This last week, JCP CEO Ron Johnson has come under renewed scrutiny as fourth quarter 2012 numbers have come back worse than expected for investors. I think investors of JC Penney are making a huge mistake in calling for a reckoning with new CEO Johnson, I think that he has had a year to implement a new branding change, a change to 102 years of unchanged roots, a change that can really revitalize the JC Penney brand, a change that will take couple of years, much more than the than the 12 months they’ve given him. Investors are saying that many of their customers are straying because of the loss of coupons and sale events. It’s hard to tell bottom line, dollar driven investors to be patient, however I think that’s exactly what they need to be told and to do. The type of customers who are up in arms about JC Penney’s branding shift are those who are in their late 50’s to early 60’s. That’s an aging demographic to appeal to, in another 10 years this demographic will be spending marginally less than they were today, or even 10 years prior to today. The strategy is to breathe life into the aged, brittle brand by attracting a younger demographic, those who are not so coupon/ sales event driven like their parent-aged counterparts. It is painful to undergo a strategy shift, but one that is necessary if the JC Penney investors are to see the long term survival of their company.
Take a look at other companies that are in a similar situation, Kmart is the biggest of these aging brands; an aging demographic and the small baby steps to try and resuscitate it are moving too slow for the brands long term survival. Sears Holdings Corp, the owner of the dieing Kmart brand predict the same painful sharp decline if major overhauls were to take place but they seem unwilling to endure a short drop in revenue to see the longterm health improved. Of smaller brand names who have struggled to reinvent themselves is RadioShack. Aside from JCP, RadioShack has been one of the more aggressive retail joints in blazing a new strategy from that of the past. What was once known as the place to find all odds and ends electronics, they have decreased offerings of general electronics and increased their offering of mobile devices. This shift in strategy dates back to 2009 with the signing of the exclusive deal with T-Mobile. That was somewhat of a failed attempt for both RadioShack and T-Mobile, but since then RadioShack has inked deals with AT&T, Verizon and the largest of deals with Sprint. RadioShack has made an agressive strategy shift but have failed to rebrand themselves over the last 4 years, hardly a fair comparison to JCP. JCP’s trajectory, with a modern sales strategy and targeting a younger audience with a new look, is set high and if given more than just six months, as Reuters is reporting, JCP will soar far above it’s retail counterparts who have failed to launch even with the most honest of attempts.