Kohl’s V. Jcp Marketing Analysis Essay Example
Kohl’s V. Jcp Marketing Analysis Essay Example

Kohl’s V. Jcp Marketing Analysis Essay Example

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  • Pages: 11 (2947 words)
  • Published: February 12, 2018
  • Type: Analysis
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The report presents recommendations for marketing strategies for J. C. Penny and Kohl's, including a brief summary of the companies' histories with a focus on the past two years. It specifically analyzes J. C. Penny's marketing efforts under Ron Johnson and compares their financial and market performance during that time period to Kohl's. The report also mentions the recent introduction of the "Chief of Customer Relations" position at Kohl's, although there is limited information available on this topic.

Acknowledging the difficulty in filtering and validating provided information, Team Textiles proposes that J.C. Penny continue catering to their existing discount-oriented customers while updating their stores based on Ron Johnson's model to attract millennials and regain customers lost during his tenure. They additionally suggest that ICP (presumably referring to J.C. Penny) capitalize on its extensive catalog/mailing customer database to promote e-commerce

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through a well-developed website and social media channels for interactive customer engagement. The ultimate goal is to transform the stores to appeal to millennials and then utilize ICP e-commerce to engage with and attract millennial shoppers.

Based on their investigation, the team advises Kohl's to maintain a quasi-holding pattern of growthKohl’s has achieved success through cause-related marketing campaigns, gradual sales growth, loyal customers dedicated to exclusive brands, and strategically located stores that align with their target customers' preferences. Nonetheless, Kohl's is currently facing challenges in customer service and the shopping experience, as evident from the creation of a new corporate position called "Chief Customer Officer". This position is being filled similarly to how ICP hired their personnel. In this report, our team specializing in textiles will compare and contrast Kohl's with other textile and apparel retailers. The industry

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as a whole must find ways to meet the consumer demands of both the "Baby Boom" generation and the "Millennial" generation, with Generation-X falling somewhere between these two generations. Our research specifically focuses on the retail department store industry in textiles and fashion apparel. Direct competitors share similar product selection, pricing structures, promotional methods, and location choices. Initially, Team Textiles believed that Kohl's had experienced growth and positive feedback from consumers over the past two years while ICP struggled to meet their marketing and financial objectives. However, ICP recently fired Ron Johnson as CEO; he was previously a retail marketing executive at Apple. This decision mirrors Jars' hiring of Johnson back in 2010 when both companies sought innovative changes in marketing and customer relationships.
Team Textile will conduct a comparison/contrast study between ICP and Kohl's to understand successful marketing strategies in the retail department store industry. The disastrous outcomes resulting from ICP's changes, particularly in their marketing efforts, suggest that a micro-environmental review is the most promising approach for analyzing successful and unsuccessful marketing endeavors. Secondary sources were the primary data sources for this research, while primary research involved publishing a survey on www.Surveying.Com, Backbone, and a fashion apparel blog site. Due to media limits, the survey was limited to ten questions aimed at differentiating consumer shopping preferences between ICP and Kohl's. The value of this survey lies in Jars' attempt at repositioning their stores as offering an affordable, entertaining, and contemporary shopping experience that appeals to both millennials and older customers. This report analyzes the marketing endeavors of J.C.Penny COP)and Kohl's corporation(s), with the goal of recommending a marketing direction that will appeal to the

millennial generation while maintaining their current baby-boomer generation customer base.To gain a better understanding of effective marketing strategies in the retail department store industry, Team Textile plans to conduct a comparative analysis between two companies: ICP (J.C Penny Corporation) and Kohl's Corporation. Both companies have hired innovative individuals like Johnson to enhance their approaches to market dynamics and customer relationships. Given ICP's previous negative outcomes, specifically in promotional campaigns, it is important to examine successful or unsuccessful initiatives through micro-environmental reviews. Our investigation primarily relies on secondary data sources and includes a survey conducted on various platforms such as www.Surveying.Com, Backbone, and a fashion apparel blog site. Due to media limitations, the questionnaire consists of only ten questions aimed at understanding consumer shopping preferences between ICP and Kohl's. This survey holds significance as Jars aims to position their stores as providers of affordable, enjoyable, and modern shopping experiences that appeal to millennials while still catering to older customers. This report analyzes the marketing strategies employed by J.C Penny COP)and Kohl's Corporation(s). Our objective is to propose a marketing strategy that will help textile and apparel retail department stores attract millennials while retaining their current baby boomer customers. James Cash Penny opened his first business—a small dry-goods store—in Icemaker, Wyoming in 1902.

