J.C. Penney is banking on buttons this holiday season.
Starting Black Friday through Christmas Eve, Penney's employees will be handing out more than 80 million small, holiday-theme circular buttons to customers. Each has a code on the back that, when entered on J.C. Penney's website, reveals whether a customer has won prizes such as a trip to Disneyland, tickets to Ellen Degeneres' show or J.C. Penney merchandise or gift cards.
"Instead of mailing out millions of coupons, we'll be handing out millions of buttons," said CEO Ron Johnson in an exclusive interview with USA TODAY, touting the retailer's new strategy, which downplays sales and promotions. "We believe in acts of generosity."
News of the holiday promotion comes as pressure mounts on Penney's to improve sales almost a year into overhauling its pricing strategy, which so far has confused consumers more than it has excited them. Johnson, 54, hopes the buttons will entice shoppers, who have been dwindling since the retailer got rid of the heavy markdowns that used to bring people through the door.
The holiday season, the biggest time of year for sales, might prove to be the ultimate test for a strategy that's mostly done away with them.
"It's the time of year when promotions are generally thought of as being the most important to really stimulate consumer response," says Anthony Bruce, CEO of Applied Predictive Technologies, a software firm that helps retailers test sales strategies. "The square deal, the everyday approach can work but the transition so far hasn't been tremendously successful (for J.C. Penney)."
If anyone can turn things around, though, it's thought to be Johnson, who came to Penney's last year from Apple, where he headed development of the tech giant's popular retail stores and the Genius Bar concept. When his appointment to CEO was announced last November, Penney's stock soared along with hopes for the changes the retail guru would bring to the outdated department store.
It's clear that his experience at Apple has influenced his strategy for Penney's 1,100 stores: a new retail interface such as the one Steve Jobs created for consumer electronics, and selling goods without sales and at consistent prices.
Retraining customers
Though he denounced the hundreds of sales the retailer once had in a given year when he introduced the new strategy at the beginning of the year, Johnson says Penney's will preserve two holiday traditions: Black Friday and Cyber Monday, which this year, he says, promise "the lowest prices ever in the history of our company."
Johnson says items will be priced lower than they were on sale for last Black Friday.
But Penney's is struggling to help customers realize they're still getting a good deal without the obvious markdowns they're used to seeing.
The company already revised pricing once. In August, the retailer simplified its original three-tier pricing approach of "everyday, month-long and best" values to focus only on having everyday low prices to make it easier for customers to understand. Penney's calls it "fair and square," and signs with the phrase hang throughout the store.
For Black Friday, at least, newspaper inserts and store signs will indicate the difference between an item's Black Friday price and the regular "everyday" price. Other days, though, it may be hard to tell. "This is the issue between everyday low price and putting things on sale," says Ken Nisch, who heads retail brand and design firm JGA. "Psychologically, (customers) think they're saving money. The question is, can Penney's, over time, retrain the customer to be so intelligent that they see through all the false promotion?"
