Digital” Generation

………………………………………..

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SWOT Analysis for the Millennial Customer ….……………………………………………………. 2 Marketing Plan and the 6 P’s of Retail Product …………………………………………………………………………………………………….. 3 Personality ..……………………………..…………………………..……………………………………. 4 Promotion, Place, and Presentation .…………………………..………………………………….. 5 Pricing ……………..…………………………..…………………………..…….…………………………. 6 Competitive Analysis Macy’s ………………….…………………………..…………………………..………………………….. 9 Target …………………………..…………………………..…………………………..…………………. 10 6-Month Sales Plan ……………………………..…………………………..…………………………………. 12 Advertising Campaign …………………………..…………………………..………………………………. 13 Visual Presentation ………………………………..…………………………..……………………………… 13 Appendix Appendix A …………………………..…………………………..……………………………………... 14 Appendix F …………………………..…………………………..…………………………..………….. 15 Appendix M …………………………..…………………………..…………………………..………… 18 Appendix P ...………………………..…………………………..…………………………..………….. 19 Appendix S …………………………..…………………………..…………………………………..… 25 Appendix U …………………………..…………………………..…………………………..………… 27 Appendix V ……………...…..…………………………..…………………………..………………… 28 Appendix W ..……….…………………………..…………………………..………………………….. 29 Appendix X ..………………………………..…………………………..…………………………..….. 30 Appendix Z ………..…………………………..…………………………..…………………………… 31 ..

Endnotes & Bibliography ……..………...………………..……………………………..………………….. 32

The Millennials: The “First Truly Digital”8 Generation Demographic Profile An appropriate Millennials characteristics study needs to be based on comparative analysis between the Millennials and other generation cohorts. This is because only Millennials characteristics that represent deviations from trends in other generations should be of interest to a retailer – similar trends among generations indicate crossgenerational homogeneity and thus don’t help in formulating a distinct retail strategy for Millennials.

Appendix X provides a quick comparison of generational demographics. Not surprisingly, the ethnicity, education attainment, and life priority categories do not set the Millennial customer apart from other cohorts as a new trend setter. “For the most part, the priorities of being a good parent and having a successful marriage are most important to Millennials, similar to those held by Gen X-ers at a similar stage of life. Similarly, helping others in need is as important to the youth of both generations.”9 This is because such factors obey their respective natural and social laws that lead to intergenerational stability and continuity.

What does set the Millennials apart, as an April Barron’s magazine article noted, are its sheer size (“Eighty-six million strong, [...] 7% larger than the baby-boom generation”10); its growth rate (“...the Millennial population could keep growing to 88.5 million people by 2020, owing to immigration”11); and its influence in consumer spending (“The Millennials already account for an annual $1.3 trillion of consumer spending, or 21% of the total”12).

Appendix Z looks closer at specific characteristics within the Millennial cohort – including gender make-up, common occupational groups, and average income and personal spending amounts – based on a recent study conducted by Metropolitan Life Insurance Company. But again, the key trend, for a retailer, from all these findings is the Millennial customer’s expected spending potential relative to other generations.

Psychographic Profile and Attitudes The critical overarching behavioral trend of this consumer segment which retailers must acknowledge is their demand for a “seamless retail experience”13, and this

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phenomenon only further accentuates the increasing focus on omnichannel retailing.

According to a retail CEO survey conducted by Berglass + Associates and Women’s Wear Daily, “only 36% of respondents from companies with both physical stores and ecommerce sites offer a seamless customer experience, yet Millennials expect the channels to be integrated.”14 Other overarching Millennial trends which are especially important include the need for instant gratification; social consciousness; and interest in curating content and collaborating with others. But this segment’s most unique and important, especially to JCPenney, quality is its connectedness – with their peers, the ongoings of the world, and brands themselves – which is a phenomenon manifested through the Millennials’ heavy use of technology and social media platforms (Appendix W).

When it comes to a product’s company retailer, Millennials value transparency and honesty; fair pricing; respectful employee treatment; and assurance of safe merchandise.15 When it comes to products themselves, the top five attributes the Millennial consumer considers are value, familiarity, quality, function, and durability16.

The priority of “value” to the customer can be effectively realized through the launching of the exclusive new JCP private label line discussed in the marketing plan section of this case.

