Tag Archives: JCPenney

Don’t Be Something You’re Not

This week a woman named Federica Marchionni was eased out of her position as CEO of Lands’ End after only 19 months on the job.

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Federica Marchionni

This illustrates (fairly predictably) what can happen when a brand tries to be something it’s not.

Ultimately, brand-building success is driven by meeting customers’ needs, not by trying to teach them to want something different. And loyal customers have this peculiar habit of resisting (resenting) signs that they’re being taken for granted.

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Lands’ End 1983

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Recent Lands’ End

 

 

 

 

 

 

 

 

 

In the case of Lands’ End, since its 1963 founding by Gary Comer as a sailing supplies business, it developed a heritage as a casual sportswear business that was eventually bought by Sears (and spun off in 2014).  Mr. Comer was fond of saying “Take care of the customers, take care of the employees and profits will take care of themselves.”

But Lands’ End had recently been stumbling, so Ms. Marchionni, with a background at high-style retailers Dolce & Gabbana and Ferrari, was brought in and offered an experienced, glamorous executive who could help reshape Lands’ End “into a meaningful, global lifestyle brand”.

That’s when the trouble started.

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Marchionni and actress Kate Hudson

New lines were immediately introduced, meaning loafers were sold alongside stiletto heels. Ms. Marchionni dropped low-profitability catalog shoppers and hired prominent fashion photographers to shoot elegant catalogs at exotic locations. She insisted on working out of New York City rather than the corporate headquarters in Dodgeville, WI, and was often seen hobnobbing with celebrities.

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New Lands’ End Canvas Line

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Lands’ End shoes – traditional and new

 

 

 

 

 

 

 

 

 

 

 

 

All of this alienated not only customers but employees, who were used to casual access to top management in Dodgeville and who would be critical in execution of plans. And unfortunately sales lagged spending, creating a lot of red ink. Ultimately the board decided it was time for another change.

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Successful reposition – Old Spice

While there are success stories about brands repositioning to catch a younger/new demographic (think Old Spice or Target), this is not the first time a brand has suffered from trying to fly too close to the sun.

JCPenney famously failed recently; going farther back, the breeding ground (figuratively) of nerds, Radio Shack, tried and aggressively failed to get more hip by calling itself ‘The Shack’. And even staid Dolly Madison snack cakes invented a character called the ‘Snackin’ Dude with a Snackin’ attitude’ to try to become somewhat more hip. Another whiff.

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Radio Shack unsuccessful reposition

Back to Lands’ End, the acting CEO (COO James Gooch) spends all of his non-traveling time in Dodgeville and is odds-on favorite for the permanent role.

We’ll see how the company and customers respond to an expected return to tradition. On the other hand, Mr. Gooch was recently CEO of the S.S. Radio Shack. Hmm…

Conclusion #1- – ignore loyal customers at your own peril.

Conclusion #2 – – just because a brand isn’t hip, doesn’t mean it isn’t great

Top 10 2013 Mostly Accidental Marketing Lessons

This is the time of year where instead of being productive, people put together lists.
So here’s my look back at 10 events in 2013 that provided (purposely or not) great learning.

2013  Lesson 1:  Measure Twice, Cut Once.  Make that: Measure three times.
Healthcare.gov rollout
(honorable mention for Chicagoans:  Ventra public transit card rollout).
– So many lessons here.  It’s the lesson that keeps on giving.  Reminder: even if your brand isn’t one-sixth of the national economy you probably still want to test a new e-commerce site.  Test, test and then test again.

jon_stewart_obamacare

2013 Lesson 2: A brand CAN do a 180 in a Single Day 
Miley Cyrus
– And in this case it took about 5 minutes.  The recipe: take one tweens’ idol named Hannah Montana.  Remove most clothes, liberally add makeup, a big foam finger and nationally televised awards show; mix aggressively using the body and add a large dash of idiot grin.  Voila!  You’ve now transformed from Hannah Montana into what looks like the love child of Gene Simmons and Dita Von Teese, without the charm.
The winner:  probably Miley and her handlers, but hard to know yet.  The clear losers: Millions of formerly innocent Hannah fans.  Also, the general cultural level in the US.
So yes, it is possible to completely change your brand’s image in a day.  But it might involve twerking.

Hannah to Miley

2013 Lesson 3: There is such a thing as too much transparency
Lululemon
– Due to quality control snafus, Lululemon’s yoga pants delivered a little more than was supposed to meet the eye.  The media, always a model of sober restraint when it comes to high-minded topics like see-through clothing, did its best to spin this story as salaciously as possible.  Ultimately it went viral, resulting in loss of gobs of market value, as well as Lulu’s top management. At least they kept their sense of humor about it. (actually, there is a real lesson here: at the end of the day it’s about the product – and you can never take your eye off the ball).

