Good results from the other guys' marketing

J.C. Penney and Kohls reported good quarterly results:

Wal-Mart may be whimpering, and Federated Department Stores may be struggling. But both J.C. Penney and Kohl's Thursday announced better-than-expected third-quarter results, and bullish predictions about the quarter ahead.

Good for them. But the amusing part of the report was this:

The company also said J.C. Penney benefited from the extensive marketing campaign for Macy's stores, which sent more people shopping at the mall.

The golden mean

It looks like J. C. Penney is seeking the middle ground in their new ad approach and new agency Saatchi.

J.C. Penney's desire to reposition its brand as the preferred choice in the "hearts and minds of Middle America" drove its decision last week to shift creative duties from DDB to Saatchi & Saatchi, said Penney chief marketing officer Mike Boylson. The shift came after months of presentations by both DDB in Chicago and Saatchi in New York.

"We believe that the hearts and the minds of Middle America are up for grabs," Boylson said Friday. "Middle America is really underserved. And we think there's a unique opportunity in owning the middle, owning the moderate space."

Not that I know much about advertising or positioning -- I'm strictly a trade promo guy -- but all the talk about the country going high/low (it's either Wal-Mart or Nordstrom) has struck me as overdone. I think JCP has the right idea. In any case, we'll see.

Penney tackling Kohl's off-mall

JCPenney is reported to be going off-mall, pitting it head-to-head with Kohl's.

They're planning 200 new stores in the next few years -- this year they will be opening 29, of which 20 will be off-mall locations.

Building new stores beyond malls gives J.C. Penney more flexibility in location, allows the company to locate closer to its customers.

It's a strategy that's worked for fast-growing Kohl's the past 15 years and could cut into the Menomonee Falls company's market share throughout the United States.

Other indications that they may be targeting Kohl's are the store layouts and merchandise assortments, which are similar to Kohl's:

The off-mall stores are slightly smaller than traditional, mall-based Penney's and are built on one level, rather than two. The stores also are laid out differently, with a central checkout stations. They offer clothing and home items, but not furniture.

With that concept, J.C. Penney is chasing the same type of customers as Kohl's...

Kohl's, though, is planning even more growth, with 500 new stores projected in the next five years. If both chains meet their plans in new-store openings, they'll be roughly ties at about 1200 stores each.

I've got to wonder if there's enough business to support that many stores.

Rebirth at Penney's?

JCPenney has been reporting some good numbers lately, and USA Today reports on some of their new initiatives.

(Unfortunately, USAT's headline writer chose "J.C. Penney sells with an attitude". Is there a tireder cliche than "attitude"?)

Among other things, JCP is putting a temporary showcase store in Times Square, sponsoring the Academy Awards show, and putting a 12-page spread in People, Vogue, InStyle, and other mags.

While trying to update their image, JCP execs are quick to say their not moving up-market.

Just don't use the "u" word, as in "upscale," executives stress. Says Cape: "We're not moving upscale."

Says Boylson: "I don't want to leave the impression that we're going upscale — because we're not."

Adds Chairman and CEO Myron "Mike" Ullman: "We are not ashamed of Middle America."

Good thing. As "attitude" is to creative writing, moving upscale is to retail thinking. It's what everybody does when they lose their way, and it practically never works.

Retailers have been "trying to drag Middle Americans upscale in one direction or downscale in another," he says. "We don't think there's anything wrong with being 42% of American consumers."

It's an interesting article on one of the few department store chains that is doing well.