JC Penney "tweaks" its turnaround strategy

JC Penney, led by CEO Ron Johnson has been executing an epic transformation of the current industry model.  The key feature of the turnaround was the elimination of year-round promotion, something that is standard with North American department stores, and indicates to the customer that the original retail price is above the product's true value.  The implication for the competition is significant as many are forced to price-match, leaving large department stores (including Amazon) to essentially dictate market pricing.  Consumers have come to expect discounting and promotions on the regular - the original retail price being a suggestion only. 

With same-store sales down 25% for 2012, the CEO indicated in the earnings call with investors that they have bought back sales and coupons for their reward members.  "We worked really hard and tried many things to help the customer understand that she could shop anytime on her terms.  But we learned she prefers a sale.  At times she loves the coupon.  And always she needs a reference price." said the Johnson.   

JC Penney has some quality names behind the effort to drive traffic and sales, including Joe Fresh, Sephora, Marchesa, Jonathan Adler, Levi's, and Liz Claiborne.  Twenty-five percent of all transactions were conducted on a mobile device last week in-store (via iPod Touches carried by associates, to increase transaction speed), and the company continues to move forward with resolve.  See the WWD article here, and corporate earnings announcement here.

 Macy's, on the other hand, is coming from a place of strength, achieving 3.7 percent comp-store sales for the year, adding another $1billion to the top line.  Macy's current omni-channel initiative, allowing for delivery of goods ordered online to come directly from stores (instead of a separate warehouse), has allowed for and increase of almost 50% for the year online.