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Sales Are Like Drugs. What Happens When A Store Wants Customers To Quit?

Filed by KOSU News in Business.
March 1, 2013

Last year, JC Penney saw what every big retailer had been seeing for years: the threat of Amazon and other new competitors rising to destroy their business.

So JC Penney brought in a bold new CEO. Ron Johnson had already created the Apple Store, a chain of physical stores where people flocked to shop. Before that, he had revamped Target.

And Johnson had a plan for JC Penney: Tell customers that they don’t have to spend time anymore clipping coupons or waiting for sales to happen. Instead, the store would offer fair prices on its merchandise every day.

“He sort of said sales were akin to drugs, and he was trying to wean customers off drugs,” says retail analyst Rafi Mohammed.

The company redesigned its stores to try to make JC Penney a destination for a younger, hipper crowd. There are boutiques within the store featuring individual designers.

It didn’t work. The old customers really did love clipping coupons and waiting for sales.

“I come home and I cry over it, and my husband’s looking at me, like, ‘What’s wrong?’” says Carol Vickery, who shopped at the store in Tallahassee, Florida. “I said, ‘Penney’s doesn’t have sales any more. I need my store back!’”

Penney’s has been putting new, fancy boutiques inside its stores, trying to appeal to a younger, hipper crowd. But that crowd hasn’t really showed up yet.

This week, JC Penney announced that its sales in the last three months of the year were down about 30 percent from the previous year.

Now, the company is backing off its bold strategy a bit, and reintroducing sales and some coupons for shoppers in its loyalty program. But they won’t be called them coupons. They’ll be called “gifts.” [Copyright 2013 NPR]

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