Back in November I wrote about JCPenney's (NYSE: JCP) plans to move upscale in a down-market, hoping to attract trade-down consumers who can no longer afford Neiman Marcus or even Macy's (NYSE: M).In a way it seems counter-intuitive: selling more expensive merchandise in an economy where everyone is looking to go cheaper. But JC Penney's management decided that it would have a better chance at surviving this market by offering affordable luxury, and its new ad campaign reflects that.
The Wall Street Journal reports (subscription required) that the company's spring advertising campaigns "will focus only on its most fashion-forward clothing lines."
Those lines are Kimora Lee Simmons's Fabulosity line, Nicole Miller's nicole line, Bisou Bisou by Michele Bohbot and the soon to be introduced ALLEN B. by Allen Schwartz and the modestly-titled I "Heart" Ronson by Charlotte Ronson.
Whether JC Penney's strategy will work depends, of course, on the buzz generated by the new lines. But the idea behind it seems to make sense: If the strategy works, the company will be able to ride out a downturn by appealing to cash-strapped consumers who used to shop at more upscale places. Retain those consumers with good values when the economy rebounds, and you have a recipe for a strong improvement in margins.
One problem for JCPenney may be the fact that most retailers are being extremely aggressive in terms of discounting, and it may be just as affordable to shop the plentifully-stocked sales rack at Macy's as it is to buy JCPenney's hot new fashions. This phenomenon is hurting sales at some thrift shops and could also interfere with JCPenney's dreams of attracting higher-end consumers.
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Reader Comments (Page 1 of 1)
3-02-2009 @ 7:52PM
Theresa said...
I love shopping at Penneys. I hope they survive the economic turmoil.