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BUSINESS

Penney hoping love is in store

Retailer remakes its brand with a new focus on service

09:51 AM CST on Tuesday, February 13, 2007

By MARIA HALKIAS / The Dallas Morning News
mhalkias@dallasnews.com

NEW YORK – J.C. Penney Co. wants to be loved.

More important, the 105-year-old department store chain says it's ready to be loved – ready to form a more intimate, emotional connection with shoppers.

Will consumers ever feel as passionate about Plano-based J.C. Penney as they do about such beloved brands as Nordstrom, Apple and Starbucks? Since flirting with extinction around the turn of the century, Penney has undergone a multiyear turnaround. Shoppers have noticed a difference in its stores, catalog and Web site, reflected in the company's 15 consecutive quarterly sales increases.

Penney ad
J.C. Penney
Penney has broadened its merchandise, with both its own labels and through partnerships with designers like Chris Madden, who has an exclusive home collection with the retailer.

And tonight, in a Manhattan ballroom, Penney hopes to take its transformation to the next level by unveiling a new branding and advertising campaign.

"Six years ago, this company was in deep, deep trouble. We had a good marketing campaign, but we weren't delivering," said Michael Boylson, chief marketing officer. "Branding takes a long time. It's not something you can do overnight. Now we can deliver on our promise."

For tonight's coming-out party in front of New York's influential fashion and financial world, Penney has rented a ballroom just two blocks from competitor Macy's flagship store at Herald Square.

Meanwhile, training materials have gone out to its 1,033 stores, and Penney managers are briefing sales associates on the new branding and why they're the key to the process.

The advertising campaign debuts on the Academy Awards television broadcast Feb. 25. The next morning, store aisles will have signs noting displays of outfits that were featured in the commercials.

In the commercials, people are dressed in Penney's clothes in everyday situations, at work, the beach, taking a walk and playing with their children.

FROM LIKE TO LOVE
Saatchi & Saatchi CEO Kevin Roberts has written two books on turning trademarks into "lovemarks." The trick, he says, is to move a brand up the axes of love and respect.
Low love and low respect: These are commodity brands, like gasoline for your car or lumber for your home-improvement project.
High love and low respect: These are fads that fade quickly, like Pet Rocks and Beanie Babies.
Low love and high respect: Where most brands are – including J.C. Penney, Microsoft and your neighborhood grocery store.
High love and high respect: These are brands people swear by, like Starbucks, Apple and Nordstrom, and it's what Penney aspires to.
SOURCE: The Lovemarks Effect: Winning in the Consumer Revolution by Kevin Roberts

The campaign will come out of the department store chain's annual billion-dollar-plus advertising budget. Penney's new slogan, "Every Day Matters," replaces the old "It's All Inside."

"'Every Day Matters' is more than a tag line. It's a way of life, a way of thinking," Mr. Boylson said.

A fresh face

The timing's right for a rebranding, said Gerald A. Hirschberg, a Standard & Poor's analyst who has covered the retailer for more than 20 years.

"They've changed a lot. It's not a bad idea to put a fresh-faced image in front of the public that says, 'Come and look at what we're doing now,' " he said. "It's really not the old J.C. Penney anymore."

Penney has been working with a new ad agency, Saatchi & Saatchi, since last fall, after a six-year relationship with Omnicom Group's DDB Chicago office.

With Saatchi, Mr. Boylson said, Penney came to the conclusion that the retailer can graduate into the hearts and minds of shoppers as a "lovemark."

Saatchi & Saatchi CEO Kevin Roberts has written two books on brands as lovemarks, a concept he named and has developed since 2000. His second book on the topic, The Lovemarks Effect: Winning in the Consumer Revolution, was published in November.

Mr. Roberts argues it's time for love to be firmly entrenched in marketing and for people to be willing to talk about it.

"This is a big step up from when I used to mention the 'L-word' and CEOs slid under their boardroom tables," he writes. "Love is here to stay. Emotional connections with consumers are an irrefutable differentiator in the market."

