Tuesday, January 31, 2012

Is JC Penney Making a Mistake?

JC Penney announced a brand new pricing strategy. They are getting away from the over-inflated regular prices with everything on some kind of a sale all the time including scattershot coupons and deals.

They have already implemented it in my local JCP.

And my wife is not happy.

She went shopping there recently and was more confused by their pricing than ever. More importantly, she walked out without making a purchase. She asked me about it at lunch today, and I told that while I am a huge fan of not using sales and gimmicks (the old JCP model), I think they have a hard road ahead for three reasons.


THEY TRAINED THEIR CUSTOMERS

The first problem is that JCP trained their customers to expect a sale, to expect a discount, to wait for the coupon. For the next few months there will be some pain as customers try to adjust to this new program.

My wife was looking at a sweater. The new price tag said $25.00. It used to be priced at $50 in the old scheme. Then with a 40% off in-store sale and a 15% off coupon, it sold for $25.50. But without those "sales", my wife ended up putting it back. It did not feel like a bargain any more.

You cannot get rid of that sale mentality overnight. We all know stories of customers who buy things on "sale" at other stores even when the "sale" price is higher than our price.


PRICING HAS PERCEPTION

I have been saying this all along. The numbers you use in your price give off a perception to the customer. JCP has changed all their prices to end in .00 instead of .99 as most retailers use.

The only problem is that .00 looks like "full price" while .99 looks like a discounted price. My wife, a full blood Transactional Shopper, mentioned this first. The price just looked too high. She even went so far as to say that she would have given it a second look at $25.99 instead of $25.00. So JCP, by their new pricing strategy is making everything look perceptually more expensive.

(For a full explanation of the way prices are perceived, download my free eBook Pricing for Profit.)


CAN THEY RELATE TO THEIR CUSTOMER?

Let's face reality. JCP, Kohl's, Macy's, Elder Beerman, and all the other department stores like them are relatively interchangeable. They all carry similar goods at similar prices. And they all go after that Transactional Customer, the one who shops solely on price.

But with this shift, JCP is hoping to get away from that price-shopping mentality. Does this mean they are now going to go after the Relational Customer, the customer looking for an expert she can trust? I don't believe they have the staff and the training to accomplish that. They certainly are not going to compete with Nordstrom's any time soon.

So while they alienate their Transactional Customers in the short term, they are going to have to find new ways to attract those customers (who have been their base for so many years) back to the store with some really sharp pricing on those every-day-low-prices. JCP is right that not everyone is duped by the mark-it-up-to-mark-it-down policy so many department stores use. But not everyone is good at math, either.

We'll see if JCP has the guts to stick it out. Personally, I'm hoping they do. (But please change those prices back to .99)

-Phil Wrzesinski
www.PhilsForum.com

PS If you have not yet seen my Pricing for Profit presentation, I am doing a revised version at the ASTRA Marketplace in Baltimore this coming June. According to those who have seen it, it might be the single most profitable hour you might ever spend.

Monday, January 30, 2012

Gotta Keep Learning and Growing

I have not been blogging as much as usual. Sorry about that. You would think that with the hectic Christmas season behind me I would have more time.

Wrong.

I have been busier than ever.

One of those projects that has kept me busy is that I was asked by the American Specialty Toy Retailing Association (ASTRA) to write a book about the financials of a toy store. A comprehensive guide to help independent toy stores understand their financial statements, how those numbers get calculated, what are the industry averages, and how to figure out why your numbers might be higher or lower than your fellow store owners.

Yeah, they asked me to write a book on financials. The same guy who says right on the home page of my website that I am not a financial guru.

So for the past few weeks I have been doing my homework to become that financial guru. Okay, maybe not guru, but learning enough so that I can help you understand your numbers, too. And the journey has been worth it.

For the first time, when my accountant came in to help us make those year-end adjustments so all our accounting lines up, I finally understood everything he said. A couple of times I even knew before he said it what he was going to say.

Don't get me wrong. I am not going to pass any accounting exams in the near future. But the thrill of knowing I had learned something useful has given me a new excitement towards the business and a refreshed energy.

Maybe you could learn something new to give you that same feeling of newfound enthusiasm. If so, I have a list of topics worth exploring right here.

