The big day – post Thanksgiving Black Friday shopping – starts a holiday shopping season that makes or breaks many retailers’ year. Black is likely a better description of most retail leaders’ moods, as their market environment has only gotten harder year after year. From the days of Sears being the only store or catalog in town, we have moved to a world where the consumer is king. Expectations are merciless, prices are transparent, and consumers benefit from intense competition on-line and in-stores. Success will only come to brick-and-mortar retailers who have a clear view of their target customer, offer a brand promise that is relevant, high value and hard for others to copy, and create in-store experiences that make it worthwhile to go to the store. JC Penney (JCP) is a best-case example of what not to do. It added appliances—and subsequently…
Demographics, GOP and business model strategy
Demographics don’t lie. They are one of the few external trends shaping organizational outcomes around which there is little if any controversy. The baby boom is aging. The voting electorate is getting more diverse. A critical question facing business models therefore is “What will be the impact of demographic trends on our future success?” The answer depends upon context. Lima, a small city in the eastern part of Pennsylvania, has a median age of 79. It suffered a 15% decline in population from 2000 to 2010. City officials and local businesses clearly have an issue! On the other hand, a large city with one of the oldest populations (Scottsdale, Arizona) experienced a 7.2% growth in population over the same period. Here, demographics work to city government and local business advantage, as Scottsdale attracts new residents by positioning itself as a retirement hub. It…
What JC Penney didn’t understand about the role of price in business models
Wizard of Oz protagonist Dorothy captures the shock of her post-tornado world in the memorable line, “Toto, I’ve a feeling we’re not in Kansas anymore.” Ex-Apple retail wizard Ron Johnson, now CEO of JC Penney (JCP), must be saying “I’m not in Cupertino, California [Apple’s headquarters] anymore” as he discovers the challenges of transforming his new employer’s retail stores. The first head has already been chopped: merchandising and marketing leader Michael Francis left JCP after less than a year on the job. We’ll now see if Johnson, who created the “shabby chic” value promise at Target and the stellar shopping and learning experience at Apple, has the chops to fix a troubled company in a category with excess supply. I thought Johnson had a great idea – reinvent the department store, which had offered wonderful shopping experiences when local high-end stores dominated the…