SWOT Analysis for the Millennial Customer A summary of JCPenney’s current SWOT situation is summarized in Appendix V, but in this section I discuss the table’s most important elements that are especially applicable to my particular private label strategy. As evident from the “Introduction”, JCPenney’s current weaknesses include leadership shifts, a confusing brand image that is losing relevancy, loss of old clientele, and the threat of future liquidation thanks to poor gross margins and excessive borrowing. Important threats include overarching industry trends – such as rising labor costs and human rights concerns and a still unstable economy – as well as the business strategies that the firm’s competitors are pursuing, which will be explored in Part II’s “Competitive Analysis”. But now as I turn to the remaining two SWOT components, I open by emphasizing their complementary interrelationship: the most significant opportunity, I believe, lies in pursuing a Millennial private label, and this strategy effectively leverages JCPenney’s strengths.

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Logistically, JCPenney’s current strengths in (1) vertical integration (i.e. its welldeveloped production, manufacturing, supply and distribution base, as well as its agility in inventory management thanks to controls in real-time sales data, store networks, and customer loyalty programs); (2) real estate (i.e. its 1,100 store locations17 and substantial presence in shopping malls); and (3) private-label experience (i.e. its portfolio of trademark brands such as Liz Claiborne®, Worthington®, St. John’s Bay®, The Original Arizona Jean Company®, and Decree®) will provides the structural business-system support a new private label requires. Branding-wise, a private label offers a more affordable alternative to budget-conscious Millennials who, in their pursuit of personal style, are favoring “B-branded clothes from stores like Wal-Mart, JCPenney, and Target” over “A-branded clothes like Abercrombie & Fitch”18. Moreover, private labels open opportunities to personalize and “shape the shopper’s in-store experience”19, which is a fundamental element of both the Millennial customer’s value set and my marketing plan.

Marketing Plan and the 6 P’s of Retail To unleash the emerging purchasing power commanded by the Millennials, JCPenney should pursue a private-label strategy that is anchored in the aforementioned six P’s of retail (product, personality, promotions, place, presentation, and price).

Product “Adding a seasoned retailer veteran to assist its turnaround efforts, department store J.C. Penney (JCP) announced on Wednesday it has recruited Saks (SKS) CEO Stephen Sandove to join its board of directors.”20 - Matt Egan, October 9, 2013 The addition of Saks’ Stephen Sandove to JCPenney’s team demonstrates the company’s heightened interest in revitalizing its outdated brand image by injecting fashion and luxury into the JCPenney persona, and the more fashion-oriented strategy I propose focuses on an exclusive private label aimed at enticing Millennials to first simply enter the company’s stores, fall in love with the brand, and then become loyal customers.

As the gender ratio of the Millennial consumer is relatively evenly split21, both a

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menswear and womenswear line should be introduced, but in this case study, I will focus on developing a Spring/Summer 2014 collection for the latter.

“The modern-day woman knows how to be a chameleon - transitioning from corporate professional to night-time party girl.”22 - Rosaline Hsieh As the exact age range into which the Millennial customer falls is often disputed upon, the ambiguity in defining this consumer segment requires a further breakdown of the cohort itself in order to better define a target customer for JCPenney’s new private label. My proposed womenswear collection is aimed at the 24- to 30-year old working woman, an individual who has just entered or is adjusting to two major phases of her life: career advancement and family development. The line will thus consist of businesscasual attire, unified by an underlying “wardrobe essentials” theme as well as the private label’s unique logo described in the “Personality” section of this marketing plan.

One of the biggest wardrobe challenges a woman in this age group faces – thanks to the more lax attire policies of the office environment – is dressing “down without crossing the threshold of revealing, beachy, or just plain inappropriate”23. The pieces in this collection include light jackets and blazers, well-tailored pants and pencil skirts, classic button-downs, and silk short-sleeve blouses. To address the Millennial female’s desire to personalize her style and inject some drama into closet stables, accessories – such as pumps, handbags, and scarves – will also be offered. The collection will combine muted, solid hues with more vibrant prints and patterns; elegance with modernity; and quality with affordability in order to provide the creative playground in which the customer can experiment with separates and accessories such that she can communicate professionalism and elegance as well as individuality and taste through her work attire.

Personality The new JCPenney logo (Appendix U) for the company’s Millennial initiative is designed to not only capture the attributes of the product line described above, but also to (1) project the firm’s century-old American legacy (through the use of patriotic colors); (2) redefine Johnson’s “Fair and Square” pricing strategy and continue along the lines of his one-stop “Town Square”-style shopping experience (through the encompassing red 4

square); and (3) illustrate the worldly values of the Millennial consumer (through the blue half-circle).

The collection will initially carry the label of “Embrace”, which communicates JCPenney’s strong interest in “embracing” Millennials as a core client group as well as the Millennials’ mutual “embracing” of the company. Moreover, as Generation Y’s social concerns need to be utilized and fashioned into branding strategy, if the “Embrace” name does successfully take hold in the marketplace, the private label’s logo can then be simplified to an “e”, a letter which will be explained in future promotions and advertising to reflect words such as “environmentalism”, “exclusivity”, “economical”, “esteem”, “expression”, “experience”, etc.

