strategic plan presentation
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Strategic Plan Presentation. Group Research PowerPoint Project By : Michelle Captain, Michelle Nash, Renee Narzako , Phillip Baade, Delphine Lim. Content. Introduction: Issues Affecting JC Penny. Organization. Marketing. Competitors I n Retail I ndustry. Customer Connections. - PowerPoint PPT PresentationTRANSCRIPT
Strategic Plan Presentation
Group Research PowerPoint ProjectBy: Michelle Captain, Michelle Nash, Renee Narzako, Phillip Baade, Delphine Lim
Introduction: Issues Affecting JC Penny
Organization
Marketing
Customer Connections
Content
Competitors In Retail Industry
In 2013 J.C. Penney was ranked 215th on the Fortune 500 list
It has been a successful department store in years past
Recently, the retail giant has experienced a drastic drop in revenue and sales
This is due to a consecutive decrease in profits/revenue and its foreseeable future is now uncertain
For this presentation, we will look at why these problems arose and ways J.C. Penny can stop this downward spiral.
Introduction
History
“My name is James Cash
Penny and I was born in Sep 16,
1875 in Hamilton Missouri”
“I was born into a poor farming family & had eleven other siblings”
“I was taught at a young age to value the family's Golden Rule: Honor, Education, Self Discipline, & Self Reliance.”
“This Golden Rule would be the basis of my future endeavors.”
In 1898, Penney moved to Colorado and began working for Thomas Callahan and Guy Johnson who owned several dry goods stores called the Golden Rule
Four years later he was approached by the two men and offered a partnership
A year after opening his new store, Penney was successfully managing a total of three stores
Later in 1900’s, Penney bought Callahan and Johnson shares of the Golden Rule chain
Golden Rule
In 1913, Penney changed the Golden Rule franchise name to J. C. Penney Co.
By then, he owned a total of thirty-four stores
Annual sales exceeded $2 million Penney’s embraces “Honor,
Confidence, Service, and Cooperation” and decides to make it the company motto
This motto is still in place today
JCPENNYThe Beginning
Current situationSales and revenue
have steadily declined and hit an
all time low
Stock prices are plummeting
The reasons for the decline started five
years ago due to the recession and mismanagement
The retail giant is trying to keep up
appearances while rumors swirl on Wall Street of bankruptcy
J.C. Penney has dropped 62 places
from last years stand point on the
Forbes 500 list
Ron Johnson,Operation Vice
President of Apple, joined J.C.
Penny as CEOin Nov. 2011
He was brought in to bring J.C.
Penny out of its perpetual slump
His business strategies were
deemed as thinking out side of the preverbal
box
His goal was to revamp the aging
company and attract new customers
With new pricing and
promotional strategies
It is called the “Fair & Square Pricing” strategy
Which led to……
Within the 16 month stay at J.C. Penney, Ron Johnson: Bypassed market research and put a new pricing
strategy into place Took away all coupons and promotions stating that
coupons were comparable to drugs and customers needed to be weaned off of them
His statement enraged and alienated loyal customers The new changes confused existing and new
customers Insulted customers by stating that they need to be
educated on how the new pricing strategy worked Johnson executed one of the most aggressive and
unsuccessful tenures in retail history He was fired on April 8, 2013
THE MOST spectacular Retail
Failure In Our Generation
Organization• Over the past couple of years, J.C. Penney
went through major transformation under the leadership of Ron Johnson
• Objective was for J.C. Penney to become America’s favorite store which involve changing all aspects of the store, including upper management structure and employment changes.
• The long-term transformation process presented many unforeseeable risks• Declining employee morale• Inadequate management structure
• Beginning in April 2012, massive job cuts occurred.• J.C. Penney cut approximately 600 jobs at its headquarters and just three
months later, the company cut approximately 350 more jobs at its headquarter location (Smith, 2013, para. 4).
