The clock is ticking for J.C. Penney


J.C. Penney, by CEO Jill Soltau’s own admission, has to move faster if the department store chain is going to get ahead of its competitors and turn its ailing business around. The question, assuming that Penney’s team has the answers for putting the business back on the right track, is whether it has the time and resources necessary to accomplish the task.
Penney, which continues to operate its business under billions of dollars in debt, has recently seen its share price fall to under $1 on the New York Stock Exchange, risking a delisting if it is not able to move that figure higher.
The chain, in the first nine months under Ms. Soltau’s leadership, has taken steps to reposition its brand with a fashion and home goods focus. Among the earliest significant moves made by Ms. Soltau was to get Penney out of appliance sales in February.
Former Penney CEO Marvin Ellison, who left the department store last year to lead Lowe’s, added appliances to the chain’s merchandise mix in 2016. At the time, Mr. Ellison pointed to a market opportunity created by a weakened Sears. Penney went from a 22-store pilot of appliances to a nationwide rollout in short order.
The Dallas Morning News reports that Penney has begun testing two new fashion and home concepts to see if they resonate with consumers.
In the first, Penney has redecorated its women’s dressing rooms, added stylists and installed more seating to meet the needs of customers and those shopping with them. The pilot, which is taking place at a store in Penney’s home market in the Dallas/Fort Worth area, will need to show positive sales results if the concept is to be rolled out on a wider basis.
Penney is also testing educational classes in the home department at a store in Tyler, TX. The classes, some that have attracted customers and others that have failed to drum up interest, have covered a wide range of topics, from how to properly blow out hair to choosing the best window coverings.
- Where does J.C. Penney’s turnaround stand? It’s testing new ideas in Texas – The Dallas Morning News
- JC Penney is trying new things to stay afloat. But its stock is below $1 again and at risk of being delisted. – CNBC
- J.C. Penney dumps appliances – RetailWire
- Can a new CEO revitalize J.C. Penney’s business? – RetailWire
DISCUSSION QUESTIONS: Will it take major new initiatives (e.g., increased focus on fashion and home) to bring customers back to J.C. Penney or improving the fundamentals of its operation? Do you think that Penney still has the time and resources to turn its business around?
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25 Comments on "The clock is ticking for J.C. Penney"
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Managing Director, GlobalData
I hate to be negative, but I am not at all optimistic for J.C. Penney. Far too much rot has set in internally and it will take a mammoth effort to resolve it. It will also need capital to create meaningful changes, something which is in very short supply. Resolution also takes time as customer sentiment and perceptions do not change overnight. And time is precisely what J.C. Penney does not have.
Founder, CEO & Author, HeadCount Corporation
Significantly changing the trajectory of a business the size of J.C. Penney will be very difficult. Ms. Soltau and her team have their hands very full, and the market is watching every move they make. So far, the initiatives undertaken have been relatively modest and incremental. Dressing room stylists and educational classes will not deliver the change that’s needed. J.C. Penney needs a serious makeover, not incremental window-dressing and it seems like precious time has already been lost. Rationalize the store base, focus back on driving conversion of the shoppers already in the store and getting back to positive comps should be the focus.
President/CEO, The Retail Doctor
It is well past time Ms. Soltau announced a compelling vision of what J.C. Penney could be. As I wrote in this post Here’s The Bold Vision Of How I Would Fix J.C. Penney, without a clear vision driving their strategy the retailer is bound to die of a thousand cuts. But a bold vision can rally shoppers, associates, and investors. Focusing on fitting rooms when people aren’t coming in seems a bit like rearranging the chairs on the Titanic.
Director of Retail, Milwaukee Art Museum
I think you are right on the money. Today’s differentiator from online retail is to be experiential, or for a cause. “Girl Power” is a very strong initiative right now, and the fact that this driving force is not relegated to one age group and does focus on the gender that does most of the shopping.
Managing Director, RAM Communications
Without a solid ecommerce presence or at least a solid partner, J.C. Penney isn’t going to last more than a few years. Too bad Kohl’s already is teaming up with Amazon. Maybe Penney’s could try eBay?
Senior Vice President, Dechert-Hampe (retired)
Only if J.C. Penney completely commits to a single focus positioning — home goods, clothing, just pick one and do it better than anyone else. Otherwise J.C. Penney is going to be swept away by the fundamental shift in retail taking place today. The return of the butcher, the baker and the candlestick maker is here with a vengeance (i.e. specialty shops.) Lifestyle focused big-box retailers are thriving (REI, Cabela’s, Home Depot, etc.) The rest of shopping splits between those who do it online and those who do it in physical discounters (Walmart, Target). All else are doomed. Pick a lane folks!