Starting with employees

But before Penney could ask shoppers to love the company, Penney chairman and chief executive Mike Ullman says, Penney had to become "a great place to work." He's been orchestrating a remaking of the corporate culture so Penney's workforce could communicate the good feelings to customers.

Mr. Ullman is on the board of Starbucks Corp., whose founder, Howard Schultz, created a corporate culture from the beginning that kept employees engaged.

In a letter to Penney employees about the rebranding, Mr. Ullman said store employees are the ones "who will bring 'Every Day Matters' alive" for the customers.

Mr. Ullman isn't asking its sales staff to be personal shoppers the way a Neiman Marcus or Nordstrom associate does for their best customers. Instead, he's asking Penney associates to be "prepared to offer encouragement, be their friend and inspire them and to show them that we know every day matters."

"Every day matters" isn't just a slogan for the public, it's something he's adopted at the home office, Mr. Ullman said. "My goal is to never walk around here looking like I'm upset about something. We have great opportunities, every day. Every day matters."

Difficult turnaround

Mr. Ullman has been addressing Penney's image inside and out after the company completed one of the most difficult turnarounds in the history of retail, led by his predecessor, Allen Questrom.

Penney's stock has also seen a turnaround; it closed Monday at $82.48, down 37 cents, but still near an all-time high.

Penney has broadened its merchandise, with both its own private labels and through partnerships with companies that wouldn't have considered the chain in the 1990s. Last fall, it reached an agreement with Liz Claiborne to launch Liz & Co. for women and Concepts by Claiborne for men.

Penney sells Nicole by Nicole Miller and Bisou Bisou and is adding Sephora cosmetics shops inside its stores.

Polo Ralph Lauren Corp.'s new division to develop brands for specialty and department stores made its first deal with Penney. It's designing a line called American Living, due in 2008.

Giving the shoppers reasons to keep coming back is at the center of Mr. Ullman's rebranding.

That dynamic was on display Monday afternoon at the Penney store at New York's Queens Center mall, one of the chain's highest-producing locations. Lines at the registers were four or five deep as Raquel Carrasquillo, 19, and Viviana Cordero, 21, both of Queens, checked out the Sephora shop.

The women said they normally go to Macy's, Gap, Banana Republic and local boutiques, and to Penney for something specific like sandals or stockings. But Sephora has changed the equation.

"We started coming here when we realized they had Sephora," Ms. Carrasquillo said.

She and Ms. Cordero said they would think of Penney as a value destination for clothes and household items as they grow older.

Big comeback

Only a few companies have achieved what Penney is doing, Mr. Hirschberg said.

"It's not easy, once you're down, to come back in the eyes of the consumer. Several of us here were talking about that recently. We came up with J.C. Penney and McDonald's. Someone mentioned J.Crew."

Former Gap Inc. CEO Mickey Drexler is getting accolades for leading a restructuring at J.Crew, including forming two new chains, CrewCuts and Madewell.

Fast food giant McDonald's Corp. stumbled badly in the 1990s and early 2000s, but it cleaned up its stores and improved its menu. Customers and profits returned.

Brand strategy and design consultancy Lippincott Mercer, based in New York, helped McDonald's rework its store environment. Peter Dixon, senior partner and creative director at the firm, said McDonald's had to change many things at once, as did Penney.

"It wasn't that long ago that it seemed people were going to write off the whole category of department stores," Mr. Dixon said. "Penney has fixed its merchandise, figured out who its customers are and focused on making fashion right for them. Then they've moved forward trying to also reach a younger customer with new relationships such as Sephora.

"That's a very smart way to differentiate itself from the department store cosmetic counters," Mr. Dixon said. "They're getting a lot of traction on that."

As Penney attracts new customers, it has to deliver a positive experience, he said.

"Advertising is only a component of brand building. It's a way to reach people. It becomes a joke if you don't deliver," Mr. Dixon said. "When people come back one more time, you have to deliver, because people want to identify with a place that makes them feel good."

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