JC Penney CEO compares coupon shoppers to drug users, loses $55 million after getting rid of coupons

This story's been making the rounds since yesterday, and I just shook my head when I read it. Who couldn't have predicted this months ago? From the Huffington Post:

Ron Johnson, the new star CEO of J.C. Penney, wishes that couponing fanatics would just listen to him already and stop fussing with those little scraps of paper.

"Coupons were a drug," said the CEO on Tuesday evening at a conference with analysts. Earlier that day, J.C. Penney announced abysmal results for the first three months of this year, with sales plummeting 18.9 percent at stores open at least a year. Net losses for the period were $55 million. Executives blamed the results on the departure of deal-hunting shoppers after the company changed its pricing strategy in early February to abandon coupons.

"We did not realize how deep some of the customers were into this," noted COO Michael Kramer about couponing. "We've got to wean them off this and educate our consumers."

The article continues: "History lies on the side of coupons. Macy's once tried and failed to reduce coupons after it acquired May Department Stores in 2005, leading to consumer backlash, weak sales and a declining stock price."

Nearly every major company that has tried to get rid of coupons has felt consumer backlash. Way back in 1996, Procter & Gamble experimented with getting rid of its coupon insert entirely in three test-market areas in New York. Guess what happened -- they abandoned the project because their competitors, who still offered coupons, were taking P&G's market share... to the tune of 48% increases in sales! The Supermarket News story on P&G's no-coupons test noted that Procter & Gamble was discontinuing coupons "in an effort to prove that coupons are an expensive and wasteful promotional practice."

Guess who's still got coupons today?

When the coupons go away, so do the shoppers.

Personally, I never went into JC Penney without a coupon -- but when the coupon motivated me to take the trip to the store, I usually came home with more than the $10 worth of "free" stuff the coupon sent me in the store to get. Sears Outlet offers a coupon for one free item of clothing nearly every Tuesday, and guess what days I go to their store? Tuesdays. Yes, it's to get the free item, but do I come home with other things too? Sure!

Interestingly, Carson's ran a $10-off-$10 coupon in the Tribune on Thursday, the same day that this article hit the news. It's good today and tomorrow, 5/18 and 5/19. Guess where your competitors are shopping today, JC Penney?


JCP's new CEO (does he think we have stupid on our foreheads)

I did a review on an item I had purchased. JCP had it as a BEST BUY at $15.00. I purchased the shortie pj's two month's previously for $11.00, regular price--not on sale! The new CEO must think us regular repeat customers are idiots. We know what JCP pricing was on sooo many items. By the way, I used a $10 Reward Certificate to buy the shortie pj's on line, shipped to store for free for $1.00,plus tax, total, since their price was $ 11.00! He and his staff need to wake up and smell the coffee; 'cause we'll all be shopping elsewhere.
By the way, for many years Sears got it's profit with it's own credit card. Now it's always empty (so I hear), haven't been in a Sears store in twenty years.

Sticking with it

While I'm not surprised that they say they will stick with the new program, I'm a little surprised by this comment:

"Mr. Johnson said that a year ago, only one out of every 500 items was purchased at regular price. During the first quarter, 67% of products were purchased at the highest ticketed price.
'This is profound,' Mr. Johnson said. 'People are now buying at the first price, [the] right price. That's the dream of every retailer.'"

I kind of resent the idea that the right price is the highest price. I understand that it's right for JCP's bottom line, but it's not right for my budget.

(AdAge: http://adage.com/article/news/shaky-start-jc-penney-stands-firm-reinvention-plan/234874/)

JCP

I have actually found some cute stuff in the best price section for my daughter. Today I got a dress on best price for $11 and used a $10 JCP rewards coupon and got it for only $1.

So they do still give you coupons for the JCP rewards program.

I'll defend JCP...

I was pleased when I first heard about their overhaul. I hate Kohl's pricing strategy of pricing clothes high, and then putting everything "on sale" to make it seem like you're getting a deal. I hate Macy's coupons that have paragraphs of fine print. If I was looking to distinguish my store in this market, I probably would have gone for the "honest pricing" niche, too. I can't blame them for trying.

Unfortunately, it looks like their PR and marketing departments dropped the ball. Obviously they didn't do a good job of selling the new concept. The Ellen controversy turned into a political football instead of keeping the focus on the brand and the clothes. And blaming the customers for "just not getting it" doesn't help anyone.

