J.C. Penney Company is a U.S.-based firm, which sells goods and services to customers through its department stores. Family-friendly clothing and shoes, cosmetics, exquisite and fashionable jewelry, aesthetic items, and furniture are all sold herein. James Cash Penney established the business, which has its corporate headquarters in Plano, Texas, in April 1902 (Sestak, 2021). According to J.C. Penney Company Inc.’s Altman Z Score, this business is more likely to declare bankruptcy (Sestak, 2021). The diagram below (see Figure 1), shows the revenue growth from 2009-2020.
From the above diagram (see Figure 1), the firm’s sales growth declined from 7.92 to 29.68 as of the financial quarter October 31st, 2020, compared to the period ending August 1st, 2009. The biggest quarterly sales increase for the business from 2009 to 2020 was 8.41 (see Figure 2). The year with the lowest sales increase for the company was 53.19. For each period between 2009 and 2020, the company’s median sales increase was 6.63. The sales increase for the firm over the leading twelve months was -$135.00, when compared to its competitors in the Clothing Stores industry sector for the period ending September 30th, 2020 (see Figure 2). The corporation’s operating profit during the quarter that ended October 31st, 2020, was 29.68. The company saw median sales growth of 6.63 between August 1 and October 31, 2020, which was lower than the industry average of 2.05 (see Figure 2).
Recommendations for Improvement: Strategies for Achieving a Sustainable Competitive Advantage
To counteract competition from other companies in the Department Stores business sector, the Firm should also develop into an off-price store. For instance, J.C. Penney should introduce a new off-price brand, similar to what Macy’s did with Backstage, instead of copying megastores and fast-fashion retailers (Sun, 2020; Weissman, 2020). The company extended Backstage to an additional 50 locations during the year, as per Macy’s CFO Paula Price, who also noted those stores open for more than 18 months, actually performed well, up about 4-6, and have strengthened both revenue and turn (as cited in Sun, 2020). Off-price businesses like Macy’s Backstage outperformed regular retailers because they purchase goods at liquidation costs, discount them to prices below Amazon, and quickly switch out their merchandise to entice customers looking for bargain clothes (Sun, 2020). J.C. Penney, like Macy’s, has the size and surplus inventory to develop into an off-price shop. Its short-term revenues may suffer as a result of that strategy change, but it may also provide opportunities for more competitive growth in terms of profitability and financial stability.
Pricing Strategy Implementation Plan
In order for off- price retailing business model to work, the following key success steps need to be present in the plan.
|Task No.||Task Description||Task Owner||Dependency||Resources Needed||Task Status||Cost||Start Date||Estimated Completion||Finish Date|
|1.1||Identify the issues to address in pricing strategy||Strategy Director||Director and Facilitator||Readiness assessment||In Progress||$1,000||8/28/2022||1 day||8/29/2022|
|2.1||Assign an implementation manager||CEO||Task owner||Staff, employee data||In Progress||N/A||8/29/2022||2 weeks||9/14/2022|
|2.1.2||Exploring the market segments||Strategy Director||Task owner||Demographic data, list of customers||Unassigned||N/A||9/15/2022||2 days||9/17/2022|
|2.1.3||Engage an external pricing consultant.||Strategy Director||External consultant||Kissmetrics.||Unassigned||N/A||9/18/2022||3 days||9/21/2022|
|3.1||Generating pricing options||Strategy Director||Director||Binomial Pricing Model software||Unassigned||$1,000||9/22/2022||3 days||9/25/2022|
|3.1.1||Analyzing costs, cost attributions and unit margins||Strategy Director||Accountant||Cost analyzer||Unassigned||$1,000||9/25/2022||6 days||9/31/2022|
|4||New Price Advertisement-Closing Phase|
|4.1.||Complete review of the pricing strategy||Strategy Director||Finance department||review records, pricing records||Unassigned||N/A||10/8/2022||1 month||11/8/2022|
|4.1.1||Providing a brief: The advertiser must provide a brief on the good or service that must be marketed while also doing a SWOT analysis of the business and the item.||Strategy Director||Finance department||review records, pricing records||Unassigned||N/A||11/9/2022||1 month||12/9/2022|
|4.1.2||Media Selection: After determining the target market, it is time to choose the best media for advertising in order to effectively reach those consumers who are interested in learning more about the product and are prepared to make a purchase.||Media Director||CEO||Media briefs||Unassigned||N/A||12/9/2022||1 month||1/9/2023|
|4.1.3||Designing and Creating the Ad: The firm’s copywriters first sketch out the layout of the advertisement on canvas, and then the art directors and creative staff of the agency work together to actually create the advertisement.||Firm’s copywriter||Art director/staff||Canvas||Unassigned||$500||1//10/2022||1 month||2/10/2023|
|4.1.4||Execution: At last, the advertisement is made public with flawless conception, faultless positioning, and impeccable timing in the market.||Strategy director||CEO/Media personalities||Ads, canvas, videos, audios||Unassigned||$2000||3/12/2023||6 months||9/12/2023|
|5||New Change in Approach in Case of Failure in 6 Months’ Time|
|5.1||Review the plans: Finding the tools and people who will guide the change and aid the process before it begins is essential for success.||Strategy director||Review committee||Review books, sales records||Unassigned||$200||9/13/2023||1 month||10/13/2023|
|5.1.1||Get customer feedback on the new prices||Sales representatives||Survey department||survey records, questionnaires||Unassigned||$500||10/14/2023||1 month||11/14/2023|
|5.1.2||Compare performances with the overall company||Market manager||Statistician||Performance records||Unassigned||N/A||12/14/2023||1 month||1/14/2024|
|5.1.3||Defining Key Performance Indicators (KPIs)||Market manager||CEO||KPIs||Unassigned||N/A||1/15/2024||1 month||2/15/2024|
|5.1.4||New Strategy Implementation: coordinating the new approach across all teams.||Strategy Director/CEO||Sales and marketing manager||Price list, product list, bonus list||Unassigned||N/A||3/17/2024||1 month||4/17/2024|
Sestak, K. (2021). Lessons from the failure of J.C. Penney’s new pricing strategy. Profit Well. Web.
Sun, L. (2020). 3 ways J.C. Penney can still reinvent itself. The Motley Fool. Web.
Weissman, C. G. (2020). How JCPenney’s e-commerce strategy ultimately faltered. ModernRetail. Web.