Go slow to go fast. Something Penney's new CEO might have considered when taking dramatic changes to regain Lasting Connections with customers.
There was much traffic online and in social media when Penney's earnings were announced. Two days later, the Google ranking of the event is four pages down (when was the last time you scrolled through four pages to find something on a search engine?). Markets expected losses in the stock, so the surprise factor for me was limited. The stock is trading slightly below the currently declining NYSE average and is back to where it was before CEO Ron Johnson took over. While the losses are real and this isn't a "correction" (due to an inflated price created by a high flyer CEO who came in during the hot fourth quarter) all of this was expected and should be disconnected from changes in brand and store operations strategy. This is simply were the company is from a revenue and market position.
When discussing corporate strategy and swift, speed is measured in glacier time. Ron Johnson has made lightening fast changes with the brand, store layout and pricing. Any one of the three are events that must be rolled out to consumers over time. Doing all three at once and in a period of months is bold, dramatic (he did come from Apple) and appeals only to specific audience. Much like Abercrombie and Fitch's transformation (remember when they sold Business Casual clothes for adults?) the brand is going from "old school" to an uber-boutique strategy. A&F did the roll out over time and didn't have the social media exposure that all brands do today. Penney's is trying to change their customer appeal and in a manner and speed that applies to another demographic and generation of buyers. The challenge they have is how to reach them using all of the marketing (including social media) tools available today and educate them while demonstrating (it's all about perception not reality) of how the new strategy is working. Penney's consumers simply haven't had time to react. A slow transformation might not work either by the way. The changes might confuse consumers. The key will be the way the new strategy is communicated and made viral. Media outlets such as YouTube, Foursquare, Pinterest will probably hit the right audiences faster. A new loyalty program should come out as well.
Turn around failed? Perhaps if you read the tea leaves, that might be so. Or perhaps it might be better to review in-store sales over the next quarter. If I were Chief Merchant Liz Sweney, I'd start dropping numbers on how these new brands are faring and who's buying. Three Retail events (Memorial Day, Dads/Grads , 4th of July) and then the relative quiet of the summer season are upon us. This quarter is likely to be the best barometer of how well the new strategy is working. And if Penney's could make changes this rapidly, they can do course corrections as well.