JCPenney’s Rebranding. The “New,” New Coke

By Kelly O’Keefe (@kellyokeefe)

It was a rare moment in the history of retail branding. Two giants in the field had come together to forge a new path for a tired old brand. Their approach was well researched and brilliantly executed with flourishes of creative genius. So why has it been such a complete failure?

That’s the question many industry analysts have been asking about the re-launch of the JCPenney brand. On January 26, CEO Ron Johnson, the man behind Apple’s unprecedented retail success, and Michael Francis, the former marketing chief who made Target one of the most valuable brands in retail, stood together onstage to deliver a pitch-perfect presentation on the future of the JCPenney brand.

With a keynote said to channel Steve Jobs, the pair took investors through a case study of their brand re-launch, so well composed that it has already been put to use at graduate marketing programs across the country. Their work was a demonstration that creativity and innovation can be used to remake even the most forgotten brands. But just a few months later, the management team was facing hostile questions from investors, trying to explain one of the biggest declines in sales in the company’s history and a 24 percent drop in the stock’s value in one quarter.

What did these branding giants miss in their blueprint for JCP’s brand revival? The same thing the brand managers at Coca-Cola forgot when they attempted to re-launch their aging brand as “New Coke” in 1985 – that brands are fueled, not only by creativity, but by predictability.

The truth is that for any brand, the most loyal fan is the least likely to appreciate radical change. Logic dictates that after spending hundreds of millions of dollars to encourage shoppers to love the old JCPenney, a wholesale shift might ruffle the feathers of those same shoppers.

But JCP’s makeover was even more jarring than a new look, new merchandise and new advertising. After training the consumer for years to flock to the stores whenever coupons came their way, the company abruptly cut off their coupon program. With the interruption of the coupon’s Pavlovian shopping signals, many shoppers simply stayed home.

Now it’s far from game-over for this intriguing experiment – the company is moving fast to reconnect with loyal fans and clearly communicate its new discount pricing approach – but the lesson remains. Consumers want consistency from their brands and radical change is more likely to destroy brand value than create it.

Coke learned this lesson a long time ago when they changed their formula; Netflix learned it more recently when they attempted to split their company into two, only to do a mea culpa after consumers rebelled and their stock lost half its value. Discount king Walmart learned the same lesson when they scrapped an ill-fated entry into high fashion, their Metro 7 line of clothes that was launched with ads in Vogue magazine. In each case, the company’s changes tampered with the very attributes their consumers had learned to love.

For marketers, the lesson is simple: Evolution works better than revolution when it comes to brands.

About Jeff Wilson:

Jeff Wilson, APR is associate vice president and director of business development for CRT/tanaka. He develops and guides the implementation of the agency’s strategic communications plan, which includes media relations, social media, sponsorship, website copywriting, advertising and collateral material development. He also provides day-to-day management of the agency’s new business response functions. Jeff has earned some of the PR industry’s most prestigious awards, including PRSA Silver and Bronze Anvils, a PRSA Health Academy Innovation Award and an IABC Gold Quill. He was named one of PRWeek’s “2008 Top 40 Under 40” as well as one of Richmond’s “2007 Top 40 Under 40” by Style Weekly. He also is immediate past president of PRSA Richmond.