Having little luck with Millennials, J.C. Penney refocuses on middle-age women
When Marvin Ellison announced he was stepping down as chairman and CEO of J.C. Penney in May to join Lowe’s, he praised the department store chain for its “warrior spirit” and maintained the retailer, despite carrying over $4 billion in debt, had “the talent and expertise to achieve sustainable, long-term growth.” A little over two months have passed and Penney’s board is still looking for a new CEO, while a new Wall Street Journal article raises questions about the retailer’s ability to succeed no matter who it finds to run the business.
The Journal article points to several factors working against Penney in addition to its heavy debt load. Under Mr. Ellison, Penney moved into new businesses such as appliances where the exec had some familiarity going back to his days at Home Depot. While the retailer has had some success in appliance sales, primarily at the expense of Sears, it has struggled in others, including apparel, which makes up more than half the chain’s total revenues.
During Mr. Ellison’s tenure at Penney, the chain also focused heavily on outreach to “Millennial moms” as it sought to increase customer counts and sales.
The strategy to attract younger consumers was nothing new at the chain. One of the criticisms of Penney during former Apple executive Ron Johnson’s disastrous tenure as CEO was that it moved away from its older core customers too quickly before developing a brand identity that attracted younger shoppers. When Myron “Mike” Ellison came back as Penney’s CEO to fix Mr. Johnson’s mess, one of the strategic steps taken by the chain was to refocus on its core older shoppers once again.
Mr. Ellison has also been accused of failing to cater to Penney’s core as the chain launched several new private label clothing brands targeted to younger women while cutting space for brands such as Liz Claiborne, St. John’s Bay and Worthington that appeal to older shoppers.
Mike Robbins, executive vice president of supply chain at Penney, acknowledged in an interview with the Journal that the retailer had taken its eye off “our core customer” to woo younger shoppers. In an apparent past-is-prologue moment, Penney is once again refocusing its attention on winning back the female Baby Boomer shoppers it has lost.
- Done Chasing Millennials, J.C. Penney Tries to Win Back Moms – The Wall Street Journal
- Ellison leaves Penney, further fueling doubts – RetailWire
- Millennial shoppers are heading to JC Penney – CNBC
DISCUSSION QUESTIONS: Do you agree with the criticism that J.C. Penney’s business has been hurt because previous management lost sight of its core older customer? What will a new CEO, when found, need to do to grow the chain’s business?