Struggling with slumping sales, Penney's tapped DDB's Chicago and Dallas offices to evolve its marketing image to match merchandising changes the retailer is making at its 1,140 stores. The goal is also to bring home to consumers the retailer's abundant online offerings.
The company's Web site (jcpenney.com) -- which offers the store's entire catalog with more than 200,000 stock-keeping units -- was among the most visited on the Web, ranking 10th during the holiday season, according to Nielsen/NetRatings. Online sales rose nearly seven times higher than 1998's performance, hitting $102 million, up from $15 million the previous year.
Penney's hopes to build on that online momentum with a new DDB effort. The retailer valued its account at approximately $200 million, although Competitive Media Reporting said the retailer spent $372 million on measured media in 1999.
The new marketing thrust comes as Penney's replaces its old guard with a group of outsiders led by Vanessa Castagna, exec VP-chief operating officer of JCPenney stores, merchandising and catalog -- who joined Penney's from Wal-Mart Stores -- and Stephen Farley, senior VP-chief marketing officer. Among the veterans leaving the chain were Penney's previous lead marketing officer, Gail Duff-Bloom, president of corporate communications and corporate image.
"This is a great American icon," said Mr. Farley. Penney's decided that "instead of looking inward, to look outward," he said, undertaking extensive self-analysis while interviewing more than 76,000 of its customers. He declined to discuss details of the new effort that will break later this year.
Penney's is `'a brand which can be revitalized," said Keith Reinhard, DDB Worldwide Chairman-CEO.
Penney's, like many department store chains, saw its sales erode at the end of the century.
"Penney's has lost a lot of momentum to Kohl's and other fashion merchants like Target," said Walter Loeb, president of Loeb Associates. "Old Navy and Gap have taken customers away. Its home furnishings departments do not have an updated look."
Penney's stock also has slumped. From a 52-week high of $54.44, it had sunk 75.7% to $13.25 by April 20, close to its 52-week low of $12.94. That reflects a drop of 34.8% for its stock price year-to-date, vs. a 16.3% overall stock price decline for retailers with a broad selection of merchandise, according to MediaGeneral's Financial Services report.
DDB'S `CUSTOM-FIT TEAM'
To service Penney's, DDB has put together what Mr. Reinhard called a "custom-fit team" with several members who handle another American icon brand, McDonald's Corp. They include Mr. Reinhard, who said he "will personally be involved in the business," along with Dick Rogers, president of DDB U.S. and worldwide account director on McDonald's; and Bob Scarpelli, U.S. chief creative officer and vice chairman-chief creative officer.
Also sharing the account are DDB's Optimum media planning unit and parent Omnicom Group's Optimum Media Direction for media buying. Other agency arms involved in the work include Spike DDB, the agency's urban marketing arm, and Omnicom's Rapp Collins Worldwide for direct marketing. Cartel Creativo, San Antonio, and Dieste & Partners, Dallas, remain Penney's Hispanic agencies.
Other agencies in the Penney's pitch included BBDO Worldwide, McCann-Erickson Worldwide and Saatchi & Saatchi, all New York, and FCB Worldwide, Chicago. Sibling Omnicom shop BBDO Worldwide was the other finalist.
TEMERLIN KEEPS SOME WORK
Incumbent Temerlin McClain, Irving, Texas, declined to participate but remains agency for one of Penney's private-label apparel brand, St. John's Bay, with spending of about $14 million. MediaVest, New York, was the media buying incumbent.
DDB's Dallas office about a year ago made inroads on the larger account when it won Penney's $15 million Arizona jeans private-label brand.
Observers say a lot is riding on the new effort. "I think it's not too late for the brand to be revived, but there isn't that much time to waste," said Mr. Loeb. "The new campaign has to be hard-hitting."
Contributing: Hillary Chura, Richard Linnett