Promotion, Place, and Presentation “In 2011, JC Penney ran 590 promotions that only brought a customer in an average of four times a year. Each promotion cost around $2 million. And 99 percent of JC Penney's potential customer base was flat-out ignoring them.”24 -Meredith Galante Johnson thus nixed the number of promotions down to twelve, gambling on his “Everyday Low Pricing” model to be incentive enough to draw in customers. The merits of his new three-tier pricing structure will be expanded upon in the “Pricing” section of the marketing plan, but I will first explain why active promotioning will be necessary in the early stages of introducing the “Embrace” brand to the marketplace.

As mentioned in “Psychographic Profile and Attitudes”, Millennial consumers are addicted to their smartphones (please refer to Appendix S for summarizing infographics) and are experienced social networkers (please refer to Appendix T).

Moreover, “Millennial women are a segment leading the trends around mobile devices as the ubiquitous shopping companion to inform every step along her [shopping] journey”25, and, according to ten surveys conducted by Pew Research Center from December 2009 to December 2012, “the proportion of women who used social media sites was 10 percentage points higher than men on average”26 (please refer to Appendix M). To harness these trends in its private label promotional endeavors, JCPenney should employ omnichannel retailing techniques in first reaching the Millennial consumer where they 5

already are (on their mobile phones and social networking sites) and then offering them the exclusivity they crave in the company’s brick-and-mortar locations. Although Mercedes Benz’s recent Fashion Week proved that social media is actually not as powerful as once assumed by the fashion industry27, the digital platform can still be employed in JCPenney’s marketing plan.

As the overarching goal for JCPenney is to get the Millennial consumer into their stores, promotional tactics will focus on advertisements - featured on fashion blogs and news sites as well as social networking Web sites such as Facebook and Youtube - of the Spring/Summer 2014 line’s premiere at the firm’s physical locations. To account for JCPenney’s current financial situation, capital can be saved by avoiding expensive television commercial airtime and print advertising, and by setting an exclusive floor (rather than an entirely new, separate boutique) within JCPenney’s existing mall real estate as the site of the lavish collection release. An individual can sign up for a special “VIP” pass which is required for entry and must be presented in order to gain elevator access to the floor. This strategy provides the Millennial customer the privilege he or she desires - that is, the feeling of being a “celebrity” and receiving the intimate attention of a company. Celebrities – Hollywood starlets, musical artists, etc. – will be invited to the event, as “Millennials get starstruck like the rest of us”28.

Presentation-wise, merchandising and displays will draw upon Johnson’s wellcrafted and distinctly branded “stores within the store” concept (which markedly outsold the rest of the store’s areas by 20%)29, such as the “fresh, edgy”30 Joe Fresh boutiques (see Appendix F for images). And if this first Spring/Summer 2014 collection foments into a successful private label, the release of lines for succeeding seasons can follow this “premiere night” model, as this will result in the Millennial consumer eagerly anticipating such grand and opulent evenings of mingling with peers and celebrities figures alike in a beautiful “gala-” and “cocktail-esque” environment.

This strategy of first testing this Millennial retail strategy by creating and instituting an exclusive private-label floor as the new platform from which to build more long-term Millennial customer loyalty thus captures the promotion, place, and presentation elements of Johnson’s six P’s.

Pricing 6

During his brief stint as CEO, Johnson introduced a three-tier pricing structure to JCPenney: (1) prices were reduced an average of 40% to offer consumers an “Everyday Fair and Square” price; (2) twelve times a year, JCPenney ran a “Month Long Values Event”, during which seasonal items were marked down an additional 20-29%; and (3) on every first and third Friday of a month, or “Best Price Fridays”, items the company was seeking to liquidate were lowered to about one-third of the everyday price.31 The “EDLP” approach was thus combined with two strategies that still maintained some flavor of high-low pricing.

The economics of pricing strategy from a retailer’s perspective depend on the volume and the realized average price: volume may have different elasticity to different pricing regimes. From a shopper’s perspective, one either does better or worse with respect to the average price under high-low pricing; on the other hand, under EDLP, everyone transacts at the average price. The utility value of EDLP to a shopper is therefore predictability and stability of cost, both of which facilitate the connection between price and the intrinsic value of merchandise. Few commercial activities outside retail utilize the high-low pricing scheme, because pricing games generally reduce the economic wellbeing of both parties of a transaction.

