Embattled retailer J.C. Penney Company, Inc. (NYSE:JCP) has received a fair amount of media coverage for its recent TV ad. In the spot, the company apologizes for the radical changes over the last year, and asks its (now former) customers to come back to the store.
The ad closes with a shot of the company’s logo along with the statement that the company is “listening” on Facebook Inc (NASDAQ:FB).
There are a lot of overweight people in America, and they need clothes too
One factor that has received little coverage was former CEO Ron Johnson’s stance on plus-size clothing. Based on the responses the company has received on Facebook Inc (NASDAQ:FB), Johnson evidently did away with much of it:
Pamela Rhiannon Boggan writes:
“I used to love the fact that I was a size 16 and could still buy up to date clothing….I have shopped at JCP for over 12 years and I will NEVER set foot inside a store again. How utterly disappointing….you went all Junior on us. Some of us over 40 that aren’t 100 pounds”
Liz Hersom
writes:
“My opinion would be to remember that not all your customers are 5’8 and weigh 115lbs. I always have loved JCP but recently don’t bother to go on line or in the store because I am 5′ and 150. Sorry but your normal person is not skinny or as skinny as your adds make them out to be. Take a look around. I love to be fashionable but buying items in your store is frustrating at best.”
Arica Palmer
writes:
“What happened to the plus size section? You used to have one of the best selections for plus size.”
It’s an undeniable fact that obesity rates in America have been increasing in recent years. With more overweight people, plus-size clothing should naturally be in higher demand, particularly among J.C. Penney Company, Inc. (NYSE:JCP)’s traditionally core customer.
Teen retailer Abercrombie & Fitch Co. (NYSE:ANF) has drawn some criticism for refusing to offer its women’s clothing in plus sizes. That strategy is intentional, as CEO Mike Jeffries aims to keep the brand exclusive.
In contrast, as a large department store, J.C. Penney Company, Inc. (NYSE:JCP) needs to target a wide range of consumers. Excluding the overweight — a quite literally growing portion of the population — seems like a recipe for disaster.
Of course, even Facebook Inc (NASDAQ:FB) could run into challenges if it doesn’t reconsider its strategy. It isn’t just American adults — obesity rates are increasing among American teenagers as well. As Business Insider notes, rival teen retailer H&M has been going after that market, with its new bathing suit advertising campaign featuring a plus-size model.
Even in 2013, some shoppers still want catalogs
Doug McIntyre, in a bearish piece on J.C. Penney, cites competition from Amazon.com, Inc. (NASDAQ:AMZN) as a possible reason for the retailer’s recent struggles.
Frankly, if the responses J.C. Penney Company, Inc. (NYSE:JCP) has gotten on Facebook are any indication, that line of thinking is utterly absurd. Forget online shopping — many of J.C. Penney Company, Inc. (NYSE:JCP)’s customers still want to buy from catalogs!
Nancy Guest
writes:
“Do you know the number of people you lost because of not having a catalogue. Not all people have a computer to order from and some just don’t like using a computer to order something. Not all people are comfortable putting their credit cards out there. Poor decision on your part. You have lost a bunch of sales.”
Karen Sue Barrow Howard writes:
“I use to order alot of our clothes from the catalog JCPenny sent out because we didn’t live near a JCPenny Store. But I haven’t bought from them since. I miss all the little home catalogs too. JCPenny has lost a lot of business by not having those catalogs sent out. Not everybody shops online. I hope that is one change they go back to.”
It’s important to note that these are the people who are still tech savvy enough to post on the company’s Facebook page — imagine those that aren’t.
When Johnson laid out his grand vision for J.C. Penney in early 2012, he noted the retailer had some of the oldest customers in the industry. If those customers aren’t going to buy in the store, they want catalogs — not online shopping.
While Amazon.com, Inc. (NASDAQ:AMZN) may have had an effect on electronic retailers, the company’s impact on the clothing market seems significantly less substantial. As Slate’s Farhad Manjoo points out, there’s an obvious problem with buying clothes online — how does one gauge the proper fit?
No doubt Amazon has been taking a more aggressive approach to selling apparel in recent years, acquiring Zappos in 2009 and launching fashion site MyHabbit in 2011.
But for now, Amazon doesn’t seem to be pushing any clothing retailers out of business — certainly not J.C. Penney.
Coupons might not be to blame
Surprisingly, not every J.C. Penney customer missed the store’s coupons. Although most commentators have seen the loss of coupons as the single biggest factor in the company’s decline, that might not be the case after all.
Janine Zaidan Timmermann
writes:
“As for the pricing, some people are just not that smart… they think they are getting a “deal” when they use a 20% off coupon… wondering if they realize the price was increased and you end up paying exactly the same?? Probably not. I loved not having to feel like I HAD to have a coupon to come into the store.”
Leellen McFarlane
writes:
“I’ve been shipping at JCP for a year now, I would go there before anywhere else. Not now. I took my 20% off coupon and I found a pair of pants I liked. They were tagged at 34.00 where the week before they would’ve been 22.00 so even with the coupon I would pay about 27.00. I was sooo angry that I left and have no plans to return. Coupons are a rip off!”
Judi Watson Frazier
writes:
“I LOVED not having to play stupid discount games!! I complained for YEARS about them. It made me angry that if my husband needed new underwear for a trip on Tuesday, I had to pay 25% more for it than it would cost next Saturday…don’t make us go back to playing games. JCP customers knew not to buy anything until there was a sale.”
When it comes to similar merchandise and aggressive discounting, Kohl’s Corporation (NYSE:KSS) is probably the company’s biggest competitor. Yet, while J.C. Penney’s stock has floundered, Kohl’s has done little better. Since the beginning of January 2012, shares of Kohl’s Corporation (NYSE:KSS)’s are down nearly 5%.
Presumably, if these J.C. Penney customers were so discouraged by the loss of coupons, then why hasn’t Kohl’s performed better? The company should have benefited from an influx of J.C. Penney customers, yet shareholders have not been rewarded.
Morgan Stanley downgraded Kohl’s shares back in March, slapping an Under-Weight rating on the retailer and a $42 price target. Part of Morgan Stanley’s reasoning was that the reintroduction of coupons by J.C. Penney would increase the competitive pressures Kohl’s was facing.
Yet, Kohl’s seems to have benefited little from J.C. Penney’s decision to ax coupons in the first place. If J.C. Penney believes restoring coupons alone will fix the company, its shareholders could be in for a rough ride.
Investing in retail
Obviously, these Facebook responses are but a sampling of the larger American clothes buying public. Yet, they demonstrate a few basic truths in retail: larger people need larger clothes, online shopping won’t kill any clothing stores any time soon, and aggressive discounting isn’t a magic bullet.
The overwhelming response J.C. Penney received from its ad should be interpreted as a positive sign that people still care; can the retailer effectively implement the necessary changes?
The article 3 Retail Takeaways from J.C. Penney’s Facebook Page originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
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