Photo: JCPenney
Can a new CEO revitalize J.C. Penney’s business?
J.C. Penney announced earlier this week that it has successfully concluded its search for a new CEO with the appointment Jill Soltau, former president and CEO of Joann Stores, to the position.
Ms. Soltau joins a company that has seen its stock price decline 57 percent over the past year. A turnaround plan begun under former CEO Marvin Ellison emphasizing improved supply chain and omnichannel execution along with an increased focus on categories such as appliances, athletic wear and women’s apparel has failed to produce the gains necessary to help Penney cut into its debt of more than $4 billion in a significant way. Same-store sales for the chain only improved 0.2 percent for the first six months of the year in a highly favorable retailing environment.
When Mr. Ellison announced in May that he was leaving Penney to join Lowe’s, many saw it as an admission that he saw little hope of turning the department store’s business around. Subsequent defections by the chain’s chief customer and financial officers only added to the perception that Penney is in trouble.
Paul Brown, the board director who chaired Penney’s CEO search committee, said the company has found an executive in Ms. Soltau who can lead a turnaround.
“We wanted someone with rich apparel and merchandising experience and found Jill to be an ideal fit,” said Mr. Brown in a statement. “Not only is she an established CEO and former chief merchant, her depth of experience in product development, marketing, e-commerce and store operations have been an important basis for the turnaround work she spearheaded at prior companies.”
Ms. Soltau believes she is the right person in the right position to lead Penney going forward.
“I am highly passionate about the customer and I spent my entire career focused on the needs of a value-based consumer by researching, understanding and meeting her expectations for style, quality and inspiration,” she said. “Every position I’ve held has prepared me for this role, and I couldn’t be more excited to meet the talented and hard-working J.C. Penney teams and get to work.”
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JCPenney Welcomes Jill Soltau as Chief Executive Officer – J.C. Penney Company, Inc.
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J.C. Penney new CEO takes on a turnaround challenge – CBS News
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New J.C. Penney CEO Jill Soltau on meeting HQ staff in Plano: ‘Everyone is up for the challenge’ – The Dallas Morning News
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3 massive problems J.C. Penney’s new CEO must solve – Yahoo Finance
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J.C. Penney Hires Joann Stores’ Jill Soltau as Its New CEO – Fortune
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Ellison leaves Penney, further fueling doubts – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What do you see as the biggest challenges facing J.C. Penney? How do you expect Jill Soltau to address them?
Poll
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Adam Silverman
SVP Marketing, Theatro
Revitalizing J.C. Penney is like running up a down escalator: possible with no missteps, but very difficult and time consuming. However Ms. Soltau probably has the experience and stamina to accomplish it.
The company’s main issue is in its apparel offering, which is unfocused, uninspiring and uncoordinated. This then extends into a wider brand malaise about what J.C. Penney is, what it stands for and who it wants to serve. Those are key problems that need to be resolved pronto!
Ms. Soltau has experience in fashion and merchandising and as a woman she will likely be more intuitively aware of what needs to be done (yes, retailers, women make the bulk of purchasing decisions so it’s probably a good idea to have quite a few of them at the top of an organization). I also like what she has said, so far, about putting the customer at the heart of decision making.
Ultimately, J.C. Penney’s future remains touch-and-go. But this more favorable economic environment means it is in with a chance.
These days, retailers no longer feel bound by direct category expertise when it comes to bringing in new leadership. Ms. Soltau just happens to possess it, having held positions at Shopko, Kohl’s and Sears. That, and her more recent experience at Jo-Ann, should ensure that proper focus is given to the critical “softer” side of J.C. Penney’s business (apparel and home). Focus and continuity are make-or-break at this point and J.C. Penney must get its core house in order before leaping into new categories. After years of crowbarring brand after brand into its stores, a portfolio evaluation that includes an honest assessment of J.C. Penney’s private brands (and how they stack up against national brands) will be in order. Ms. Soltau will also need to take a hard look at J.C. Penney’s still-sizeable store fleet and evaluate which markets benefit from brick-and-mortar presence and those that may be more efficiently served digitally. Penney’s was the first retailer to hit $1 billion in online sales many moons ago but many others have encroached since. Building morale and building rapport with J.C. Penney staff, including at the store level, will also be important. Many legacy employees that have weathered multiple structural, leadership and strategy changes are still on board. They are proud of J.C. Penney’s history and want to feel confident in its future.
The on-again off-again noise from J.C. Penney has told customers it is a crap shoot to know what or who J.C. Penney is anymore. I wish her well but I would suggest we hear less of J.C. Penney’s plans and they should simply start building a new foundation after Ron Johnson blew up the customer loyalty and, in fact, the business.
J.C. Penney is in a race on multiple fronts. A race against the financial (debt) clock. A race against the expansion of Primark. A race against the gravitational pull of Amazon and T.J.Maxx and Macy’s Backstage and Old Navy. One of the healthiest things J.C. Penney could do at this point is pick a couple malls where they go head to head with Primark and figure out how to effectively compete on that front. Primark is very smart on product, price, presentation and seasonal flow. J.C. Penney either figures out this formidable competitor or Primark will have more mall real estate available to occupy. J.C. Penney has some very good private labels they need to elevate as competitive weapons. The mall does not need yet another outlet for Nike.