• Ron Johnson, CEO and Chairman, of J.C. Penney stated that the job cuts were necessary to move forward. Johnson stated:• “Often in business, companies must streamline in order to leap forward . . . In
our case, this has involved some very difficult decisions that have had an impact on many of our associates, but these changes are essential to help us achieve our long-term goals and, ultimately, grow our associate base as we grow our business. (as cited in Moin, 2012, para. 4)
Employee Morale
• In addition to the massive job cuts, most employees hold entry-level, part-time jobs, thus not receiving sick time, vacation time, insurance benefits, or bonuses.
• Additionally, the first year of the transformation process led unexpectedly lower revenue.
• Ultimately, this meant employee morale was affected even more because the ability to give bonuses, raises, an or incentive compensation opportunities were decreased.
Employee Morale
• Reducing company costs was a major goal of the transformation process.• e.g., massive job cuts employees faced
• Job cuts also took place in the upper management structure of J.C. Penney.• The significant reduction resulted in the company operating with
fewer individuals and increased job responsibilities (J.C. Penney Annual Form 10-K Filing, 2013, p. 8).
Inadequate management
• The upper management restructuring resulted in J.C. Penney having a decentralized management structure, which ultimately has potential risks for all levels of the company.
• The decentralized management structure, “distributes significant control and decision-making powers among our senior management team and other key employees, some of whom are located in satellite offices” (J.C. Penney Annual Form 10-K Filing, 2013, p. 8).
• As a result, communication, morale, management cohesiveness, and effective decision-making are negatively affected.
Inadequate management
Solutions• To increase employee morale:
make sure employees on all levels are aware of the company’s long-term goals for transformation and success.
Provide to employees all information that does not violate legal restrictions.
• This way, employees would be more likely to have the mindset to jump on board and be a team member with the company’s transformation process.
Solutions• Focus on hiring talents that will ensure
long-term success for the transformation. Talents in management, sales,
marketing sourcing, and human resources
• Make sure that employees know that the long-term goal is for company growth, meaning more jobs will be needed once growth begins to occur.
Solutions• Shift away from the decentralized
management structure to: Remove communication barriers Improve decision-making Increase employee morale
• Look at the management methods used by their competitors to compare management structures. Macy’s is ranked 109 (previously 110) on
the 2013 Fortune 500 List Kohl’s is ranked 148 (previously 146) on
the 2013 Fortune 500 List J.C. Penney’s is ranked 215 (previously
153) on the 2013 Fortune 500 List
marketing Ron Johnson failed to understand the
customer’s needs and he believed J.C. Penny needed to update its image by:
• Selling higher priced items• Selling more brand name
merchandise• Totally making over some of the
store’s departments
marketing Ron Johnson adopted the wrong
marketing strategies which became a total disaster
• Totally eliminating sales coupons and sales circulars
• Adopting a 40% off “all the time” pricing policy
• Eliminating special sales events• Pursuing a younger sales
demographic • Eliminated popular store brands• Implementing strategy quickly
Marketing Debacle Johnson’s plan left behind J.C. Penney’s core
customer base• Customers miss coupons and sales• Customers miss the brands that were
eliminated Younger customers never bought into the new
concepts Redesigned departments left customers feeling
alienated from the sales experience Sales dropped by over 60 to 70% Stock price fell to almost “junk status” J.C. Penney is teetering on bankruptcy No sales clerks to help with shopping experience J.C. Penney’s online sales system was basically
ignored
Solutions• Bring back sales coupons and special sales
events• Bring back popular store brands• Bring back sales clerks• Remodel some store departments• Shore up home goods and furniture
departments• Reemphasize center store cosmetic counter• Invest in commercial advertising• Commit to stronger online presence and
inventories
Department stores overall have had a tough time amid stiff competition from specialty and online retailers.
The closest competition of J.C. Penney have all had sales growth for 2013, yet J.C. Penney has had a significant decrease.• 2013 - a 24.77% decrease
CompetitorsIn the retail industry
Competitors 2.53% Growth in Sales/Revenue for
2013 Special Buying Incentives:
• Kohl’s cash which gives customers reason to return and spend more money• Large discounts of up to 30% can be
used in conjunction with sale prices and Kohl’s cash
Display Sale Prices – on everyday prices
Competitors 4.92% Growth in Sales/Revenue for
2013
Advertise like no other
Brand’s product and advertisements are aesthetically pleasing
Focus on creating fun and intuitive shopping experience that considers customers
Competitors 4.97% Growth in Sales/Revenue for
2013
Convenience of in-stock merchandise
They have massive buying power
Try to cut costs out of operations such as distribution centers, home office, fleet, etc.
