After listening to JCPenney's executive team a couple of weeks ago announce a marketing shift to emphasize item discounts in its advertising I had to wonder: Did the retailer's everyday pricing message resonate a little too well?
Penney's multi-media "fair and square" campaign had been its central message since it streamlined its pricing policy Feb. 1. The company had expected sales to falter in the short term as shoppers adjusted to the new strategy. However, the 20.1% drop in first-quarter sales was steeper than expected, executives acknowledged.
While JCP execs continue to insist they will not return to couponing and one-day sales, as of mid-May the message is now focused on highlighting month-long price breaks on specific products as well as "best price" clearance items.
"A lot of people think we're an everyday low price retailer. We're not," ceo Ron Johnson told analysts during a face-to-face meeting in New York on May 15.
I confess to a moment of whiplash there. But he continued: "We have promotions, but we don't have 590 of them. We have 12 - and they last all month, but people don't know that."
Another misconception, executives said, revolves around "best price" sales, which have been advertised as "Best Price Friday" on the second Friday of each month. Consumers mistakenly believe these are one-day sales. JCP is also sharpening its messaging there.
There was a silver lining behind the first-quarter numbers.
Among customers who shopped the store during the period, 21% actually bought something - not far off the 22% conversion rate in last year's first quarter. The average spend was $46, down 2% from the $48 average spend a year ago. And 67% of sell-throughs were at the highest ticketed price - an improvement from last year when 70% of merchandise sold at 50% off or higher.
But overall traffic was off by an unspecified number. Said coo Mike Kramer: "We did not realize how deep" the commitment to coupons ran.
Ay, there's the rub. The new Penney team has set a five-year term for turning around the operation. Will the new brands and shop-in-shops headed to JCP prove more of a lure than the coupons of old? Can JCP do holiday 2012 with month-long specials alone?
As I've written before, it's the retail story of the year. Possibly the decade.