JC Penney (JCP) Poaches New Marketing Chief From Kraft Foods (KRFT)

 @AlexCKaufman
on August 06 2013 6:04 AM
No. 3: Ronald B. Johnson, J.C. Penney Co. Inc., $53.3 million
J.C. Penney says it has the support of all key vendors as it attempts a turnaround. REUTERS

J.C. Penney Company Inc. (NYSE:JCP) is hoping its new marketing chief – its first in 14 months -- can make the ailing department-store chain as appetizing to consumers as a bowl of macaroni and cheese.

The Plano, Texas company poached Debra Berman from Kraft Foods Group Inc. (NASDAQ:KRFT) on Monday, filling a position left vacant by former President Michael Francis, who stepped down amid huge losses less than a year into the job in June last year.

An executive who oversaw 55 new brand strategies in her first three years at Kraft, Berman told AdAge last October that the key to her success with “powerful brands” such as Velveeta macaroni and cheese is to avoid “hammering the redundancy of message” and “stay fresh.”

“There is huge opportunity to remind America’s families why it is so great to shop at J.C. Penney while attracting new customers to the brand,” Berman said in a statement on Monday.

But striking a balance between those two marketing concepts may be the precise remedy for Berman’s new employers’ woes, an analyst said.

“Even in the press release, J.C. Penney said she was selling Velveeta mac and cheese,” Paul Swinand, an analyst at Morningstar, told International Business Times. “Maybe that’s Middle America, maybe it’s the right fit.”

J.C. Penney fired CEO Ron Johnson, a former Apple Inc. (NASDAQ:AAPL) executive, in April and brought back predecessor Myron Ullman.

Johnson had spearheaded a glitzy new home-goods section -- filled with a stable of designer brands including Jonathan Adler, Michael Graves and Martha Stewart – that failed to draw in customers, leading many analysts to believe the new products were marketed poorly to J.C. Penney’s older, more traditional customer base.

“In some way they’ve got to create this new version of the world, which is not the same as the past, but not so radically new that nobody knows what it is,” Swinand said, adding that the revamped home-goods department brought in fewer new customers than it deterred old ones.

“It pissed three people off for each one it got in the door,” he said. “And people that tried some of the new things were like, ‘Oh, this is great.’ But the difficulty was judging the reaction of people who were disappointed or people who didn’t even show up.”

But Swinand said he isn’t giving up hope for the company, which has been on a hiring spree for new executive talent over the last few weeks.

“I’m not totally convinced that things are as big a disaster as everybody thinks they are,” he said.

J.C. Penney denied a New York Post report last week claiming that CIT, the largest lender in the U.S. apparel industry, had cut off financing to small vendors selling to the chain. The tabloid report sent the company’s stock price tumbling, and prompted analysts at UBS and Citi to trim their estimates for second-quarter sales.

Shares in J.C. Penney were down more than 3.2 percent to $12.82 on Monday afternoon.

“Retail is a much simpler business than even Philadelphia Cream Cheese marketing,” Swinand said of how Berman’s hire can help turn J.C. Penney around. “If the merchandise is good and the pricing is good, and the stores are clean, you get people in the door and they’ll buy stuff. This is important, I think it can help, but the important thing is not to screw it up.”

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