-Phil Wrzesinski
www.PhilsForum.com

PS Last year I posted a free eBook on Reading Your Financial Statements. It is pretty good. Not as good as the book ASTRA will be publishing this spring, but a decent start. I will be correcting a couple errors in it soon, but even this version might be a big help for those of you struggling to speak accountantese.

Monday, January 16, 2012

Lessons from MLK Quotes

If you have seen my live presentations, you know I love great quotes. I love quotes that make you think, quotes that teach you a lesson, quotes that give you perspective.

Here are some of my favorite quotes from Martin Luther King, Jr. that relate to our type of business.

"Never succumb to the temptation of bitterness."

We all have customers who try to take advantage of us. It is easy to want to feel bitter about them or react by creating programs or policies to deter them. Unfortunately, those changes always come across as bitter or anti-customer. Do not succumb to those feelings. Accept that some people will act that way. Treat them well anyway. You never know what they are thinking and how you just might make a difference in their lives through your kindness.

"Faith is taking the first step even when you don't see the whole staircase."

The pretty much epitomizes the mindset you need to be a successful retailer. Have faith in your abilities. Have faith in your business model. Have faith to take risks even when you do not see the outcome clearly because you will never see the outcome completely clearly. The only outcome that is clear as a bell is that nothing good will happen if you do nothing at all.

"Love is the only force capable of transforming an enemy into a friend."

Embrace your tough customers. Embrace your unhappy customers. Say, "I'm sorry," when someone is unhappy with your business. If they are unhappy, there is something you did wrong. Apologize, accept that you were wrong somewhere, and then make it right. Love those tough customers and instead of writing bad things about you on Yelp, they will become your most loyal supporters.

"Everyone can be great because everyone can serve."

Put yourself in the service of others - both your customers and especially your employees - and they will lead you to greatness. The best training you can offer your staff is to role model the behavior you expect of them. Your staff will never care more than you so you need to care more than they have seen. They will never work harder than you, so you have to work hard (smart) enough that your staff's lesser efforts are more than your customers expect.

"All progress is precarious, and the solution of one problem brings us face to face with another problem."

The one mistake we often make is believing that once the next problem is solved, it will all be smooth sailing. If you wish to succeed, you need to be prepared to meet each problem head on. One way you do that is by furthering your education, furthering your own personal growth as a leader, as a retailer. You will never not have problems, but you can overcome them more easily the more you prepare yourself.

Happy Martin Luther King, Jr. Day!

-Phil Wrzesinski
www.PhilsForum.com

PS If you are looking for a way to grow your retail business and are in the Jackson area, next Monday starts the fifth year of the Jackson Retail Success Academy. Contact me to find out how you can get signed up.

PPS If you are not in the Jackson area, but are interested in the contents of the Jackson Retail Success Academy, I offer a two-day workshop that includes all of the best content from that class in two jam-packed days. Contact me for pricing and booking information.

Monday, January 9, 2012

This Will Be a Succesful Year If...

I don't like making New Year's resolutions.

I resolve to lose weight, pay off debt, exercise more, eat healthy, save money, go to sleep earlier...

The moment you stop, you fail. I prefer success.

So instead of resolutions destined to fail, I like to take a moment to define what success will look like.

Finish the following statement:

This will be a successful year if...

...if I get to be in business next year
...if I book 6 new speaking engagements
...if I publish a new book
...if I average 100 readers per blog post

The difference between doing it this way and resolutions is that you are focusing on the goal, the end result, instead of just the method. If the method you are using does not help you reach your goal or is unsustainable then you can try new methods.

You get to keep working on that goal from any angle you choose.

Like everyone else, I encourage you to write it down. Go get a blank piece of paper and write across the top "This will be a successful year if..." and start filling in the rest.

You can make categories - Personal, Professional, Individual, Family, Financial, Social - if you want. Just be sure to jot something down for each.

Once you have done that, start strategizing the How. Start brainstorming the What. Start piecing together the Who and the Where.

The When is right now. Define your success and you have a better chance of reaching it.

-Phil Wrzesinski
www.PhilsForum.com

PS For those of you who have already downloaded my free eBook Staff Meetings Everyone Wants to Attend, you recognize that this is the same statement I use when planning those meetings. In fact, it is written right across the top of my Staff Meeting Planner Worksheet. And my clients know I ask the same question of them. How will we define success? How will you?