Forbes has a piece that suggests that JC Penney CEO Ron Johnson, who has been moving the company to an EDLP strategy that depends less on promotions and coupons and more on a perception of real and sustained value, may be working against certain scientific precepts related to shopper appeal.
The story says that "a new study, soon to be published by the Center for Neuroeconomic Studies at Claremont Graduate University, measured the hormone levels, heart rates, breathing and perspiration of subjects who received a $10 coupon while grocery shopping online compared with those who didn’t get a coupon.
"The result: Levels of oxytocin, a feel-good hormone linked to love and happiness, were an average 38% higher for people who got a coupon. Their breathing and heart rates were slower. They reported better moods."
In essence, by eliminating coupons, Johnson seems to be forcing his customers to go through withdrawal.
The story says that "a new study, soon to be published by the Center for Neuroeconomic Studies at Claremont Graduate University, measured the hormone levels, heart rates, breathing and perspiration of subjects who received a $10 coupon while grocery shopping online compared with those who didn’t get a coupon.
"The result: Levels of oxytocin, a feel-good hormone linked to love and happiness, were an average 38% higher for people who got a coupon. Their breathing and heart rates were slower. They reported better moods."
In essence, by eliminating coupons, Johnson seems to be forcing his customers to go through withdrawal.
- KC's View:
-
And, as we all know, when addicts are denied their fix, the first step is to find a new dealer. Which could explain JC Penney's continuing problems.
However, while there certainly can be legitimate questions raised about Johnson's tactics and their short-term impact, it also has to be said that JC Penney was an retailer bordering on obsolescence when he took it over. That's why they hired him! Something had to change, or the retailer might not continue to exist.
I have no idea if the company will be able to survive the short-term problems, but the long-term solution strikes me as the right one.