JC Penney

Maybe Chase bank will hire him next. :)
He is about as arrogant as you can get. Blame the consumers for his/their failed attempt to bring in more customers? I planned on purchasing my husband's new slippers for Father's Day at J.C. Penney but will go to Dillards and pay full price instead. (He is very picky about slippers and the cheaper stores don't carry them)

Only one piece of the puzzle

The lack of coupons is only one piece of the puzzle, according to the comments I have been reading about Penney's on other websites. There is another major reason Penney's has lost sales. First they chose Ellen DeGeneres as their spokesperson. I didn't have a problem with that, although other people I know were uncomfortable with it. I felt that they hired her for her winning personality, and that her sexuality was not a factor. Then I saw a "my two mommies" Penney's ad. The two together begins to look like a "gay agenda." This has been much talked about on conservative websites. Many Christians have stopped shopping at Penney's for this reason.

Now I read this article with the CEOs comments, and he has taken the arrogant attitude that we just need to be educated by smarter people like him. Whether you realize it or not, the "gay agenda" I refer to has little to do with sexuality, and everthing to do with educating us ignorant folk who just don't know any better. It is this arrogance that offends most people. Now, as far as I'm concerned, with all these factors put together, Penney's has crossed the line. I will not be shopping there anymore.

Since I tune out comercials,

Since I tune out comercials, I haven't seen the 2Mommies ad you mentioned. Now I don't care if some one is gay, but what I do hate is that they are often times so "in your face" demanding that I accept and approve of the lifestyle. And I'm not super religious so if it affects me that way, I can understand how many Christian groups feel. Perhaps a boycott is in order. Seems like other groups threaten boycotts everytime they don't like something. Two can play that game.

Comments like this really

Comments like this really stick in my craw, and I really can't let it go unchallenged.

I don't know what kind of "lifestyle" you think we lead that is so different from your own. Every morning, my partner and I get up, have a little breakfast and then head off to work, where we spend the better part of our day. At night, when we get home, we'll have dinner, watch a little tv or maybe read, and then go to bed to do all over again the next day. A couple times a year, we may take a weekend trip somewhere to get away, even if it's just a local destination (which we can do a little more frequently now, thanks to people like Jill-THANKS JILL!). We've been doing this for 32 years. What kind of "lifestyle" does that sound like?

If you were to take an after dinner stroll through your neighborhood, holding hands with your husband, I would call that a "nice, romantic stroll down the boulevard, hand in hand with my husband" but you call it "in your face demanding that I accept and approve of the lifestyle." Again, what kind of "lifestyle" are you talking about?

The Christian groups get all up in arms for one reason, and one reason only: They need to demonize people so that they can feel self-righteous about themselves. That's really all there is to it. REAL Christians don't care.

If I were to ever meet you on the street, the LAST thing I would ever think about is who you have dancewith and how. Besides being none of my business, it's not a DEFINING characteristic about who you are. I can be sure that when you hand over your coupons to the cashier, that you're not thinking "hetero dancingwoman=has dancewith men". You may be more concerned with how efficient she is, or if she's kind, or friendly. But, by declaring that you don't care if someone is gay means you take that into consideration when dealing with gay people. It's a defining characteristic for you, but it should be the LAST thing that ever crosses your mind.

And I apologize if this came off sounding like a personal attack, I NEVER meant it to be one. I just saw an opportunity to provide some insight that you, and Jill's other readers, may not have considered. I'm sure you're very nice in person.

How Arrogant

The executive at JCP is so typical of self-righteous, arrogant elites who think the masses are uneducated and need to be enlightened by their superiors. To say coupon users need to be educated is absolutely insulting, and while I usually laugh when people whine about being dis-respected, this time it really got on my nerves. I don't make purchasing decisions regarding products based on coupons. I buy what I want and if a coupon accompanies it, all the better. This executive needs a reality check.

I seem to recall a few months ago stating something

like almost see the spider webs forming when this idiotic move was announced. Mr. Johnson, who's the uneducated one? Instead of trying to convert us 'little scraps of paper fussers' why don't you just man up and give us what we want ... that is, IF you want to keep the doors open.

Truthfully, JCP is on its way out ... been dying a long, long time. Even with their coupons, I just wasn't interested. Nor did I ever participte in the Sears free clothing Tuesdays. Too pissed off about their piece o' crap vacuum we paid big bucks for. Oh, and the fact never could find bags for it in stock. Always had to get at Target or Meijer. Go figure.

Both should quietly turn off the lights and close the doors. Party's been going on elsewhere for quite awhile.

One of the best comments I've read today...

... was over on my Facebook wall (which incidentally, I've been trying to hook up those comments to appear over here - so far, you can comment here with your Facebook account, but it's not the same comments as are on the wall..! More work to do.)

Anyway, this was a brilliant comment:

so wait, JCP was already ahead in this tough economy by not having to downsize or close store locations, had a good customer base and chose to shoot themselves in the foot by taking away coupons and raising prices? Did I hear that right?