In my view, the problems encountered in the implementation of “Fair and Square” were less driven by customers choosing high-low over EDLP than by overall customer confusion caused by a lack of clear comparison between the two pricing regimes.

In fact, EDLP seems to align with J.C. Penney’s interests well. In Ron Johnson’s first report to shareholders, he spoke about the detrimental long-term effects of excessive price promotions: “Plagued by the ‘games’ of the industry over the last several decades, retailers – including J.C. Penney – barraged customers with a constant stream of promotions that proved to be ineffective. Each time we participate in this pricing war, we were discounting our brand and eroding the trust and loyalty of our customers.”32 Economically, notwithstanding the overall poor performance of JCPenney since the implementation of this new strategy, the company reported that it “sold more items at its everyday prices at higher average unit retail during 2012” and realized “higher gross margins on ‘everyday value’ priced merchandise sales”33. High volume and high margin indicate high marginal ROI contribution.

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Fundamentally, pricing strategies are dictated by products: pricing wars reflect a lack of product differentiation in terms of fashion quality and costs amongst retailers. A firm that focuses on managing these factors in its branding strategy may become more price competitive and rely less on high-low pricing.

It is also important to mention that during the last few years, retailers have realized that having only national brands in their merchandise assortment is not enough to draw in new customers and maintain the loyalty of their old ones; national brands, thanks to their economies of scale, have the ability to transcend geographic locations and to thus create a pervasive presence in the marketplace for themselves. This phenomenon, combined with the diminished need for consumers to enter physical retail stores in order to have access to products and the ease at which consumers can compare competing brands thanks to mobile technology, makes including new private labels - those which are exclusively only available at their locations - in their brand portfolio especially lucrative for retailers.

But brand portfolio management involves more than the careful selection of labels. To support the “Fair and Square” pricing platform, JCPenney needs to also focus on the cost and quality of its private labels. This requires strategic and collaborative category management, which is instrumental for a retailer to realize its “own” brand goals and aspirations. It requires the development of a symbiotic relationship with manufacturers as well as suppliers to elevate relationships and to further a mutual mentality of partnership.

By including high-quality private labels in a global brand portfolio, JCPenney can offer products that are comparable to national brands, but at a significantly lower price point. This would undermine the high-low pricing scheme inherent in the retail business and provide an opportunity for the “Fair and Square” pricing approach to truly take hold.

Therefore, the long-term purpose of my proposed private label strategy is to serve as the “springboard” for a distinct and unique brand proposition for the overall JCPenney company. This transformation process needs to be gradual and incremental in order to allow for the Millennial customer to adjust and adapt to it. Part II’s “Assortment Plan” and “6-Month Sales Plan” will have more specific information on the pricing (i.e. wholesale price and retail price for individual collection pieces).

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Competitive Analysis As my proposal for JCPenney is based on the company creating a new exclusive private label line, it will be most effective to look at two retailers who have been successful in courting the Millennial consumer through the private label strategy. I chose to analyze Macy’s and Target, as the former is a middle-market department store and the latter falls within the discount department store category.

Macy’s "Throughout 2013, Macy's has continued to invest in exclusive brands to engage Millennial shoppers who are looking for diverse, current and trend-forward fashion. With the introduction of two new Impulse brands this fall, Maison Jules and QMack, we are continuing to deliver on our promise of newness and excitement. Both collections are unique, contemporary and affordable, and further elevate Macy's position as the Millennial shopping destination."34 - Molly Langenstein, Macy's EVP/GMM Macy’s has recently devoted much capital and promotional energy into attracting the Millennial consumer. The company has since launched new private, “Impulse” brands – such as Maison Jules and QMack – and worked on improving existing ones in order to achieve this goal. Pieces are trend-focused, contemporary, and seek to communicate the “newness and excitement”35 Macy’s infuses in its overarching brand personality.

The company has been keen to dedicate product design as well as in-store experience to cater to the specific desires (discussed in Part I’s “The Millennials: The ‘First Truly Digital’ Generation”) of this particular consumer segment. Macy’s thus has acknowledged the seamless nature of omnichannel retailing – that is, combining attractive product assortments with exceptional service, entertaining and engaging store formatting, and online technological platforms in order to maintain relevancy in the marketplace. The result is substantial revenue generation and competitive advantage: “…unlike many other retailers, Macy’s also has been able to turn a profit. In the third quarter [of 2010], Macy’s posted net income of $139 million. Sears and JC Penney had losses of and $421 million and $143 million, respectively”35.

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Macy’s three major strategies in enticing Millennials are (1) My Macy’s; (2) “Omnichannel”; and (3) “Magic Selling”. The first, which was introduced back in 2009, aims to truly understand the customer – via data mining – such that the company can more effectively design its products, appropriate them to particular locations, and maintain general control over all operations that are part of the sketch-to-store process.