Lululemon Store Window

2013 Lesson 4:  The early bird still catches the worm – – if he tweets about it.
Oreo cookies
– We now live in an era that enables, and requires, real-time marketing.  As has been reviewed ad nauseam (guilty!), Oreo slam-dunked it with a timely tweet during the Super Bowl blackout.  Meanwhile, given the opportunity of Marco Rubio’s magic cotton-mouth TV moment, the Poland Spring ad team not only didn’t stick the dive, they missed the pool entirely.

oreo-super-bowl-tweetMarco Rubio drink

2013 Lesson 5:  When life gives you lemons, make lemonade.  When your meatball supplier tries to slip you some horsemeat, clean house IMMEDIATELY.
IKEA
– When IKEA learned that some of its famous meatballs (150 million annually!) might contain traces of horsemeat, it immediately got rid of all meatballs in inventory, whether suspect or not.  Cost of write-off?  Probably pretty high.  Benefit to reputation by immediately taking action?  Priceless.  Sales of meatballs since then?  UP.

IKEA meatballs

2013 Lesson 6:  Hint: ‘Fail Fast’ is really just a euphemism for Test and Learn.  It doesn’t mean your goal is actually to fail fast.
JC Penney
– Here is a retailer that tried to do a 180 without twerking.  Or more importantly, without considering that its customers preferred periodic discounts.  Boom.
Easier to adapt to customer preferences than to try to force them to adapt to you.

jcpenneymadnessJCP quarterly

2013 Lesson 7:  There is No Such Thing as Bad PR (at least for Jeff Bezos)
Amazon
– Amazon’s eerie delivery drones cleverly debuted on ’60 Minutes’ the day before Cyber Monday.  Never mind that if you give it about 5 seconds’ thought, the barriers are significant (snow? wind? power lines? privacy issues? teen boys with slingshots?) – what it really shows is that in addition to any product you can think of, Amazon’s mission apparently also includes delivering PR to all homes.

Amazon drone

2013 Lesson 8:  If you go for the ‘wink-wink, joke’s on me’ approach, and people don’t get it, then ‘wink-wink, the joke’s on you’.
Honda/Michael Bolton Holiday campaign
– If you didn’t see them, these spots feature the man of the strained tenor and shorn mullet singing soulful holiday-esque tunes from atop a Honda, next to a Honda, in a Honda showroom, behind a piano, behind a guitar, all to the indecipherable reactions of surprised, baffled, younger presumed car shoppers.  It’s difficult to tell what the point is.  The obvious assumption is that this is a quid pro quo: the 60-year old Bolton (perfect for a younger target!) has a new album that needs promoting (true) and Honda needs some breakthrough quality in the holiday car ad environment that generally features obnoxiously gift-wrapped luxury cars (true again).
But what’s Bolton doing up there on that car?  Apparently, according to Adweek, this campaign is ‘poking fun at itself with melodramatic guitar solos and idiotic lyrical gems like “This special time of year, it’s filled with joy and cheer, for me and you and you and you, too’.”  Well, I know something about misplaced melodrama and idiot lyrics and I didn’t catch it.  If there’s a wink in there somewhere, it’s subtle enough as to be invisible.
So we’re left with a spot with bland cars, being promoted by bland music – – a perfect match, but I suspect probably not what they were going for.
The American public as a rule doesn’t respond well to ‘subtle.’   Witness, if you will, Ron Burgundy for Dodge – – a more effective celebrity hookup.

Bolton on car

2013 Lesson 9:  When in Rome, do as the Romans do.  When trying to break into Southern California, and your name contains the word ‘Fresh’, don’t pre-wrap the fruits and vegetables.
Tesco Fresh & Easy
– This one already has a coda. Big UK retailer Tesco created its Fresh & Easy chain in late 2007 to penetrate the Western US market with a fresh new smaller format store, famously after significant consumer research.  The experiment failed when consumers didn’t respond well to new formats, new food presentation, and in some cases, truly foreign concepts.  Ultimately F&E was sold to Yucaipa, which has added “competitive pricing, improved hours, fresher foods and assisted checkout” according to management.  Everything, it appears, has been changed except the name.
– The obvious lesson – – listen to your customers (see Lesson 6).

fresh and easy vegetables

2013 Lesson 10:  You can say Social Media and B2B Marketing in the same sentence
Maersk Shipping
– Maybe it’s the exotic locations where its ships are shown.  Or maybe it’s just the fact that deep down we’re all little kids and are awed by really cool big boats.  Whatever the appeal, big freight shipper Maersk found a way to go from zero to one million+ in Facebook likes in about a year (good Forbes article here).  Of course, no one places container orders on a Facebook page, but for very little cost (repurposing archival company photos) this enhances the Maersk brand, distances it a bit from its competitors, and likely provides meaningful recruiting and morale benefits.