Yep,

It is obvious the ceo does not understand JC Penney's customers, their behavior, nor the economy right now. Oh and thanks for the heads up about the Carson's coupon in the newspaper yesterday- I still haven't recycled it, so I will go ahead and pull it out and use it! :)

JC Penney

I am not surprised. I knew when they started their Friday sales, I would not step foot into this store for anything, only to Sephora for my free birthday item! I have been finding better deals elsewhere!! I am very disappointed in their language of their customers.

I agree

They seem to think that the customers will fall for anything...and the CFO from Macy's saying "they love thinking they got us". Well my dear overeducated idiot...when we(the smart consumers) walk out of a store paying basically pennies on the dollar for bags full of merchandise we must be doing something right.

I agree!

There is definitely an art to the deal, and if we play our cards well, we DO pay pennies on the dollar for bags of merchandise. We may not be the shoppers the store -wants- most (i.e., the ones that are willing to pay full price, or close to it) but we are a part of the equation too. We just know how to play the game better than most.

One of my favorite Macy's sales was last year around this time - they were doing half-off clearance, plus had a $10-off-$25 coupon in the paper. I bought six pairs of Levi's for my son for under $10 (for ALL of the jeans!) That was about $1.67 per pair.

Of course, Macy's would have rather sold those boys' Levi's for the full price of $18.98. When they went "past season" and were put on clearance for $4.97 per pair, they were already a bargain. Half-off clearance = $2.48. Plus a $10-off-$25 with other clothes in the mix? DEAL.

Did I love thinking "I got them?" You bet. I bought six pairs of Levi's for less than the regular price of one pair.

But I would not even have made the trip to Macy's that day if I hadn't had the $10-off-$25 coupon. It was THE motivator that got me in the door to do the deal. And I've had quite a few great Macy's trips similar to this -- but each involved a coupon. I can honestly say that I have never gone into Macy's to shop without a $10-off-$25 coupon in hand. No coupon? No reason to go.

Jc Penney prices

I found the cutest purse at penneys last weekend and decided to pass on it because it was $35...if I had a coupon or they were having a sale, I would have bought it and looked around at the clothes. My mom also passed up a purse at penneys and bought a more expensive one on sale at Sears. And, I don't get the 'sales' JCP is promoting...which Fridays are sale Fridays, what colors are on sale...it makes no sense.

Fridays

The Friday thing is supposed to be the first and third Fridays of the month = when they put things on clearance/best prices.

As soon as they announced that, I thought, well, everyone's going to know exactly which days it's not worth going to Penney's, and the two days it might be worth going.

Ya know, Jill-I sometimes wonder...

What all of those BUSINESS DEGREES on the walls of these CFO's means, anyway. You, I and a whole-lot of your followers could have WAY predicted this the day that they rolled this whole thing OUT!!!! Not to mention, did they NOT look at the historical data from the other stores that tried the same strategy??? I'm thinking they would have been better-off ASKING their customers about their buying habits and how they felt about this before shelling out all of the money they did to promote their new approach, only to fall FLAT on their faces less than 6 months later. Sheeeeshhhhhh!

I agree

I think the people in charge are so far removed from how much regular people spend and shop. It's probably been a long time since the CEO had to use a coupon on anything.

I read somewhere that this CEO used to work for Apple - a company who truly has the market cornered on their devices and never needs to offer a coupon or have a sale at Apple Store locations. They are a brand who has created their own niche (and done it well) and people will buy their products anyway because they like their brand, they like the products, and they have few direct competitors doing what they do as well as they do.

But JC Penney is not Apple. And shoppers can buy clothes anywhere. And when all of your competitors are still offering coupons, Kohl's Cash, "Spend $35, save $10 instantly" and other incentives to shop... where will the shoppers go? Unfortunately for JCP, they aren't in a situation where what THEY sell is that much different or better than what their competitors sell.

The comments under the article are very interesting too. I liked this one:

"Michaels spends about $140 million a year inserting coupons sheets in local newspapers, spending nothing on television. The customer opens her newspaper and there's the Michaels ad, so buying something on sale at Michaels becomes part of her weekly routine. One of the first things a new top executive would suggest is that we get rid of the old-fashioned, low-tech ads. And every guy who tried it had to take his punishment as same-store sales dropped dramatically that week".

Sam Wyly, "1000 Dollars and an Idea, Entrepreneur to Billionaire," page 200 (Expanded Edition)

AND...

I don't much care for the comparison to drug addicts! :(

that and basically calling us uneducated.

Both of those comments have me now completely against shopping at JCP ever. Even if they bring back the coupons...short of them giving it to me for FREE I would not step foot in a JCP store now