He decided to call it the Golden Rule store in order to represent his personal and business principles. The Golden Rule store offered a variety of products such as blue jeans, work clothes, fabrics, and sewing supplies specifically for working-class families. In 1907, J. C. Penny bought out his partners and expanded the stores across western regions. Taking charge in 1909, J Penny established

the first headquarters office for Golden Rule in Salt Lake City, Utah within a span of two years. By 1912, the company had grown to include 34 Golden Rule stores with annual sales surpassing $2 million. Consequently, in 1913, the chain's name was changed to J Penny Company and its headquarters were relocated to New York City.

According to The State Historical Confidence, Service, and Cooperation website (insert ), the company demonstrated an astute advertising strategy by treating customers fairly while offering quality products at affordable prices.

In , J Penny stores initiated credit selling as an option, thereby discontinuing their previous cash-only policy.

This allowed for customer credit availability and led to a focus on apparel, as well as an expansion of both hard and soft goods offered. Additionally, J Penny stores started offering more fashionable merchandise. In 1968-69, J. C. Penny expanded globally by opening stores in Belgium and Italy. By 1988, the company relocated its headquarters from New York City to Plano,Texas. In 1995, J Penny Company had further expanded into Mexico and Chile. In the early 21st century, J Penny operated around 1,000 stores in the United States. The company celebrated its 100th anniversary in retail in 2002.
In a demonstration of continued growth and innovation, J Penny partnered with Seaport, a renowned cosmetics chain, in 2006.This collaboration introduced Seaport stores within select J Penny stores.The success of this model led to the addition of other exclusive brands such as American Living by Ralph Lauren, Linden Street, and Fabulously.In a bold move in 2010,J Penny decided to discontinue their catalog business and direct customers to their website.Although this decision was expected to result in

a significant loss of traditional customers at that time,it signaled the company's focus on digital transformation.In 2011, J C. Penny hired Ron Johnson as their new CEO, who had previously worked at Apple and was known for his expertise in leading innovative changes to appeal to the millennial generation. From 2000 to 2011, Johnson's success at Apple earned him recognition as a marketing and development master, contributing to Apple's success as a retailer and setting a benchmark for other industries. At J.C. Penny, he implemented various changes including renaming it ICP, aiming to reposition the company. However, despite targeting millennials successfully, traditional customers dropped out while millennials joined. Ironically, even though Johnson made significant and innovative changes that resulted in a sales decline of over 30%, he was fired. James Cash Penny dedicated his life's work to being a merchant and giving his best to the company he founded.ICP's success can be attributed to its customer service-oriented approach which has helped it overcome economic challenges throughout history.Despite recent setbacks, ICP is not only poised to survive but also emerge as a leader in the retail industry where they have played a significant role.Kohl's Department Store is one example of such success; Max Kohl founded it in 1962 in Brookfield, Wisconsin.Initially starting as a small grocery business, Kohl's eventually became the largest supermarket chain in the Milwaukee area. Expanding into general retail, Kohl's positioned itself between high-end and discount department stores and offered diverse products such as candy, engine oil, and sporting goods. By 1972, they had five department stores and by 1980 expanded to 39 stores across Wisconsin, Illinois, and Indiana.

In 1986, the management team

decided to redefine their product lines while remaining committed to selling moderately-priced merchandise. With $300 million in annual sales and 5,000 employees across their 40 stores at that time, low-margin departments like candy and sporting goods were discontinued in favor of higher-margin items such as linens and jewelry by 1987.