Competitors4.85% Growth in Sales/Revenue for 2013
Fierce competitor – especially during holidays with exciting merchandise and promotions
Always looking for ways to surprise and delight the consumer - newness and quality
Logistics and Operations - constant push to improve, raise the bar, challenge assumptions, and deliver value to stores, consumers and shareholders
Competitors22% Growth in Sales/Revenue for 2013
Innovative and lots of selection
Platform for sellers from all over the world, therefore prices are competitive
Offer promotions like 2-day free shipping during festive season e.g. Christmas
Solutions• Stand out among their customers
Work with suppliers to develop
exclusive product for J.C. Penny only
Loyalty Points
Price match
Improve e-commerce site and allow more suppliers from all over the world to participate
Customer Connections
How did J.C. Penny lose touch with
our customers?
Took away their most popular cheap and good quality home brand. E.g.
St John's Bay Gloria Vanderbilt in attempted to
upscale the retailer by bringing in well-known
brands like Martha Steward Living and dedicating floor
space to boutique like Levi’s and Liz Claiborne
Customers feel alienated
and never come back
Stop listening to what our
customers want
Took away sales and coupons
Customer Connections
How did J.C. Penny lose touch with
their customers?
J.C. Penny ex CEO, Ron Johnson, arrogantly
commented that “customers needed to be educated as to how the pricing strategy work”
when shoppers were not reacting positively to the
no more coupon marketing strategy
Insensitive to customers Johnson also compared
their customer’s usage of coupons to addictive
drugs which insulted their most loyal
customers that used coupons for many
years.
Solutions• Public campaigns to gain trust and build
loyalty among customers and investors Help customers and investors
understand J.C. Penny’s future plans
Efficient communication with customers and investors
Consider writing a sincere publication to tell their customers that we have changed and are here to listen to them.
Solutions• Engage with our customers
Using social media like Facebook,
twitter, and Instagram to:• Show appreciation• Create Facebook or Instagram
Contest• Update customers on deals and
promotion Have surveys to find out how we can
improve to please our customersBring back the coupons and brands
that customers like
References
J.C. Penney Company, Inc. (2013). Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for fiscal
year ended February 2, 2013. Retrieved from http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-sec
Moin, D. (2012). Penney’s cuts 900 jobs. WWD, 203.71, n. pag. http://
go.galegroup.com/ps/i.do?id=GALE%7CA286522386&v=2.1&u=lom_lansingcc&it=r&p=ITOF&sw=w&asid=f3d1149c916d2
6b7a3cc2fd7f69871ee
Smith, K. (2013). US: JC Penney coy on potential job losses. Just-style.com. n. pag. http://
go.galegroup.com/ps/i.do?id=GALE%7CA317973981&v=2.1&u=lom_lansingcc&it=r&p=ITOF&sw=w&asid=0ecd9b862f84c7
a36b3db8baef5d3ba5
"Business & Money." Business Money The 5 Big Mistakes That Led to Ron Johnsons Ouster at JC Penney Comments. N.p., n.d. Web.
10 Nov. 2013. Retrieved from
http://business.time.com/2013/04/09/the-5-big-mistakes-that-led-to-ron-johnsons-ouster-at-jc-penney/
References
"Fired - Google Search." Fired - Google Search. N.p., n.d. Web. 10 Nov. 2013.
"J. C. PENNEY COMPANY, INC. PROVIDES UPDATE ON PROGRESS OF TURNAROUND." MarketWatch. N.p.,
n.d. Web. 10 Nov. 2013. Retrieved from https://www.google.com/search?q=fired
"JCPenney's Senior Management Team Knows There's Only One Way Out Of This Mess." Business Insider. N.p., n.d.
Web. 10 Nov. 2013. Retrieved from http://www.businessinsider.com/jcpenney-must-regain-consumers-trust-2013-3