The second, “a strategy that allows customers to shop seamlessly in stores, online or with mobile devices”36, acknowledges the Millennial customer’s reliance on digital technology in his or her shopping activities. Writes Tom Demeropolis of BizJournals.com: “One Omnichannel effort is ‘Search & Send.’ Initially, every Macy’s store register could find products that are out of stock in a particular location by accessing the macys.com inventory.”37 The key lesson, then, that JCPenney should learn from Macy’s success is the importance of first listening to your target customer, something that ex-CEO Johnson failed to do. His reasoning to why he chose to so quickly implement all the changes he’d introduced during his tenure at JCPenney – “we didn’t test Apple”38 – rather than test them first is not applicable to running a fashion company.

In Appendix P, I provide photographs I took during my visits to the Macy’s location at Herald Square and JCPenney’s location in Manhattan Mall such that differences and/or similarities of store design and merchandising display decisions can be seen.

Target Although this section focuses on Target and its competitive advantages, it is important to mention Wal-Mart’s recent interest in “dominating the apparel industry”39 as well. Writes Ivan Kenneally: “Wal-Mart has been crafting a comprehensive strategy for apparel merchandise as part of its vision for overall growth over the next five years. […]

[Carol Spieckerman, CEO of new Market Builders] hypothesized that Wal-Mart could radically improve its sales if it targeted millennial shoppers who are increasingly enthralled with wearable technology, or fashion that has a prominent technical aspect.”40 As the retail giant already has substantial experience in omnichannel retailing as well as a wide distribution network at its disposal41, the news of Wal-Mart’s plans should be taken seriously by JCPenney.

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“Target stores have managed to maintain a hip, trendy image with a strong value message with whimsical advertising; strong, almost pop art in-store merchandising and a roster of high profile designers for everything from housewares (Michael Graves) to bedding (Todd Oldham) to women’s fashion (Mossimo) to cosmetics (Sonia Kashuk).”42 - Aisling Balfe, retail analyst with London-based PlanetRetail Back in 2002, Target Corporation managed to earn the title of second-largest discount store retailer, trailing behind only the formidable retail giant Wal-Mart.43 Somehow, “[Target] was able to thrive and coexist profitably with”44 the world’s biggest corporation and employer. And just as Target could never hope to ever really compete head-to-head with the massive Wal-Mart, neither can JCPenney – thus, investigating how Target was able to grow side-by-side with Wal-Mart is applicable to this case study.

Target’s main strengths, besides its effective location monitoring and management and its offering of financial services to customers, stem from its ability to differentiate itself as a brand through the company’s expertise in product design, merchandising, and promotions. When it comes to the products within its private-label portfolio, “Target has found a successful niche by focusing on the intersection of design and value. […] The emphasis at Target is that ‘great design doesn’t have to cost a lot of money.”45 JCPenney should similarly strike a healthy balance between high-quality and affordable price when creating the pieces for its new “Embrace” collection.

But perhaps it is through Target’s innovative advertising campaigns and other promotional activities that we can truly see how the company has so successfully changed its image from mere “discount retailer” to hub of fashion and entertainment.

“Target's success was attributable to two key factors: the right kind of differentiation and distinctive marketing communications”46, which is exactly what I believe JCPenney should be pursuing.

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Advertising Campaign As discussed in the “Promotions” section of Part I’s “Marketing Plan”, the main advertising tool to be used in the introduction of the embrace line is the “VIP” pass which is required to attend the premiere of the new S/S 14 collection. An individual who is interested in getting a pass must sign up for the JCPenney newsletter; this allows JCPenney to obtain the email addresses of new Millennial consumers who show interest in both the new private line as well as the overall company.

In “6-Month Sales Plan”, reasonable numbers was set as the budget for branding expenses ($120,000) and total marketing communications expenses ($180,000). However, as promotions is key to my proposed Millennial retail strategy for JCPenney, of all the 6-month operating costs, most money should be put into these activities. Other fixed and variable costs (such as logistics and distribution; employee wages; production and supply control; etc.) can leverage JCPenney’s existing strengths (please refer to Part I’s “SWOT” section).

Visual Presentation The “Advertising Campaign” focuses on creating a new customer base – the Millennial cohort group – for JCPenney, but in this section, I comment on future and overall JCPenney brand maintenance. As embrace is only one private-label brand in JCPenney’s portfolio, the company should make sure to communicate to consumers that the whole JCPenney brand is evolving with the times, a change which is best captured by its release of a new and fashionfocused private label.

