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"JCPenney: EMBRACE." Date Completed: December 2014. Brief - Response to YMA Fashion Scholarship Fund 2014's case competition. 2014 First Round Scholar Winner (Parsons the New School for Design). - Analyzes how JCPenney's uncertain position in the fashion industry since ex-CEO Ron Johnson's departure can be rescued through enticing the growing Millennial consumer market.

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Ron Johnson’s 6 P’s – First Principles of a Great

Millennial Retail Strategy Misplaced

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 merchan-dise pricing structure. Specifically, in introducing his revolutionary change, Johnson neglected to first understand what his target customer wanted, to test his strategy before actually implement-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.

From January 25-26, 2012, JCPenney announced its plans to become “America’s favorite store”. 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 Ex-CEO Ron Johnson Made JCPenney Even Worse”, and MSN Mon-ey’s “Ron Johnson's 5 biggest mistakes at J.C. Penney”, were not forgiving in assessing his brief stint at JCPenney. But post Johnson’s departure, JCPenney’s financial predicament continues to deterio-rate: 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 turn-around strategy for JCP amounts to a grand undoing of the damage 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”, in my view, is not an ac-curate 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, JCPen-ney may have been more successful at becoming “America’s favor-ite 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 princi-ples 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 profil-ing of this consumer, an analysis of the private label strategy and current retail industry trends, and a reexamination of some of John-son’s more promising strategies.

“[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.”

-David Cush, Virgin America CEO

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Anne Chen

Parsons the New School for Design

YMA FSF Scholarshipo Case Study: Embrace by JCP

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Table of Contents

Introduction i

The Millennials: The “First Truly Digital” Generation 1

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

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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 cross-

generational 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 e-

commerce 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 well-

developed 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 business-

casual 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

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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

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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 well-

crafted 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

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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 fashion-

focused 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. “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/its-

a-womans-social-media-world/>.

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Appendix P

Photos Taken on 11/14/2013

Macy’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 Brand’s Persona

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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-Influence-Factor_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-Influence-Factor_062712.pdf>.

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Appendix U

embrace by JCP logo design

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Appendix V

JCPenney SWOT Analysis

Strengths

• widely distributed real estate

• vertical integration

• familiarity with private label

management

• legacy

• supplier/manufacturer relationships

Weaknesses

• constant leadership changes

• losing relevancy

• loss of old customers

• struggles to attract new customers

• confusing brand image

Opportunities

• Millennial consumers

• private label focus

• more ethnic customers

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

Threats

• economic trends (rising raw

material prices)

• political/social trends (human rights

issues and labor laws)

• Wal-Mart looking to focus on

apparel

• 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-to-

change.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: America’s Gen Y, Metropolitan Life Insurance Company, Mature Market

Institute, 2013, https://www.metlife.com/assets/cao/mmi/publications/Profiles/mmi-gen- y-demographic-profile.pdf. p. 1.  

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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-strategy-wrong/). 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-americas-favorite-store/). para. 5.

4. Jim Edwards and Charlie Minato, “How Ex-Ceo Ron Johnson Made J.C. Penney EvenWorse,” Business Insider, April 8, 2013 (http://www.businessinsider.com/ron-johnson-disaster-timeline-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 OnlineJournal, Nov 7., 2013 (https://www.sourcingjournalonline.com/jcp-october-sales-surge-serious-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-failed-at-branding-jcp-2013-4). para. 2.

8. Christopher Donnelly and Renato Scaff, “Who are the Millennial shoppes? And what do theyreally 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-want-retail.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 IndustryOff Guard,” Reuters, Oct. 24, 2013 (http://www.reuters.com/article/2013/10/24/ny-berglassassociates-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-of-young-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 BrandsStay Hot, Sept. 17, 2013 (http://www.howcoolbrandsstayhot.com/2013/09/17/gen-y-trends-the-end-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,” FoxBusiness, Oct. 9, 2013 (http://www.foxbusiness.com/industries/2013/10/09/jc-penney-says-saks-ceo-to-join-board/). para. 1.

21. Demographic Profile: America’s Gen Y, Metropolitan Life Insurance Company, MatureMarket Institute, 2013, https://www.metlife.com/assets/cao/mmi/publications/Profiles/mmi-gen-y-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’sFavorite Store,” Business Insider, Jan. 26, 2012 (http://www.businessinsider.com/the-6-ways-ron-johnson-plans-to-transform-jc-penney-into-americas-favorite-store-2012-1#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/millennials-consider-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-millennials- 150131). 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-great-if-the-stores-were-less-like-jcpenney/). para. 1.

30. Dale Buss, “For JCP’S Ron Johnson, Joe Fresh Looks Like a Rescue by CanadianMounties,”BrandChannel, March 18, 2013 (http://www.brandchannel.com/home/post/2013/03/18/JC-Penny-Joe-Fresh-Rescue- 031813.aspx). para. 2.

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

32. Ron Johnson, Annual Report, JCPenney Company, 2012http://www.jcpmediaroom.com/assets/annual-report/JC_Penney-AR2011-letter.pdf. para. 8

33. 2012 Form 10-K, JCPenney Companyhttp://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-2013-2013- 07-31). 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-are-paying-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,” HarvardBusiness 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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