First and foremost, I think J. C. Penney needs to figure out exactly who they are and whom they want to be. Do they want to be Kohl’s, or do they want to be Macy’s? Then whatever they decide they need to build a brand that will offer customers something different from competitors and give them a reason to shop. When I take the time to walk through a J. C. Penney, I see a store with tremendous potential, but I don’t feel as if I’m in a J. C. Penney — just a big store with no uniqueness. Today with so much competition brand identity is essential. As for Ms. Soltau at the helm, I have mixed feelings. Nothing comes to mind that stands out as a great success while she was CEO of Jo-Ann — another chain that is having its own issues, many of which began under Soltau’s leadership. So the jury is out and we’ll just have to see how she does, what changes she makes, what strategies she introduces and within a year or so, we’ll see how it is going. The advantages Ms. Soltau has in addition to her experience is a booming economy that is helping retailers across the board and showing definite signs of increasing retail store traffic. More customers coming back, especially to malls, should help Ms. Soltau find some success.
J.C. Penney is not in as bad shape as Sears. So there is hope. Certainly having a woman in charge is a great step in the right direction. I find this reminiscent of when Mindy Grossman came in and revamped a dying HSN in 2007.
J.C. Penney needs to appeal to a younger audience and regain new shoppers with a redesign of its merchandising. Certainly Jill Soltau has an understanding of the shopper and the category. I would expect her to focus on the product first and leverage the Sephora relationship a bit more.
I think it is a positive move for J.C. Penney. It will be great to watch the transformation.
Jill Soltau’s appointment as the CEO of J.C. Penney is a welcome development, yet the challenges remain and it will be an uphill battle for the once-dominant department store. For a generation of shoppers that shop with a purpose in mind, J.C. Penney has yet to articulate what exactly their “why ” is, and what specifically differentiates the company from all the competition.
What are the compelling reasons to shop with J.C. Penney other than the deep discounts and perhaps if you are a long-term loyal consumer? Perhaps Ms. Soltau’s vast expertise and leadership in the apparel and fashion sectors will help lead J.C. Penney to better articulate what their merchandising strategies are, and just ignite a comeback of sorts.
The road ahead will be a treacherous and challenging for J.C. Penney, yet with Jill Soltau, they might just have a shot at a comeback.
Full disclosure: I’m a former Kohl’s colleague of Jill Soltau; we worked in different merchandising divisions. Somebody with Jill’s background in apparel and “soft home” is just what J.C. Penney needs right now — you can always hire a great COO or CIO, but you have to get the product right. This has been an issue at J.C. Penney for years, and Mr. Ellison’s efforts to paper over the challenge by adding appliances didn’t fix the problems.
There are plenty of other challenges that J.C. Penney faces — from underdeveloped omnichannel programs to a troubled real estate portfolio — but putting a “merchant at heart” in charge was the right move.
Can Jill Soltau bring the much need miracle touch to J.C. Penney? I think she will have to leverage all of her experience lessons learned with Kohl’s, Auto Zone, Shopko and Jo-Ann. Having spent a lot of time in the creative retail industry, I am well aware of what she has been capable of doing to improve business, and how she understands the incredible importance of customer experience and interaction. This could very well be the ground level CEO that customers and employees will follow. She is a smart retailer and market savvy. I am sure she can attract and leverage all resources that can help J.C. Penney grow back to health. And I think the she will be the great hope that J.C. Penney must have.
First of all, what does “turn around” mean? If it means closing stores and leveling off the business so it looks like they’re doing better, then sure, I think she can do that. But if it means revolutionizing J.C. Penney into something relevant for young people — I doubt it. Probably not going to happen with a 30-year veteran of other huge, close-to-irrelevant companies. Macy’s: same thing. Both need REAL change, not just beating last year’s numbers (which are down 40 percent from eight years ago).
What I like is the fact that she accepted Shopko for what it is – a banner with unlikely growth potential, and found a way to maximize sales and profits as a private company.
If she can do the same with J.C. Penney, I think she’ll have another win.
Better strategy than trying to remake the brand a la Ron Johnson
The apparel and fashion segment for J.C. Penney is a huge challenge; they haven’t been able to compete on value for some time. Curious to see if the expansion into home appliances lasts under the new regime.
J.C. Penney has no shortage of challenges: declining sales, too many stores, heavy debt, aging customers and a less than stellar brand reputation. I am sure one of the first and most important steps Jill Soltau will focus on is defining J.C. Penney’s future brand promise.
It seems like in the past 10 years, Penney’s had tried to reinvent themselves by trying to appeal to younger generations and experimenting with different pricing strategies. However, most of these attempts have not turned out very well.
I wish Jill Soltau the best of luck, as this is an extremely difficult challenge for J.C. Penney.
The biggest challenge? Who is the JC Penney customer? The answer to that question will be very difficult to obtain for the newest JC Penney CEO in a climate of noise and shareholder/board angst. In reality, Ms. Soltau will need to determine those she can trust to work by her side to clear the political clutter, inspire tired employees and foster a renewed sense of genuine Aspiration for the brand internally. Key will be allowing Ms. Soltau time to deep dive into what is the new vision of the JC Penney brand, which is predominately executed by apparel offerings, while at the same time discovery of how the new JC Penney brands fit into the matrix of competitive vertical retail brands. In other words, a reason for being.
The true essence of the JC Penney brand, if one exists at this point, must be transitioned to reflect today’s JC Penney customer. With a decade of evidence of what does NOT work for JC Penney, along with Ms. Soltau. as new CEO, it appears shareholders are willing to give Ms. Soltau a realistic period of time for discovery and execution of new JC Penney brand[s]. Given Ms. Soltau’s hands-on, in the trenches apparel product and production background, I think she has the opportunity to be a woman rock star!
Once again, the board of directors reach for a cure. Jill Soltau will be busy for months being briefed on what does not work for the company’s profit line. This is what to expect when the company has been so long a time without real good news. With no experience in stores like this and problems of this magnitude, finding a solution may take some real magic or miracles. Learning what and where to make cuts in this situation is a wrong direction. Getting the shelves filled with what the consumer wants at a price that create turn is the only viable solution. I would love to see the look on her face after reading the current open to buy and aged inventory reports.