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JC Penney & Joe Fresh Strategic Alliance: A good fit?

JC Penney & Joe Fresh Strategic Alliance: A good fit?. G.W SHWARTZ CONSULTING GROUP: Donisha Young, Kent Nunn, Ryan Sloan, Caroline Gilbert. Agenda. Description of Article Internal Analysis: J.C. Penney Company overview Target market analysis Financial analysis

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JC Penney & Joe Fresh Strategic Alliance: A good fit?

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  1. JC Penney &Joe Fresh Strategic Alliance: A good fit? G.W SHWARTZ CONSULTING GROUP: Donisha Young, Kent Nunn, Ryan Sloan, Caroline Gilbert

  2. Agenda • Description of Article • Internal Analysis: J.C. Penney • Company overview • Target market analysis • Financial analysis • Retail strategy mix analysis • Strengths and weaknesses • External Analysis: J.C. Penney • Positioning analysis • Competitive positioning map • Gross profit comparison vs. competitors • Porter’s Five Forces Analysis • Analysis of New Retail Strategy • Analysis of Partnership with Joe Fresh • Pros and cons • Implications of partnership • Expected results • Conclusions

  3. Analysis of Article • Partnership with Joe Fresh • 700 stores • 4-year deal • March 2013: Store openings

  4. J.C. Penney Company Overview Mission statement: "To be our customer's first choice for affordable fashion and quality as we enhance the quality of her life by being Bigger, and Bolder.“ Core Values: • Associates- We value, develop and reward the contributions and talents of all associates. • Integrity - We act only with the highest ethical standards. • Performance - We provide coaching and feedback to perform at the highest level. • Recognition - We celebrate the achievements of others. • Teamwork - We win together through leadership, collaboration, open and honest communication, and respect. • Quality - We strive for excellence in our work, products, and services. • Innovation - We encourage creative thinking and intelligent risk taking. • Community - We care about and are involved in our communities.

  5. J.C. Penney Company Overview • Mass merchandiser • Operates 1,104 department stores in 49 states and Puerto Rico. • Sells variety of products and product lines • Owns over 100 private brands • Objective: • Continue to focus on customer satisfaction and gaining customer loyalty by remaining first in its class in terms of customer service.

  6. J.C. Penney Target Market • Middle class/middle income • Women (age 30-50) with dependents • Visit store about once every 2-3 weeks • Savvy shoppers

  7. J.C. Penney Strengths/Weaknesses

  8. Financial Analysis • Once the go-to place for home products • 13% drop in customer traffic in fiscal year 2012 • 25% fall in revenues in fiscal year 2012 • Fewer customers are coming into stores and when they come purchases are smaller • Has not participated in the economic recovery as well competitors • The financial position of JC Penney shows the urgency to incorporate Joe Fresh in their company. They need to move forward , and Joe fresh is a good fit.

  9. Retail Strategy Mix • Location: Urban shopping centres • Merchandise: Extensive width and depth of assortment • Competitive Pricing: JC Penney is price oriented, and working toward attracting cost-efficient customers • New pricing strategy, consisting of "fair and square” pricing. It includes three types: everyday, regular prices; month long values • Atmosphere: Good to excellent • Promotion: Heavy ad commercials, also using catalog use; direct mail, personal selling. • Customer Service: medium levels

  10. J.C. Penney’s Position in the Marketplace • Indistinct middle-American value-priced merchandise • Neglected building a brand • Focused on pricing strategies to drive traffic • Perceived as value retailer offering mid-quality products and product lines

  11. J.C. Penney’s Position in the Marketplace J.C. Penney

  12. J.C. Penney’s Competitors J.C. Penney J.C PENNEY’S MAJOR COMPETITORS GROSS PROFIT (2012) (*USD in Millions)

  13. Porter’s Five Forces Analysis

  14. New Retail Strategy • Improve declining sales • Salvage a brand that has flopped • Three elements: • Pricing changes • New logo/spokesperson/marketing • Reinvented shopping experience

  15. 1. Pricing changes • Moving away from frequent and deep discounts • Three tiered pricing structure: 1. Everyday prices 2 . Month long value 3. Best prices

  16. Analysis of Partnership

  17. Implications of Partnership • Overlapping Target Market • JC Penney financial record is risky • Could revamp entire department store business model

  18. Expected Results • Other fashion boutiques report promising early results • Industry experts expects Partnership won’t gain traction until the second half of the year

  19. Conclusions • Action was necessary ( history, declining market share) • Fits well with marketing strategy • Gives the company a unique position

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