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JC Penney & Joe Fresh Strategic Alliance: A good fit? G.W SHWARTZ CONSULTING GROUP: Donisha Young, Kent Nunn, Ryan Sloan, Caroline Gilbert.

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Presentation on theme: "JC Penney & Joe Fresh Strategic Alliance: A good fit? G.W SHWARTZ CONSULTING GROUP: Donisha Young, Kent Nunn, Ryan Sloan, Caroline Gilbert."— Presentation transcript:

1 JC Penney & Joe Fresh Strategic Alliance: A good fit? G.W SHWARTZ CONSULTING GROUP: Donisha Young, Kent Nunn, Ryan Sloan, Caroline Gilbert

2 Agenda 1.Description of Article 2.Internal Analysis: J.C. Penney a)Company overview b)Target market analysis c)Financial analysis d)Retail strategy mix analysis e)Strengths and weaknesses 3.External Analysis: J.C. Penney a)Positioning analysis b)Competitive positioning map c)Gross profit comparison vs. competitors d)Porters Five Forces Analysis 4.Analysis of New Retail Strategy 5.Analysis of Partnership with Joe Fresh a)Pros and cons b)Implications of partnership c)Expected results 6.Conclusions

3 Analysis of Article Partnership with Joe Fresh 700 stores 4-year deal March 2013: Store openings

4 J.C. Penney Company Overview Mission statement: "To be our customer's first choice for affordable fashion and quality as we enhance the quality of her life by being Bigger, and Bolder. Core Values: Associates - We value, develop and reward the contributions and talents of all associates. Integrity - We act only with the highest ethical standards. Performance - We provide coaching and feedback to perform at the highest level. Recognition - We celebrate the achievements of others. Teamwork - We win together through leadership, collaboration, open and honest communication, and respect. Quality - We strive for excellence in our work, products, and services. Innovation - We encourage creative thinking and intelligent risk taking. Community - We care about and are involved in our communities.

5 J.C. Penney Company Overview Mass merchandiser Operates 1,104 department stores in 49 states and Puerto Rico. Sells variety of products and product lines Owns over 100 private brands Objective: – Continue to focus on customer satisfaction and gaining customer loyalty by remaining first in its class in terms of customer service.

6 J.C. Penney Target Market Middle class/middle income Women (age 30-50) with dependents Visit store about once every 2-3 weeks Savvy shoppers

7 J.C. Penney Strengths/Weaknesses StrengthsWeaknesses Well diversified supplier baseFalling sales Compelling private and national brands Losing market share to competing customers Successful marketing campaigns; high brand awareness Old/dreary image Innovative point-of-sale initiatives Old customer base; perceived to be old ladies Positive in-store experienceLack of real brand identity Effective cost and inventory management; terminates unprofitable areas of company Variable assortment - inconsistent throughout stores Successful new online store Rising costs put pressure on store economics basics Moving into food offeringsWeak perishable offerings

8 Financial Analysis Once the go-to place for home products 13% drop in customer traffic in fiscal year % fall in revenues in fiscal year 2012 Fewer customers are coming into stores and when they come purchases are smaller Has not participated in the economic recovery as well competitors The financial position of JC Penney shows the urgency to incorporate Joe Fresh in their company. They need to move forward, and Joe fresh is a good fit.

9 Retail Strategy Mix Location: Urban shopping centres Merchandise: Extensive width and depth of assortment Competitive Pricing: JC Penney is price oriented, and working toward attracting cost-efficient customers New pricing strategy, consisting of "fair and square pricing. It includes three types: everyday, regular prices; month long values Atmosphere: Good to excellent Promotion: Heavy ad commercials, also using catalog use; direct mail, personal selling. Customer Service: medium levels

10 J.C. Penneys Position in the Marketplace Indistinct middle-American value-priced merchandise Neglected building a brand Focused on pricing strategies to drive traffic Perceived as value retailer offering mid-quality products and product lines

11 J.C. Penneys Position in the Marketplace J.C. Penney

12 J.C PENNEYS MAJOR COMPETITORS GROSS PROFIT (2012) (*USD in Millions) J.C. Penneys Competitors J.C. Penney

13 Porters Five Forces Analysis Porters ForceRating Threat of SubstitutesHigh Buyer PowerHigh Supplier PowerMedium Rivalry Among Existing FirmsHigh Threat of New EntrantsLow

14 New Retail Strategy Improve declining sales Salvage a brand that has flopped Three elements: 1.Pricing changes 2.New logo/spokesperson/marketing 3.Reinvented shopping experience

15 1. Pricing changes Moving away from frequent and deep discounts Three tiered pricing structure: 1. Everyday prices 2. Month long value 3. Best prices

16 Analysis of Partnership ProsCons Attracts new shoppersLosing key customers Potential sales increaseChanging brand image Highly unique; inimitabilityHigh cost Increase store volumeHigh risk

17 Implications of Partnership Overlapping Target Market JC Penney financial record is risky Could revamp entire department store business model

18 Expected Results Other fashion boutiques report promising early results Industry experts expects Partnership wont gain traction until the second half of the year

19 Conclusions Action was necessary ( history, declining market share) Fits well with marketing strategy Gives the company a unique position

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