JC Penney goes back to the future, but it’s likely too little, too late

At one level, the announcement that JC Penney was going to stop wooing younger customers in favor of focusing on baby boomer moms seems to make a lot of sense.

During the devastating Ron Johnson era, Penney’s was practically driven out of business by trying to execute what I call the customer trapeze way too quickly while simultaneously doing a number of other bone-headed things. In a bid to “contemporize” the brand, Johnson dropped many (it turns out profitable) lines that were deemed old and stodgy in favor of more fashion-forward assortments aimed at attracting younger customers. And sales promptly fell off a cliff. The more-than-a-century-old retailer has been trying to dig itself out of this hole ever since.

In the intervening five years, Penney’s has tried a more balanced approach. Yet despite adding back some customers’ preferred brands, launching new products and services, retooling many aspects of its go-to-market strategy and having hundreds of its competitors’ doors close, the retailer has failed to build any sustained momentum. As I wrote a couple of months back, clearly Penney’s needs to try something new, and unquestionably it needs to do it with great urgency. Unfortunately, this latest gambit is very unlikely to work.

The most obvious problem with a return to focusing on middle-age moms is that it is essentially the strategy Penney’s was executing against before Ron Johnson showed up. And while Johnson set the house on fire, Penney’s was far from lighting things up during the years leading up to the failed “transformation.” In fact, growth and profits had stalled, and the stock was selling at less than half its historical high.

So as Penney’s goes back to the future, the one thing we know for sure is that the market it was trying to succeed in almost a decade ago is now considerably smaller and quite different. On-the-mall, moderate apparel and home stores have been steadily losing share to off-price/value-oriented off-the-mall competitors for many years. More recently, Amazon and other online players have set their sights on the segment as well — and most department stores are struggling mightily to keep pace. By going back to its old customer focus in a market that has shrunk considerably, Penney’s would have to gain more market share than it was able to do when things were far less competitive. That strikes me as a very tall order.

Even under the assumption that a more tightly focused customer strategy has merits, Penney has plenty of other hurdles to overcome. Like most retail brands stuck in the boring middle, it continues to swim in a sea of sameness, with repetitive products, me-too promotions, mediocre service and mostly uninspiring stores. Going deeper on a particular customer segment may provide some incremental upside in the short term, but it is hardly sufficient to make it materially more relevant and remarkable.

The retail formula for growth is, at one level, simple. Target a big enough audience. Increase traffic. Increase conversion. Increase average spending. Increase frequency. Rinse and repeat.

Doubling down on any one customer cohort may hold the promise of performing materially better on one or more of these factors. But given how the particular part of the market Penney’s is returning to has contracted, one has to make some pretty incredible assumptions to believe it can possibly drive meaningful and enduring profitable growth.

Moreover, I would argue that no retailer can sustain itself over the long term without a powerful customer acquisition strategy. And here demographics are hardly JC Penney’s friend. A decade ago Penney’s was struggling partially because it had not done a good job of attracting new, younger customers. It’s no different today as Millennials are sure to become a more significant potential source of volume.

To survive, much less thrive, Penney’s must learn to walk and chew gum at the same time. It must avoid, as Jim Collins likes to say, “the tyranny of the or” in favor of “the genius of the and.” A portfolio approach to customer acquisition, growth and retention is at the heart of any good strategy, and Penney’s must find ways to both leverage its historical core and attract the next generation of customers.

Plenty of retailers have suffered from casting too wide a net and ending up not being relevant and remarkable to any group of consumers in particular. Yet brands can cast too narrow a net as well. My fear is that this is exactly what Penney’s is electing to do. From where I sit, it simply cannot afford any more strategic missteps.

A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.

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