It appears that J.C. Penny’s first quarter efforts to increase market share by competing on ‘everyday low prices’ fell a bit short. So it’s back to the drawing boards!

This year, J.C. Penney is set to embrace technologies coolest gadgets in an attempt to recapture the coveted consumer dollar. However it seems this technological love affair is doomed from the very beginning as customers reveal aversion toward the first rollout of these technological additions. In fact, phase one of Penney’s tech-savvy roll-out was coincidentally coupled with Sears Holding Corporations’ double-digit increase in apparel and footwear sales. Is it a coincidence that Sears, a longtime competitor, is enjoying amplified business at the very moments that Penny’s investing in their own growth? Possibly.

Below is the list of what Johnson’s plan includes, according to Dana Mattioli’s Wall Street Journal article, followed by my own reactions as a frequent department store shopper:

  • All store associates will be carrying Apple iPods for mobile checkoutby Spring of 2013.
    • What if I want to pay in cash? Does the iPod project a register or are associates storing cash in pockets?
    • Are you emailing me my receipt? What if the customer wants the old fashioned paper copy – many still do.
    • What about shopping bags to hold my purchases? Do the associates carry those around with their iPods as well?
  • Radio frequency identification tags (RFID) will be placed on every item in its 1,100 stores.
    • Probably not a bad idea.
  • iPads and Macs will be installed in “entertainment” areas for customers to use.
    • I don’t go to clothing stores for iPad entertainment. I go to the Apple store for that.
  • Each Levi’s boutique will have iPads to demonstrate different clothing fits.
    • Only way you’d get me to leave a store with a pair of jeans without having tried them on is if you gave them to me for free. I don’t care what your program demonstrates; I want to see what the mirror says.

JCPENNEY LEVI'S SHOPPenney’s CEO, Ron Johnson, appears to be taking another stab at the list of five fatal flaws of most companies – he believes being the first retail store to implement these dramatic technological upgrades will serve as a competitive advantage in this increasingly competitive market. Although innovation and technology undoubtedly serve as competitive factors, these features may be less significant and not particularly relevant to the needs of the everyday department store shopper.

What You Can Learn from J.C. Penney about Competitive Advantage

According to Johnson, who happens to be the former Apple Inc. Retail Chief, technology is synonymous with good customer service, which he then can tout as a ‘competitive advantage.’ For Johnson, and many others for that matter, this may be true. But I’d like to know what JC Penny shoppers define as good service. What keeps Penny’s devoted customers roaming the racks? What is causing their less loyal clientele to shop elsewhere? How is JC Penny communicating the answer to the age-old consumer question: Why should I shop at your establishment, rather than at your competitors? My bet is an iPad isn’t in the equation.

A true competitive advantage stems from understanding your customers and their hierarchy of buying criteria. Look from the outside in. What do your customers really want? You can’t afford to make assumptions about your customers’ preferences. Market research, when conducted properly, unveils what your customers really consider in the buying criteria – a priceless insight.

Instead of turning to iPads, iPods and mobile checkouts to boost sales, J.C. Penny should strongly consider putting a hold on this multi-million dollar ‘improvement’ and ask their customers what would attract them to the stores.

Reflection: Can You Accurately Answer These Questions?

  • What does your customer define as good service?
  • What is your customers’hierarchy of buying criteria?

If you’re having trouble, you’ve got lots of company. The fact is that most business owners can’t answer these two very basic, yet critical questions. However, once you can answer them, you earn your share in the handful of companies that are benefitting from rightfully serving their customers needs.

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