Thus, after embrace’s initial S/S 2014 release, promotional and presentational activities can be given even more attention. Capital can potentially be now poured into more expensive advertising forms – such as television commercials and print advertisements. Important as well is the continuation of the exclusive floor concept. The embrace collection’s floor should be constantly refreshed and redesigned in order to welcome new lines as the seasons change. The design – merchandising displays, lighting and fixtures, etc. – of other areas of JCPenney real estate should also reflect this new focus on style, luxury, and convenience.

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Appendix

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Appendix F

Joe Fresh boutiques

Appendix F.1 Joe Fresh Fifth Avenue Flagship | Source: Courtesy photo Appendix F.1 Bloomberg. â&#x20AC;&#x153;J.C. Penney to Challenge Zara and Uniqlo WIth Joe Fresh Shops. Bloomberg. 15 March, 2013. Web. 10, Nov. 2013. <http://www.businessoffashion.com/2013/03/j-c-pen ney-to-challenge-zara-and-uniqlo-with-joe-fresh-shops.html>.

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Appendix F.2

Appendix F.3

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Appendix F.4

Appendix F.5 Appendix F.2 - F.5 The Thread Affect. “Product Review: Joe Fresh for JCP.” The Thread Affect. 13, June. 2013.

Web. 9, Nov. 2013. <http://thethreadaffect.com/2013/06/13/product-review-joe-fresh -for-jcp/>.

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Appendix M Women and Social Media

Appendix M.1

Appendix M.2 Appendix M.1 - M.2 Duggan, Maeve. “It’s a woman’s (social media) world.” Pew Research Center. 12, Sept.

2013. Web. 9, Nov. 2013. <http://www.pewresearch.org/fact-tank/2013/09/12/itsa-womans-social-media-world/>.

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Appendix P

Photos Taken on 11/14/2013 Macyâ&#x20AC;&#x2122;s Herald Square 151 W 34th St, New York, NY 10001

Entrance: Lower Level Sign

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Lower Level Festive Displays

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Prominent Brands: Designated Areas, Designed to Reflect the Respective Brandâ&#x20AC;&#x2122;s Persona 21

Photos Taken on 11/14/2013 JCPenney, Manhattan Mall 901 Avenue of the Americas, New York, NY 10001

At the Entrance: First Things I Saw

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Remnants of Ron Johnson..? “Store-in-Store” displays and Familiar “Square” JCP Logo

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Appendix S Mobile Influence on Retailing

Appendix S.1

Appendix S.1 Brinker, Mike, Kasey Lobaugh and Alison Paul. “The dawn of mobile influence.” Deloitte Digital. 2012. Web. 31, Oct. 2013. p. 6. <https://www.deloitte.com/assets/Dcom-Uni tedStates/Local%20Assets/Documents/RetailDistribution/us_retail_Mobile-InfluenceFactor_062712.pdf>.

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Appendix S.2

Appendix S.3 Appendix S.2 - S.3 Brinker, Mike, Kasey Lobaugh and Alison Paul. “The dawn of mobile influence.” Deloitte Digital. 2012. Web. 31, Oct. 2013. p. 7. <https://www.deloitte.com/assets/Dcom-Uni tedStates/Local%20Assets/Documents/RetailDistribution/us_retail_Mobile-InfluenceFactor_062712.pdf>.

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Appendix U

embrace by JCP logo design

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Appendix V

JCPenney SWOT Analysis

Strengths

Weaknesses

•

widely distributed real estate

•

constant leadership changes

•

vertical integration

•

losing relevancy

•

familiarity with private label

•

loss of old customers

management

•

struggles to attract new customers

•

legacy

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confusing brand image

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supplier/manufacturer relationships

Opportunities

Threats

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Millennial consumers

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private label focus

•

more ethnic customers

• •

high-quality, fashion-focused lines better real estate design/utilization

•

economic trends (rising raw material prices)

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political/social trends (human rights issues and labor laws)

•

Wal-Mart looking to focus on apparel

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Zara, H&M, etc. introducing private-labels

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Appendix W

Millennials & Technology Use

Appendix W Millennials: A Portrait of Generation Next, Pew Research Center, Feb. 2010 http://www.pewsocialtrends.org/files/2010/10/millennials-confident-connected-open-tochange.pdf. p. 25.

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Appendix X

Millennials v. Other Generational Cohorts

Appendix X (Data Source)

The Millennial Generation Research Review, US Chamber of Commerce Foundation, http://emerging.uschamber.com/MillennialsReport (Nov. 14, 2012).

