Fair and Square at JCPenney

So early this morning, I got an email from JCPenney with the following message:

As you may know, Ron Jonhson (formerly of Apple and Target) now heads the retail giant that goes as far back as the era of shopping catalogs. In facing the huge challenge of transforming one of America’s most unloved retail brands, he’s definitely relying on  the many lessons he learned in his 30 years of retail experience.

Today, JCPenney is rolling out a revamped pricing structure and a simplified return policy. The company is moving to “an everyday low price model” by getting rid of coupons and ineffective sales promos. Drawing on what I have learned from Ron Hess in my Customer Experience Management class, the dimensions of pricing and returns most probably have the most impact on customer satisfaction at JCPenney (which drives customer loyalty and profitability in the service-profit chain).

Though pricing is a common complaint of most customers, Ron Johnson’s approach to simplifying this satisfaction component has strong justifications. By making JCPenney’s pricing less complex, Mr. Johnson is trying to eliminate the “buyer’s remorse” felt by customers who purchase items at full price – only to find them heavily discounted in one of the 500+ yearly sales promotions at the company. Below is an excerpt from an interview with the JCP CEO on the retailer’s new policies. It was conducted by Anne D’Innocenzio of The Associated Press.

Q: How did you come up with the new pricing strategy?

A: Pricing is actually a pretty simple and straight forward thing. Customers will not pay literally a penny more than the true value of the product. And as I have been watching the department stores for the past decade, I have been struck by the extraordinary amount of promotional activity, which to me, didn’t feel like it was appropriate for a department store. My instinct was that it wasn’t a good thing.

Q: Won’t shoppers be turned off because they won’t see the big markdowns?

A: I wouldn’t assume they like the pricing strategy. I think they’re insulted by it.

Q: Who are you targeting?

A: We are going after all Americans. We would like to be the store for everyone.

Q: What are your plans to make the shopping experience more exciting?

A: We are going to make the store a place people love to come — just to come. Because they can get support before they’re ready to buy. They can get great support when they want to buy and they can come in after they buy. We’ll transform the buying experience not unlike what we did at Apple.

Q: When will we start to see improvements?

A: You’ll start to see the experience change month by month. Everyone thinks it’s an overnight success but it never is. I was at Apple from 2000 to 2011, but it wasn’t until 2004 that the iPod became an important part of people’s lives. It wasn’t until 2007 that Apple reinvented the phone. It wasn’t until 2009 that Apple launched the iPad. But we look at it today and we feel Apple had always been beloved. It took time and this will take time as well.

Q: What ideals have you embraced from Steve Jobs?

A: The importance of doing everything you do to your very best. And that the journey is the reward. If you do things well one at a time, you end up in a really good place. Don’t get ahead of yourself. Control the things you can.

Q: Other than Apple, which stores do you admire?

A: I admire lots of stores. Whole Foods is a great store. I just like their passion for food. It shows up in everything they do. It shows up in their packaging, their presentation and their employees. Starbucks. It truly has created a community. As I travel around the world, I just know that if I go to Starbucks I will have a great experience.

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