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These 3 New Year’s Resolutions Could Save J.C. Penney in 2014

By Melinda Melendez – Dec 28, 2013 at 7:00AM

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J.C. Penney and Abercrombie & Fitch are sticking with their CEOs for now while Lululemon Athletica has already made major changes. Will J.C. Penney bring about meaningful change in the new year?

What do J.C. Penney (JCPN.Q), Lululemon Athletica (LULU -1.03%), and Abercrombie & Fitch (ANF 0.67%) all have in common (besides liking pina coladas and getting caught in the rain)?

They all had a really bad year.

For J.C. Penney, 2013 was a like a never-ending, terrible, horrible, no good, very bad day. Stockholders who held J.C. Penney on January 1, 2013 have watched the value of the stock fall by 67% as the share price hit a low of $6.42 in October.

This was due in no small part to the massive marketing blunder that former CEO Ron Johnson instituted in a misguided attempt to resurrect the already-ailing brand. By abruptly eliminating the brand's tried-and-true, discount-based promotional strategy, Johnson alienated an already shrinking group of loyal customers. This sent the company into a tailspin that resulted in Johnson's firing in the spring of this year, the company's reinstatement of Mike Ullman as CEO, and the company's ouster from the S&P 500 index.

This begs the question: Will 2014 be the best of times (or at least better of times) to 2013's worst of times? Or is this the beginning of the end for J.C. Penney?

Here are three resolutions J.C. Penney should adopt in order to make 2014 a better year:

Don't throw out the baby with the bathwater
Returning to Ullman was the safe move. Bringing someone familiar back to the helm resonated with alienated customers as the retailer reinstated promotions they have come to expect from the brand.

Johnson's strategies may have been too much, too soon for the retailer. Many of his marketing techniques, however, improve the shopping experience and they are appealing to J.C. Penney's customers when combined with the store's former discounting techniques. Returning to the store's over-cluttered, unattractive ads and stodgy merchandise would be a step backward.

J.C. Penney finds itself in a very similar position as Abercrombie & Fitch, which has seen its stock price plummet more than 50% over the last two years. Abercrombie has decided to stay the course with CEO Mike Jeffries, who recently signed a contract that extends his tenure until February 2015. The year 2014 could be a make-or-break year for this company as well.

Embrace plus-size shoppers
The average woman in the U.S. wears a size 14, which is considered the low end of the plus-size scale. Yet, plus-size women are constantly searching for affordable, attractive options when it comes to fashion, and they are often faced with "size-ist" attitudes among companies.

Former chairman of Lululemon Chip Wilson learned the hard way that women, both plus-size and otherwise, have power. After blaming the brand's spring recall on the shape of women's bodies instead of owning up to shoddy merchandise, Wilson was recently shown the door in the wake of a very public outcry from Lululemon's customers.

Companies like J.C. Penney should view this a s a public relations opportunity to win over plus-size shoppers with quality, stylish merchandise at affordable prices.

Keep courting younger shoppers
Johnson may have tried and failed to court younger shoppers, but that doesn't mean J.C. Penney should give up on attracting the youth demographic. In fact, a recent study performed by the NPD Group indicates that, surprisingly, the majority of millennial dollars are spent in-store. What's more, because young people are more likely to earn less money than their older counterparts, they are attracted to cheaper prices and discounts.

That's good news for retailers like J.C. Penney. Combining some of Johnson's more successful changes, like trendier merchandise and sleeker sales floors, with deep discounts and sales promotions could be the sweet spot for drawing in younger consumers.

Fool contributor Melinda Melendez has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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