Remember All in the Family? No, not the TV show but the idea of retailers targeting young families as their prime customers. It’s something that two big national retailers – JCPenney and Kohl’s – built their businesses on. After a series of meanderings that were often dead ends, both are back going after family shoppers, while playing to their Middle America retail strategy.
The new strategies we’re seeing on the part of both Kohl’s and JCP identify a new way to define their appeal and their customer base. But here’s what’s different this time in our modern consumer society. She’s not just middle America; she’s the head of the family, possibly the main wage-earner, trying to get shoes and back-to-school clothes for her kids, a nice shirt for her partner to wear when they go out for dinner and perhaps a new work outfit for herself.
It certainly has the potential to succeed better than many of the retail strategies these two chains have pursued for much of the past decade. And for the sake of each, it had better succeed. Neither chain is exactly setting the retail world on fire and if they don’t find a niche for their businesses, they are likely to be out of business before it’s all over.
Kohl’s has lost over $2 billion from its top line – more than 10 percent of its total – just over the past two years, while its bottom line remains sketchy at best, teetering back and forth between red and black ink. Things aren’t any better at Penney, although its numbers are shrouded in corporate balance sheets. It also continues to lose money, with net losses tripling just this past quarter versus a year ago with total revenues down just over 8 percent for the quarter,
A Family Affair
Like America itself, the mid-market in retail was once the center of everything. JCPenney was arguably the leader in this channel but brands from Sears and Macy’s to Mervyn’s, and in the discount space from Alexander’s to Korvette’s, all targeted a customer looking for good prices and good merchandise too. Kohl’s came along a little later out of the upper Midwest but not before too long it expanded nationally going after that same moderate-price customer.
Gradually, things started to shake out and as discounters moved down-market, department stores traded up and players like Mervyn’s and Sears (mostly) went away. It fell to Penney and Kohl’s to hold down the middle ground. They did it with an insane amount of promotional activity, using convoluted couponing, one-day sales that stretched the better part of a week and usually involved TV commercials that turned up the promo levels to 11. Penney’s momentary detour during the ill-fated and short-lived Ron Johnson era didn’t help, and when it was over the company returned to its previously scheduled strategy.
Since then, JCP filed for bankruptcy and emerged under the ownership of two shopping mall operators who have a vested interest in keeping the lights on in their anchor tenants. Kohl’s, in the meantime, has fought off barbarians at the gate, gone through some CEO battles, and continues to underperform in what is a generally underperforming retail sector.
Middle America
We do need to cut both retailers some slack in all of this. By circling their wagons around the mid-market customer, they are appealing to a smaller and smaller demographic. Price-sensitive shoppers increasingly go to Walmart, Target, Amazon, the TJX brethren and Costco when they are feeling the need and want for bargains. On the flip side of the consumption scale, luxury brands and upscale department stores are attracting consumers who still want the good stuff…be it aspirational or real. That doesn’t leave much left for the mid-market doppelgangers other than value.
Hence, the new strategies we’re seeing on the part of both Kohl’s and JCP to identify a new way to define their appeal and their customer base. But here’s what’s different this time in our modern consumer society. She’s not just middle America; she’s the head of the family, possibly the main wage-earner, trying to get shoes and back-to-school clothes for her kids, a nice shirt for her partner to wear when they go out for dinner and perhaps a new work outfit for herself.
The Stories We Tell
Kohl’s has been much more upfront about all of this. In September it unveiled its “Where Families Come First” sentimental campaign that is all about the joy in having the things family members need to wear and how they decorate their homes. “When life gets real, start here,” Kohl’s proclaims, telling the world “With our new platform, we have an opportunity to emotionally connect with new and existing customers, including families in all of their forms, and get them excited about the changes we’re making.”
Christie Raymond, Kohl’s chief marketing officer said, “Today’s family is inundated with images of perfection across media channels, so we wanted to flip the script and bring authenticity to our marketing and storytelling that shows real moments.” Exactly how all of this gets manifested in Kohl’s stores – online too – remains a work in progress and is part of CEO Tom Kingsbury’s ongoing effort to reinvent Kohl’s…before a private equity suiter tries to do it themselves.
The Purpose We Hold
Over at Penney, CEO Mark Rosen – on the job for a little longer than Kingsbury – has been repositioning his company along similar lines. In a recent interview with Fortune, he said “We centered around being here to serve and celebrate America’s diverse working families. And I think when we really clarified that purpose and united the team around that purpose, it made it clear what we were doing here. And for our associates that was actually really appealing too because our associates are America’s diverse working families, and they saw what we were doing for people like them.”
The words may be different and so far, it’s not directly related to JCP advertising and marketing, but Rosen’s comments are eerily familiar to what Kohl’s is talking about.
And in a way, there’s a certain irony in this. Yes, it’s still about a middle-American customer. But back in their heydays, these stores were where shoppers came in to buy things for their families, not just for trendy teenage girls or young men.
As such it’s not a bad positioning, given that neither retailer is able to do the massive pivot it takes to claim a different spot in the marketplace. Even if they could, there’s already plenty of people already working that side of the block. To say this is Penney’s and Kohl’s last best hope is not necessarily overstating things. Both retailers still have the kind of solid operations that prevent any danger of going away. But if this doesn’t work, what will?
Going back to the family positioning makes a lot of sense. As Oscar Wilde said, “Be yourself, everyone else is already taken.”