The following year (1988), Kohl's further strengthened its presence by acquiring locally-owned department stores in Michigan, Chicago,and Minneapolis markets with an additional 26 locations gained through this expansion effort. During the period between 1988 and 1992, Kohl's experienced a significant increase in sales revenue, going from $388 million to $1 billion. This was mainly due to an acquisition they made during that time. Additionally, by the end of this period,Kohl's became a publicly traded company.

From 1992 to 1999,Kohl's continued their expansion efforts and tripled their number of stores to a total of259As a result of their expansion, Kohl's experienced an increase in sales revenue, reaching $4.56 billion. They also made changes to their product offerings by phasing out electronics. By the year 2000, Kohl's had expanded further and operated 298 stores. They also entered the e-commerce market through their website Kohls.com and explored more upscale brands. However, in 2003, Kohl’s faced its first decline in net income after ten consecutive years of growth. Their net income decreased by 8.5 percent to $581 million due to insufficient inventory levels, customer experiences, and marketing strategies. Despite these challenges, Kohl's achieved record-breaking sales figures that year with $11.7 billion in revenue—a remarkable increase of 14 percent compared to previous years.In 2004, they introduced new brands such as Laura Ashley Lifestyles, Gloria Vanderbilt, Daisy Funnies celebrity apparel line,and partnered with

the Estee Lauder cosmetics company.The following year in 2005, they unveiled their new positioning statement of "Expect Great Things." Currently operating 732 stores across 41 states after opening an additional 95 stores recentlyKohl's revamped their store design in 2006 to attract a wider range of customers. They used showcase windows to display the latest fashion trends and innovative merchandise displays to highlight new products across departments. Today, Kohl's is a family-oriented department store focused on value offerings. They continue to expand their exclusive brand collections, including Simply Vera by Vera Wang, Ell, Rachel Ray, Case Christina, Tony Hawk, and Candies. Kohl's Inc. maintains that their history provides a strong foundation for future opportunities.

During the years 2010-2012, Kohl's responded to business fluctuations by expanding distribution channels and adopting sustainable practices. They also launched cause-related marketing campaigns and enhanced consumer perceived value. Recently, Kohl's has sustained growth while staying updated on current textile industry trends. They sell affordable clothing lines created by celebrities and offer competitive prices for renowned brands like Nike and Levi's.

Department stores like Kohl's employ various strategies such as frequent sale days, early-bird savings, and bonus earnings for credit-card holders to practice high-low pricing. Between 2010 and 2012, Kohl's gained a significant consumer base and contributed to job creation and company innovation.

However, the retail industry has faced challenges in recent years as department stores struggle to keep up with changing dynamics.
The department store market was deeply affected by the U.S. economic recession of 2008-2009, leading to a slow recovery. However, department stores are eager to explore growth opportunities in emerging markets such as China, India, and Brazil. China is especially expected to experience significant

global growth from 2011 to 2015.

In contrast, North America's yearly growth rate over the same four-year period is predicted to be modest at only 2%, due to the lingering effects of the American recession. As a result, retailers have adjusted their strategies by opening outlet stores for lower prices and selling old stock. They face tough competition from online retailers, discount stores, and hypermarkets in their fight for survival against these alternatives.

To remain competitive, major department stores must expand internationally, diversify their distribution channels, and change their retailing format (Department stores industry', 2013). In the second half of 2010 Kohl's had to make changes to its store credit card terms because of government regulations which cost them $40 million. Nevertheless,Kohl's outperformed J.C Penny Co Inc (COP.N) and Dullard's (ADS.N) in same-store sales growth that year according to Whap Sage (1). During the holiday season of 2010 , Kohl's successfully launched a public relations campaign highlighting that they had hired 40 ,000 seasonal employees representing an increase of18% compared tothe previous yearThe recent news about Kohl's has been beneficial for unemployed individuals and has also helped build goodwill in many communities. Despite facing economic, regulatory, and competitive challenges, Kohl's continued to provide value to consumers throughout 2010, as evidenced by a summary of their marketing efforts and financial performance.

