There is something seriously wrong with JC Penney, and it is endemic to every retail marketer that thinks it can magically cut marketing expenditures (spend less) and achieve greater results (get more).
Marvin Ellison, the new CEO at JC Penney (the one who replaced Ullman, who replaced Johnson, who was preceded by Ullman) was quoted by Ad Age as saying: “We think more one-to-one marketing, leveraging digital … vs. the traditional media will save us money and give us more impressions.” Yeah, kind of like how publicity is considered free advertising.
Let’s be clear, this isn’t Procter & Gamble cutting back on its annual $10-15 billion in ad expenditures; that move actually makes sense. P&G is not abandoning traditional media to save money, it is cutting back on a lot of unnecessary creative while also increasing social and digital and mobile advertising. It will continue to spend a great deal of money on traditional and digital marketing, but in a way that makes sense for the marketplace.
No, this is a case of traditional retailers – JC Penney, Kohl’s, Macy – showing poor financial results and looking for ways to cut spending. The idea is to make more and better use of data in order to have more direct and personal communication with customers and prospective customers. And that’s all fine, except it is not. These retailers are bleeding money because their business models have not effectively adjusted to a changing world. And none of the cutbacks in traditional marketing replaced by new media advertising will change anything. These retailers – most especially JC Penney – need to understand their role in the new marketplace, adjust their business models accordingly and then assess their marketing.
I wish JC Penney’s new CMO Mary Beth West all the luck in the world as she delves into the data and tries to make an impact… she will need it. Likewise, CEO Ellison brings an exceptional skill set to the table, but he is a hardlines guy, not a softlines guy, with no real experience in apparel and accessories. So it is likely things will go they way they have gone for the past decade. But instead of printing coupons in newspapers, they will simply email them to customer inboxes. And nothing effectively changes. JC Penney is still JC Penney, the store no one understands or wants to shop at.
I hope I am wrong. I hope Ellison and West can make a change. After all, I did notice in the final episode of Mad Men that Don Draper had traded in his Sears bag for a JC Penney bag. But I am not sure if that is a good omen… or a very bad one.