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Appendix Z

Gen Y Demographics

Appendix Z Demographic Profile: Americaâ&#x20AC;&#x2122;s Gen Y, Metropolitan Life Insurance Company, Mature Market Institute, 2013, https://www.metlife.com/assets/cao/mmi/publications/Profiles/mmi-geny-demographic-profile.pdf. p. 1. Â

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Endnotes & Bibliography 1. Steve Denning, “J.C. Penney: Was Ron Johnson’s Strategy Wrong?” Forbes, April 9, 2013 (http://www.forbes.com/sites/stevedenning/2013/04/09/j-c-penney-was-ron-johnsons-strategywrong/). para. 22.

2. Dena, “Psychology of coupon codes and store sales,” BHP Mag, May 31, 2012 (http://www.blackhairplanet.com/blog/psychology-of-coupon-codes-and-store-sales/). para. 2.

3. On Marketing, “Can J,C, Penney Become ‘America’s Favorite Store’?” Forbes, Feb. 27, 2012 (http://www.forbes.com/sites/onmarketing/2012/02/27/can-j-c-penney-become-americasfavorite-store/). para. 5.

4. Jim Edwards and Charlie Minato, “How Ex-Ceo Ron Johnson Made J.C. Penney Even Worse,” Business Insider, April 8, 2013 (http://www.businessinsider.com/ron-johnson-disastertimeline-apple-guru-failed-at-jcpenney-2013-4).

5. Kim Peterson, “Ron Johnson’s 5 biggest mistakes at J.C. Penney,” MSN Money, April 10, 2013 (http://money.msn.com/now/post.aspx?post=dc1ced82-ae44-4001-9bf2-95c6efc80c0b) 6. Ivan Kenneally, “JCP October Sales Surge; Serious Troubles Remain,” Sourcing Online Journal, Nov 7., 2013 (https://www.sourcingjournalonline.com/jcp-october-sales-surgeserious-troubles-remain/).

7. Steve Rosa, “Ron Johnson's Attempt To Fix JCPenney's Brand Was Completely Backwards,” Business Insider, April 15, 2013 (http://www.businessinsider.com/why-ron-johnson-failedat-branding-jcp-2013-4). para. 2.

8. Christopher Donnelly and Renato Scaff, “Who are the Millennial shoppes? And what do they really want?” Accenture, Outlook Online Journal, June 2013 (http://www.accenture.com/us-en/ outlook/Pages/outlook-journal-2013-who-are-millennial-shoppers-what-do-they-really-wantretail.aspx). para. 1.

9. The Millennial Generation Research Review, US Chamber of Commerce Foundation, http://emerging.uschamber.com/MillennialsReport (Nov. 14, 2012). p. 5 10. Jacqueline Doherty, “Onn the Rise,” Barron’s, April 29, 2013 (http://online.barrons.com/article/SB50001424052748703889404578440972842742076.html#art icleTabs_article%3D1). para. 5 11. Barons, April 29, 2013. para. 5.

12. Barons, April 29, 2013. para. 7.

13. Accenture, June 2013. para. 24.

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14. Reuters, “Millennials Are About to Outspend the Baby Boomer, Catching the Retail Industry Off Guard,” Reuters, Oct. 24, 2013 (http://www.reuters.com/article/2013/10/24/nyberglassassociates-idUSnBw246116a+100+BSW20131024). para. 2.

15. Cherr Aira, “What Motivates Purchase Decisions of Young Adults Today,” Silicon Angle, Nov. 8, 2013 (http://siliconangle.com/blog/2010/11/08/what-motivates-purchase-decisions-ofyoung-adults-today. para. 5.

16. Silicon Angle, Nov. 8, 2013. para. 6.

17. JCPenney Investors: About Us, JCPenney, 2013, http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-homeprofile.

18. Pieter-Jan Gheyser, “Gen-Y Trends: The end of conspicuous branding,” How Cool Brands Stay Hot, Sept. 17, 2013 (http://www.howcoolbrandsstayhot.com/2013/09/17/gen-y-trends-theend-of-conspicuous-branding/). para. 5.

19. Vanessa Cross, “The Advantages of Private-Label Branding,” Chron, 2013 (http://smallbusiness.chron.com/advantages-private-label-branding-20163.html). para. 4 20. Matt Egan, “Saks CEO Set to Join J.C.Penney Board to Help Turnaround Effort,” Fox Business, Oct. 9, 2013 (http://www.foxbusiness.com/industries/2013/10/09/jc-penney-says-saksceo-to-join-board/). para. 1.

21. Demographic Profile: America’s Gen Y, Metropolitan Life Insurance Company, Mature Market Institute, 2013, https://www.metlife.com/assets/cao/mmi/publications/Profiles/mmi-geny-demographic-profile.pdf. p. 1.

