Two Great Retail Lessons: One Positive, The Other Not So Good

By Robert Gordman, president, The Gordman Group

(Editor’s  Note: Retail consultant Bob Gordman offers some interesting insights into what he calls “two of the most dramatically opposite” retail case studies in recent years: lululemon athletica and J.C. Penney Co.)

First the positive study, lululemon athletica. Christine Day and her team have redefined the term customer knowledge. They not only know their customers and their customers’ rules, they continue to become more knowledgeable all the time.

Any retailer who has not studied lululemon is missing a once in a lifetime opportunity to improve their own business. This is not a story about exercise wear or the affluent consumer; it is a story about intense customer knowledge. The reward has been the greatest growth, profit and productivity story in the history of apparel retail.

On the other side of the ledger is JCP (J.C. Penney). This is a great study of a company having a total lack of knowledge about their customers. There is no question that Penney’s needed to change. The company was dying a slow death by using a fake promotional strategy to sell less than desirable merchandise.

The lessons learned are numerous. First, lower prices on undesirable merchandise do not make the merchandise more desirable. Next, hip, confusing advertising does not increase store traffic, particularly when your customer base is generally conservative and middle of the road. Finally, when changing your strategy, change the advertising last. The bleeding edge advertising campaign JCP launched had absolutely no relationship to their current merchandise, their stores or most of their customers.

Can JCP be successful? ABSOLUTELY. But first they need to take a few steps back, accept the reality of where customers currently positions the company and develop a customer relevant plan to evolve to a new market position. It may take an additional year or two, but they can get there.

Robert Gordman is president of The Gordman Group and the author of "Do You Know What You Don’t Know?" and "What it Costs You," "Secrets of the $uper $weet $pot: Building Sustained, Profitable Growth" and "The Must-Have Customer: 7 Steps to Winning the Customer You Haven’t Got." As a consultant for almost 20 years, he has helped executives think creatively to develop well-thought-out, executable strategic plans for their companies.


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