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US: JCPenney doubles down on mobile loyalty

The debate continues to rage: Is loyalty integration integral to the success of mobile payments in retail? Or is a streamlined, frictionless customer experience through the payment app itself enough to drive profitable customer behavior? With its integration into Apple Pay, US department store retailer JCPenney joins CVS, Walgreen’s, and other retailers on the side of loyalty integration, while Target, Walmart and others stand firmly on the side of CX as the ultimate driver of loyalty. Which side will win the debate? Stay tuned.

By Rick Ferguson

It’s a familiar tale in the retail department store world: A retailer releases disappointing quarterly results, then announces a restructuring and a round of store closings. For JCPenney, the latest chapter came in May, when it announced its first-quarter earnings. The bad news: A same-store sales drop of 3.5 percent, worse than expected, and a net operating loss of $180 million – nearly three times the operating loss during the same quarter last year. The retailer promptly announced that 138 stores would close.

How will JCPenney attempt to stem the bleeding? By redoubling its efforts to retain its most valuable customers via its loyalty program. Last month, the Dallas Morning News reported that, after a year of study, JCPenney will debut a new loyalty program that allows it to compete more directly with arch-competitor Kohl’s own loyalty offering.

Enhanced features include:

  • Shoppers can now earn more than $10 in rewards each month, and those rewards will be valid for 60 days. Previously, shoppers were only able to earn $10 rewards once a month.
  • Members will also receive member-only prices and invitations to exclusives events where they can earn rewards more quickly.
  • Members shopping at one of JCPenney’s 650 Sephora locations will be able to earn both JCPenney rewards and Sephora Beauty Insider rewards, providing a nice double-dip opportunity.

Last week, JCPenney also announced that it is rolling out Apple Pay with credit card integration, allowing JCPenney MasterCard cardholders to earn JCPenney Rewards points when paying through the mobile wallet.

Money quote from JCPenney CIO Therace Risch:

“With Apple Pay at JCPenney, we`re able to offer a faster, more seamless check out process by allowing our customers to pay for their purchases by simply holding their iPhone or Apple Watch near a point-of-sale terminal, rather than inserting a chip card. And with the added convenience of our credit card as a payment option via Apple Pay, we`re giving customers another compelling reason to join our credit card and loyalty programs.”

With JCPenney now firmly in the loyalty camp, the Great Loyalty Debate is engaged. Which approach will prove more effective at stemming the bleeding of brick-and-mortar retailers? Will JCPenney, Kohl’s, Walgreens and CVS prove that loyalty is the killer app that drives mobile payment adoption and provides a fulcrum for profitable customer relationships? Or will the mere ease and convenience of mobile payments work for Target, Walmart, and their compatriots on the CX side of the debate? We don’t know the answer yet – but we’ll be watching.

Rick Ferguson is Editor in Chief of the Wise Marketer Group.

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