22. Rosaline Hsieh, “Build the Perfect Career Wardrobe,” Urbanette Magazine, 2013 (http://www.urbanette.com/career-fashion/). para. 5.

23. Urbanette Magazine, 2013. para 1.

24. Meredith Galante, “The 6 Ways Ron Johnson Plans to Transform JC Penney into America’s Favorite Store,” Business Insider, Jan. 26, 2012 (http://www.businessinsider.com/the-6-waysron-johnson-plans-to-transform-jc-penney-into-americas-favorite-store-20121#ixzz2kqrD5T3N). para. 7.

25. Ethelbert Williams, “Millennials Consider Mobile the Must-Have Shopping Companion,” MediaPost, June 21, 2012 (http://www.mediapost.com/publications/article/177250/millennialsconsider-mobile-the-must-have-shopping.html#reply). para. 1.

26. Maeve Duggan, “It’s a woman’s (social media) world,: Pew Research Center, Sept. 12, 2013 (http://www.pewresearch.org/fact-tank/2013/09/12/its-a-womans-social-media-world/). para. 2.

27. Rachel Strugatz, “Social Media Flood Fails for Fashion,” WWD, Oct. 7, 2013.

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28. Craig Atkinson, “The Marketer’s Guide to Reaching Millennials, AdWeek, June 10, 2013 (http://www.adweek.com/news/advertising-branding/marketer-s-guide-reaching-millennials150131). para. 6.

29. Brad Tuttle, “JCPenney Would Be Doing Great if the STores Were Less like JCPenney,” Time, Sept. 21, 2012 (http://business.time.com/2012/09/21/jcpenney-would-be-doing-greatif-the-stores-were-less-like-jcpenney/). para. 1.

30. Dale Buss, “For JCP’S Ron Johnson, Joe Fresh Looks Like a Rescue by Canadian Mounties,”BrandChannel, March 18, 2013 (http://www.brandchannel.com/home/post/2013/03/18/JC-Penny-Joe-Fresh-Rescue031813.aspx). para. 2.

31. Mariane Wilson, “J.C. Penney pins future on new, three-tier pricing strategy and store shops,” Chain Store Age, Jan. 25, 2012 (http://www.chainstoreage.com/article/jc-penney-pinsfuture-new-three-tiered-pricing-strategy-and-store-shops).

32. Ron Johnson, Annual Report, JCPenney Company, 2012 http://www.jcpmediaroom.com/assets/annual-report/JC_Penney-AR2011-letter.pdf. para. 8 33. 2012 Form 10-K, JCPenney Company http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-reportsannual. p. 24-25.

34. “Macy’s Continues Focus on Millennials in Fall 2013”, Market Watch, July 31, 2013 (http://www.marketwatch.com/story/macys-continues-focus-on-millennials-in-fall-2013-201307-31). para. 2.

35. Tom Demeropolis, “How Macy’s latest moves are paying off,” Biz Journals, Nov. 25, 2011 (http://www.bizjournals.com/cincinnati/print-edition/2011/11/25/how-macys-latest-moves-arepaying-off.html?page=all). para. 11.

36. Biz Journals, Nov. 25, 2011. para. 25.

37. Biz Journals, Nov. 25, 2011. para. 26.

38. Steven Snyder, “What J.C. Penney’s Ron Johnson just do now,” Fortune, March 5, 2013 (http://management.fortune.cnn.com/2013/03/05/jc-penney-ron-johnson-2/). para. 8.

39. Ivan Kenneally, “Wal-Mart Set Sights on Apparel Industry,” Sourcing Journal Online, Oct. 29, 2013 (https://www.sourcingjournalonline.com/wal-mart-sets-sights-apparel-industry-ik/).

40. Sourcing Journal Online, Oct. 29, 2013. para. 2. and para. 6.

41. Sourcing Journal Online, Oct. 29, 2013. para. 5.

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42. Lynn Celmer, “The ABCs of Reaching Gen X and Gen Y with Private Label,” PL Buyer, April 13, 2011 (http://www.privatelabelbuyer.com/articles/84237-). para. 9.

43. Patrick Barwise and Sean Meehan, “Bullseye: Target’s Cheap Chic Strategy,” Harvard Business School, Aug. 16, 2004 (http://hbswk.hbs.edu/archive/4319.html). para. 1.

44. Harvard Business School, Aug. 16, 2004. para. 1.

45. “Target: Shifting a Retail Paradigm,” Kellogg School of Business Management, Feb. 14, 2012. Print. pg. 13.

46. Harvard Business School, Aug. 16, 2004. para. 1

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