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JCP spurring Macy's profitability?

August 30, 2012 by Dale Furtwengler — President, Furtwengler & Associates, P.C.

In his August 8, 2012 New York Post article, "Macy's profit climbs 16%," James Covert states "[Macy's] Profit rose 16% as the New York-based retailer continued to lure away shoppers confused by Penney's new pricing strategy under CEO Ron Johnson." The questions we should be asking are "Why Macy's? Why not Target or Walmart?"

The answer lies in the fact that all of these stores are selling the same thing — image. They're simply offering different versions of that benefit. Each store presents itself to the market in a way that reflects the customer's self image.

Walmart's image is of the price-conscious customer. Target offers a more hip feel than Walmart. JCPenney, as the article indicated, has lost its way. It's not sure who it's targeting. Traditionally the JCP customer valued dependable brands that were stylish. Macy's offers upscale, readily recognizable brands that supports their customers' perception of their own success as well as a desire for higher quality.

When a retailer loses sight of who its ideal customer is, as JCP has done, their customers are going to migrate up the scale, not down. That's why Macy's is enjoying the benefits of JCP's foot faults and Walmart and Target are not.

About Dale Furtwengler

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