Shoppers Wait to See What JCPenney and Kohl’s Have In Store

2012 Net sales:
$13 billion
Number of stores: 1,102 in 2012

2012 Net sales:
$19.3 billion
Number of stores: 1,146 in 2012

America’s mothers, according to loyalty program provider PunchTab, account for $2.4 trillion in annual spend. So, it’s no wonder why department stores like JCPenney and Kohl’s have built their businesses and reputations on catering to a segment of that valuable demographic: the cost-conscious mom.

But despite this shared focus, JCPenney and Kohl’s have taken distinct journeys over the past few years. JCPenney went through a hurricane of change, most notably during the tumultuous and ultimately temporary tenure of Apple veteran Ron Johnson as CEO. Since Johnson’s stint—during which he tried unsuccessfully to move JCPenney’s audience away from their coupon-clipping mentality—the department store’s marketing has been largely apologetic. Some of its ads beg customers to return.

By contrast Kohl’s recent years have been less chaotic. The company has been steadily growing its retail outlets, with eight new stores opened in 2012, and in March 2013 it announced the planned opening of an additional nine locations. This slow-and-steady growth reflects the strength of Kohl’s marketing.

“[Kohl’s has] tried to stay true to [its] audience and [it’s] more approachable and real,” says David Morrisette, VP of strategic account development at Gage. “[The retailer] found [its] identity and brand voice, and stuck to it.”

This is important because department stores like JCPenney and Kohl’s often aren’t particularly differentiated in the consumer’s mind. Consequently, their marketing strategies are more of “a marathon [than] a sprint,” says Allen Adamson, managing director at Landor Associates. That Kohl’s doesn’t have any field fires to extinguish means it can stay safely on its prescribed course, using its marketing to deliver consistent experiences and drive revenue. Its print ads, for instance, stick with what many moms love: saving money. The creative is highly promotional and focused on informing customers about sales and discounts.

On the other hand, JCPenney is operating in full damage control across all of its channels, says Corey Gehrt, strategy director at Code and Theory. Take the brand’s unusually honest “It’s No Secret” ads released in May: “What matters with mistakes is what you learn,” says the voiceover. “We learned a very simple thing: to listen to you…Come back to JCPenney.” And although the retailer indicates a return to its roots of discounting and coupons, its print ads still betray aspirations to be considered modish. Aesthetically, Gehrt says, the print ads are “more sophisticated,” similar to creative from Gap or J.Crew, with stark photography and minimalistic design. But while these ads might be pretty, Gehrt doesn’t believe they accurately represent the brand.

Yet, despite the differences in company outlook, and despite JCPenney’s apologetic ads, our analysts felt that the two brands’ marketing strategies were more similar than different.

Take email—a great way to engage and to send relevant, personalized deals. Surprisingly, neither department store did well at all. Kohl’s edges out JCPenney by allowing users to sign up for email promotions in a paid Google search ad, and by providing a sign-up incentive, enticing customers with clear rewards. With JCPenney, our analysts found little reason to even bother signing up. And after the sign-up, both retailers seemed closed for business.

“Both fall off pretty strongly after the email capture: the confirmation email came a lengthy time after the sign-up, so there’s no instant gratification,” Gehrt says.

When the emails arrived, they lacked a specific call-to-action and failed to stoke excitement. This is a missed opportunity for both department stores to engage new customers and prospects, and to begin nurturing relationships.

Kohl’s and JCPenney’s social presences also are bland and far too alike, our analysts say. “They’re more similar than dissimilar, and that’s a problem for a brand,” Adamson says. The department store chains keep it light on their Twitter feeds, but the objective of each tweet is always a sale. This is unfortunate, since social media can be a powerful way for brands to engage in meaningful dialog with their customers. Gehrt thinks that JCPenney, in particular, could benefit from “humanizing” itself on social media. Doing so could add depth to its apology, and help bring customers back into its stores. The two brands’ Facebook pages don’t venture beyond the ordinary; both use their feeds to “repurpose their advertising assets,” Gehrt says. Neither brand appears to fully grasp the social aspect of social media.

There is, however, some differentiation on video. While JCPenney’s YouTube page is simply a warehouse where the brand dumps its TV spots, Kohl’s attempts to attract visitors. Kohl’s YouTube page features a video series called “My Kohl’s Story,” showcasing personal stories of its employees. Shining a spotlight on the people behind the brand adds a personal touch, our analysts say, and motivates Kohl’s staff to strive to make customer experiences better.

Both retailers jumped on the Pinterest bandwagon. In Morrisette’s opinion, it’s “natural” for these brands to have presences on Pinterest, since they cater to primarily female audiences. JCPenney has a link to its Pinterest page on its website—Kohl’s doesn’t, however, the latter has almost twice as many followers. On e-commerce, the customer experience for both brands is no-nonsense, functional, and a bit dull, according to Gehrt. From a design standpoint, JCPenney’s website was cleaner and consequently felt more upscale, while Kohl’s website was cluttered. “Kohl’s was clearly highlighting back-to-school,” Morrisette says. “This included checklists for supplies and dorm rooms and the ability to share lists with family and friends.” JCPenney is more subtle about promoting back-to-school items.

Kohl’s checkout experience, in particular, was exasperating for Gehrt, who was irritated that he couldn’t edit information prior to placing an order without the entire process destructing. He complains that the checkout process feels like a “phishing scam.”

Morrisette points out that the store locator function on the Kohl’s website seems underdeveloped, as it doesn’t provide a map until after a location is chosen, and, when it does, it’s powered by Map- Quest. By contrast, JCPenney uses Google Maps, which makes it easier for users to access directions and store information.

Kohl’s further limits its audience with its branded mobile app, only available for iOS—which effectively locks out Android users. But at least, Morrisette says, the app successfully “identifies the limited number of tasks that are a priority for a mobile user.” The JCPenney app might have a wider, addressable audience since its available on Android, but its design and functionality is disappointing. Morrisette points out that the mobile app is “almost indistinguishable from the mobile site.”

Perhaps the commonality between both retailers is the addition of “chic” brands à la Target. JCPenney has Joe Fresh and Nicole Miller, while Kohl’s works with Jennifer Lopez and Vera Wang. “It’s a celebrity bake-off,” Adamson says. “Both are glomming onto designers, trying to capture the sizzle from a designer, and transplant it onto their brand.”

Adamson considers this a Band-Aid approach to marketing. A celebrity association may help boost popularity in the short term, but for it to be effective in the long run, brands need to work on getting the in-store experiences aligned with the promise in their ads. Ultimately, Adamson thinks that “both brands need to figure out who they are, and spend less time figuring out who they want to hang out with.”

Brand Champion

In the contest to decide which department store brand is less boring, Kohl’s ekes out a narrow victory. JCPenney and Kohl’s are playing the same game, and neither is doing much to alter the rules. One of the biggest challenges for department stores is to be more than simply a collection of brands. To overcome this challenge, they need to find their identity. While JCPenney should be given credit for attempting to reinvent itself, the attempt has been its downfall. Kohl’s has stayed true to its course, and in this case, slow and steady wins the race.

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