In 2019, J.C. Penney unveiled a rebranded department store in Hurst, Texas. The remodeled store includes style coaches, fitness classes, and a coffee bar. It represents the latest strategy that J.C. Penney has deployed to draw in customers.
J.C. Penney rose to prominence as a national retailer by dressing the middle class. Still, analysts say the retailer’s costly shifting strategies have failed to bring the modern middle-class customer, leading the company to file for bankruptcy.
With so many American’s staying home because of the coronavirus crisis, sales across the retail industry have plummeted, creating an uncertain future for many retailers. Here’s how J.C. Penney fell from the top of retail.
J.C. Penney was founded in Kemmerer, Wyoming, in 1902 by James Cash Penney. The first store was named the Golden Rule and catered to farmers by selling blue jeans and other workwear.
The retailer changed its name to J.C. Penney and expanded to locations across the United States. J.C. Penney was quality clothes at a fair price. They dressed the middle class, and they had everything from clothes for kids to career clothes for women and men.
In 1958, it began allowing customers to make purchases on credit, and in 1963, J.C. Penney released its first catalog. Well, they came up during the era when shopping malls were populating the country.
They were sought after by mall developers to be anchors. They developed these private label brands like Arizona Jeans and Worthington that customers just loved. The retailer’s stock price rose throughout the 1980s and ’90s. But with the rise of fast fashion and e-commerce, retailers like J.C. Penney have faced problems in recent decades. Mainly, retailers in the middle that was neither high nor low found themselves in distress.
About JCPenney CEO Ron Johnson and His Work for JCPenney
J.C. Penney hired former Apple executive Ron Johnson in 2011 as CEO. Johnson scaled back promotions and discontinued private brands. He had run Apple’s retail stores and successfully made Apple a sweltering place to shop. He shifted to an everyday low-price strategy, which sounds good in theory, but it turns out, customers like deals.
Then former Home Depot executive Marvin Ellison took charge in 2015. He brought back appliances to the store, a product category J.C. Penney hadn’t sold since 1983. Appliances, you know, it’s a whole different business.
Its different distribution, its different skills, its lower margin, and as Penney focused on rolling out appliances, it took its eye off apparel, which is where it makes the bulk of its money.
How J.C. Penney Fell from The Top of Retail?
Between 2014 and 2018, J.C. Penney only had three profitable quarters. Since Jill Soltau took the helm in 2018, the brand has been trying to implement changes like those in the Hurst location.
Unfortunately, they haven’t had enough time to see what works, and they don’t have the money to roll this out en masse. Its stock had been trading below $1 for long enough that the New York Stock Exchange had notified the company that it was at risk of being de-listed. They have been in talks with creditors, but they could not reach a deal before the crisis.
In March, JCPenney Associate Kiosk announced it would be closing all of its stores and furloughing workers in response to the United States coronavirus outbreak. In April, Fitch downgraded the company’s bond rating, which was already in junk territory, and soon after, the company announced it would skip an interest payment owed to bondholders.
All JCPenney stores are closed. It’s lost most of its revenue. What is the inventory going to be worth when they can get around to selling it. There are a lot of unknowns that make the whole process more difficult.
That sort of middle-of-the-road department store has lost favor, and you need to define who you are. This sort of, like, trying to be everything to everyone is not a game you can play in today’s world.