Maersk Facebook

Probably the big lesson for 2013 has been that while many old conventions are being challenged (e.g. static campaigns, role of social media), the key marketing fundamentals are still alive and well:  understanding your customers and their needs is the surest way to success (or at least avoiding being in next year’s write-up).

Happy New Year.

JCPenney, Fresh and Easy, Webvan: “Did someone remember to tell the customer how brilliant we are”?

OK, that headline is a bit harsh.  But so is the world of retailing – – no matter how high-concept and inspired a new retailing idea is, if it doesn’t integrate the core consumer in the development process, there could be trouble.  We will respectfully dance on a few graves and illustrate with 3 cases.

BordersQuote

Case 1:  JCPenney.  By now we all know that Ron Johnson flew a bit too close to the sun, banking on his reputation and the obvious hubris gained during his successful run at Apple.  He applied the Apple Store model (where the stars were ultimately the products) to JCPenney, with an immediate switch to an everyday pricing approach (since reversed), and store remodels including branded mini-boutiques.  All, famously, without testing.  The result:  a disastrous $4 billion sales slide, imploding stock price, his ouster and most recently JCP looking to the capital markets to secure another $1 billion in operating cash.  Ouch.

30-OFF-COUPON-CODE-JCPENNEY-CLEARANCEJCPenney - WSJ

—> Diagnosis: Less brilliant, more tone-deaf.  The plan counted on consumers to see things Ron’s way:  “Hey! JCP now offers reliable low pricing all the time, so you can trust us!”  The catch:  consumers apparently liked the way they already shopped – -they were used to buying on deal, and there was not much merchandise at JCP that couldn’t be bought elsewhere.  And elsewhere is apparently where consumers went.

Case 2: Tesco’s Fresh & Easy Neighborhood Markets.  British supermarket giant Tesco announced it will shutter and take a $1.5 billion write-down on its F&E chain, after cumulative losses exceeding $1 billion and 5 years after noisily entering the California market. Fresh & Easy, which famously touted its in-depth consumer research, opened smaller format (10,000 sq. ft) stores and promised “convenience, fresh produce and tasty prepared foods”  (LA Times).

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FreshEasy PB&Pickle

—>Diagnosis: They didn’t walk the talk.  Rather than truly adapting to Americans’ shopping habits, Tesco essentially imported its own model and assumed that customers would do the adapting.  A few examples of British norms that didn’t make it here: pre-wrapped produce (heavy on the watercress!) and pre-packaged sandwiches (but no fresh deli), fewer familiar branded products in favor of higher-priced private label, and a policy against couponing.

According to respected researcher The Hartman Group“We believed then, and said it repeatedly in the following years, that Tesco had an innate desire — an arrogance if you will — to do things their way rather than make adjustments that catered to the needs and expectations of American shoppers. Despite Tesco’s vaunted success in the European marketplace, the resulting retail experience in Fresh & Easy was artificial, sterile and increasingly without a relevant proposition.” (bold added)

Case 3:  Webvan.  The mother of all examples of misjudging the consumer.  Founded in the late 1990s by Louis Borders (of bookstore fame), Webvan was an online grocery retailer offering delivery within a 30-minute window.  Funded by Silicon Valley venture capital, Webvan hired away the president of Andersen Consulting (now Accenture) and was heavily capitalized ($1 billion for warehouse infrastructure, plus vans, computers, etc.)  By 2001 Webvan was bankrupt (although subsequently bought by Amazon, where it exists in a much smaller form).

webvan truck webvan stock price

—> Diagnosis: Webvan management and investors incorrectly assumed that consumers would immediately adapt to their genius.  Grocery buying is very personal, an ingrained habit, and expecting large numbers of people to abruptly abandon what they’ve been doing for years was naive at best. In the heady days of the dot-com bubble #1, funding was fast, and it was big (Borders himself said “It’s $10 billion or zero“.  He was right).  So the inclination was go big or go home, leading to huge advance spending, astronomical traffic expectations, and a spectacular flameout when consumers didn’t sign up as the financial pro formas had assumed.  By one estimation, Webvan would have had to sign up two-thirds of the tech-savvy households in the San Francisco area.  This is probably one of the best examples of misjudging (or conveniently ignoring) consumer input, breathing one’s own exhaust, as well as the adage ‘Easy come, easy go’.  A short, fun post-mortem can be found here.