As experiential marketers, EWI follows retail trends closely, as they unquestionably color the canvas upon which we work. This week’s blog is the second in a series examining the changes we see shaping the future of retail. Today, we’ll discuss two characteristics we see as essential for survival in retail’s new normal — speed and flexibility.
Last week we looked at a few businesses that have thrived in the face of COVID. This week we’ll take a look at another retailer — JCPenney’s — who’s failure to evolve only exacerbated the effects of the pandemic.
Now, to be sure, JCPenney’s business has been floundering for years. This CNN article provides a good timeline of recent events, but we’ll offer a quick synopsis here: With sales flagging, Penney famously appointed Apple retail chief Ron Johnson as CEO in 2011. He completely overhauled all aspects of JCPenney to make it feel more expensive. It didn’t work. After he was ousted, two more executives attempted to right the ship — both of whom stepped down. By late 2018, the company was leaderless, closing stores left and right and had $4 billion in debt. And all of that happened BEFORE the pandemic.
When COVID-19 ramped up in early 2020, JCPenney was hit hard. By May, the company had filed for Chapter 11 bankruptcy.
JCPenney’s story is full of errors, missteps and cautionary tales (many of them driven by balance sheet business decisions that are beyond the scope of our expertise). So we’ll only focus on lessons that pertain to our industry and could impact our clients.
No time to waste
As we highlighted last week, the most successful retailers in the COVID era have ridden years-long investments in omnichannel strategies to new kinds of growth. And at least some of JCPenney’s struggles stemmed from the brand’s reluctance to embrace this emerging trend until far too late. By the time Marvin Ellison (then CEO of JCPenney) started to talk about “creating a seamless connection between ecommerce and bricks-and-mortar” in mid-2016, JCPenney was already years behind competitors. COVID was simply another nail in Penney’s coffin.
In the face of a rapidly shifting retail landscape, retailers no longer have months (or years) to wait before trying new tactics. Adhering to “the way we’ve always done things” is a recipe for disaster — as is getting caught in analysis paralysis. As experiential marketers, we’ve been involved in several projects in which client decision-makers hemmed and hawed about decisions for months, only to find that competitors had outmaneuvered them while they spent time in deliberation.
To our above point, successful retailers must be willing to take chances on new ideas. So we applaud Ron Johnson for willingness to shake things up at JCPenney. After becoming CEO in late 2011, he overhauled Penney’s logo, store design, and even price structure. Sure, his actions may have erroded trust with a loyal customer base (that he clearly didn’t understand). But in a world where far too many businesses aren’t willing to try anything new, his “bull in a china shop” approach at JCPenney was at least courageous.
In our (admittedly narrow sighted) opinion, Johnson’s biggest mistake was this: he didn’t leave any room for iteration.
Johnson reportedly conducted no testing prior to making sweeping changes, so he left little room to course correct. So he kind of painted himself into a corner.
Especially in the wake of COVID, retail needs to be willing to evolve and adapt to changing customer expectations, tastes and attitudes. Whenever possible, retailers should utilize a shoot from the hip approach, and then make adjustment on the fly. If you understand your customer, chances are you’ll be able to do 80% of retail correctly. Then, you can go back and iterate.
In today’s retail landscape, competition is fierce. Speed to market is more important than ever. And while pushing new ideas to market quickly might seem a bit daunting at first, we’ve actually found it to be quite liberating. Work fast. Implement changes. Iterate. You’ll arrive at a more successful customer experience more quickly than you will by playing it safe.