To assess the true marketing success of both ICP and Kohl's, this report utilizes their most recent quarterly reports along with articles and public announcements from both companies. According to ICP's latest financial filing, they experienced significant financial problems in 2012 with a net loss of $985 million (CO Penny 1). This loss was much higher compared

to their previous loss of $152 million in 2011. The decline in income can be attributed to a decrease in sales after an unsuccessful brand repositioning attempt that incurred substantial costs.

ICP generated revenue of $17,260 million in 2011 but this decreased to $12,985 million in 2012, resulting in a reduction of $4,275 million within one year. It is important to note that this decrease in revenue is much larger than the negative net income reported during the same period. General expenses and costs at Jars remained relatively stable (fig.1), indicating that the decrease in net income is primarily due to lower sales.

Additionally, Jars' cash holdings have also seen a decline over the past three years. In 2010, ICP had cash holdings amounting to $2,622 million;The text states that the amount of cash holdings decreased to $1,507 million in 2011 and further dropped to $930 million in 2012. This reduction of cash holdings by 64% over two years needs further understanding of its impact on ICP. J.C.Opener's 2013 1st Quarter Earnings Call Transcript reveals that most of the increased expenses and cash distributions are being invested into Jars' store conversion marketing plan. Ken Hannah, the company's Executive Vice President and Chief Financial Officer, explains that they incurred restructuring charges totaling $72 million during the quarter. Of this total, $28 million was attributed to store fixtures including increased depreciation for replacements in the home department and other fixture write-offs. Additionally, there were reductions totaling $28 million in home office and stores, along with a $16 million expense for management transition during the quarter. This influx of cash is being reinvested into the store as a sign of

optimism for J.C Penny's future as they aim to regain lost market share.
In contrast, Kohl's financial status presents a different story. According to their 2012 10-K form, their net income remained relatively steady over the past three years. In 2010, Kohl's net income was $1,120 million which slightly increased to $1,167 million in 2011 but dropped again to $986 million in 2012. However, this decrease is not considered a significant cause for concern.
Kohl's has maintained consistent sales levels over the same three-year period, with net sales reaching $18,391 million in 2010, $18,804 million in 2011,and $19,279 million in 2012. This showcases their stability and steady growth. Unlike J.C Penny,Kohl's has been able to progress without facing similar financial troubles or downward trends. They have managed their investments effectively without successful improvements made towards their current situation at J.C PennyKohl's, on the other hand, does not need significant changes or operational overhauls to remain competitive.

According to SWOT analysts, J.C. Penny's strengths lie in their celebrity marketing strategy with Ellen DeGeneres and their long-standing history with a large customer base despite some setbacks in marketing. However,J.C.Penny also faces weaknesses such as a lack of customer research leading to ineffective meeting of customer demands.The store layout and design send mixed messages and struggle to attract younger generations.Nevertheless, they have the opportunity to address this weakness by adjusting their marketing strategies and keeping the public informed about company updates while converting old catalog consumers into online shoppers.

Despite these efforts,J.C.Penny still faces threats from new regulations on store cards and potential loss of customers due to discontinuing their famous catalog.Kohl's has several strengths that contribute to its success in the

retail market. These include exclusive brands, benefits of their store card, the use of Kohl's cash as a promotional tool, and cause-related marketing through the Kohl's Care campaign. A major advantage for Kohl's is their information systems, which give them a competitive edge. As the company expands with more associates, store formats, market segments, and technology advancements, there is an increasing demand for information system services. In the future, Kohl's plans to leverage technology to drive sales, make important business decisions, and meet customer needs. They prioritize investing in cutting-edge technologies and providing training for associates to improve collaboration and scalability of systems.

While there are weaknesses such as declining sales growth rate due to challenges like Ski's and inventory issues, there are also opportunities for international expansion. However, it is crucial for Kohl's to address threats posed by new regulations affecting card holders.

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