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
I’m not convinced that J.C. Penney has the resources, strategy or time necessary to survive profitably in the long term. It lacks any significant differential advantages in a marketplace where the continued shift to online sales of J.C. Penney’s mainstay offerings does not bode well.
J.C. Penney, like Sears (where America used to shop) is no longer a preferred or even relevant shopping option. It has confused customers with its changing offerings. Sad but true. This is not what J.C. had in mind.
Co-founder, RSR Research
J.C. Penney has been failing slowly for almost a decade.
We forget that Ron Johnson was brought in to reinvigorate the chain, whose customers were aging out of the market. We know how that worked out, and Mike Ullman returned and brought the chain back to where it was when he retired. The most recent CEO has done what he knew how to do — get stores looking better and add appliances into the mix.
I think the Ms. Soltau has the right idea, but I’m not sure the world is crying out for a new moderate-priced department store.
This is going to be tough and, like Neil, I think it’s a daunting and borderline impossible task.
Chief Executive Officer, The TSi Company
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Here is the question: “Why would any customer go back to J.C. Penney? Can they offer something more than the former customer has already found somewhere else?” Nothing else matters.
J.C. Penney is dead, they just don’t know it yet. At this point, the best strategy would be determining how to maximize value in a wind-down.
Principal, Retailing In Focus LLC
I’m a former Kohl’s colleague of Jill Soltau (likewise new J.C. Penney board member Paul Jones), and I applauded her hiring as a step in the direction of better merchandise content. The question is whether she and her company have enough time and resources to fix what needs fixing, from the product to the store experience. (There are also costs involved in correcting Marvin Ellison’s mistakes such as major appliances.) A turnaround may require more urgency than simply testing some new concepts in a handful of stores.
The collapse of the traditional mall model doesn’t help matters: There is one local J.C. Penney store (here in Milwaukee) that has lost two other mall anchors in the past year — Sears and Bon Ton — and another regional mall that has lost three of five anchors in the same time frame. It’s hard for J.C. Penney to fight the good fight when there is less reason than ever for shoppers to make the trip to the mall.
President, Spieckerman Retail
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
J.C. Penney has an uphill battle with many things working against them – huge debt, a shrinking customer base and, most importantly, no consistent strategy.
In the past 10 years, J.C. Penney has tried a lot of things (changing its target audience, adding appliances, stores-within-a-store (Sephora), Instagram private brands, etc.).
However, this lack of focus has confused consumers and now J.C. Penney has an identity crisis on top of all their other problems. Jill Soltau inherited a big mess and it will be a monumental achievement if J.C. Penney survives. Good luck J.C. Penney, as nobody wants to read about another retail demise.
President, Global Collaborations, Inc.
Trying initiatives that extend the home and fashion concept is an excellent idea but maybe too late. Time is needed to determine what kind of classes resonate with which consumers and what kind of dressing room configuration and/or assistance results in increased sales. Great ideas but there may not be enough time to do the testing to hit on the winning combinations.
Founding Partner, Merchandising Metrics
Primark offers all the necessary lessons in product, pricing and presentation. My bet is that Primark would happily take over many J.C. Penney locations and succeed in the process. Can anybody offer first hand reporting on the test stores in Dallas? What kind of rabbit are they trying to pull out of the hat?
Chief Data Officer, CaringBridge
Operating under mountains of debt makes the timing critical for J.C. Penney’s to succeed. I am also not sure if there is enough time for the new concepts to work.
Ultimately, the only differentiation that a retailer can have if they do not want to go the “fast fashion” way is to provide a superior customer experience. In all the details provided, I did not see any training, retention programs, empowerment of staff — they types of activities that are critical to the success needed by J.C. Penney. Lots of classes are well and good but, if the staff is not engaged, then it is all just talk…
Principal, KIZER & BENDER Speaking
Come on J.C. Penney … you can’t yawn your way into a crowded market with a basically “me too” strategy. Show me something, something out of the box that most would not do. It’s tougher than that out there, and financial concerns have short tolerance.
President, Sageberry Consulting/Senior Forbes Contributor
The fundamental issue here is that better is not the same as good.
The moderate department store sector has been in decline since I was a young executive at Sears in the ’90s, first hammered by the rise of discount mass merchants, then category killers, then by trading down and the explosion of the off-price market. Along the way various specialty stores and the rise of Amazon took some share too. There is no reasonable scenario where the sector does not continue its slide.
But aside from long-term trends, the bigger issue is the bifurcation of retail and the resulting “collapse of the middle.” Good enough no longer is and J.C. Penney finds itself irretrievably stuck in the boring middle. It will take a massive amount of creativity and cultural change to transform the company away from boring to remarkable. It will also take a massive amount of investment and a fair amount of time. Sadly, they don’t seem to have much of either …
It isn’t about J.C. Penney. It’s about the American consumer aka shopper. The seismic shifts in rural communities and demise of the manufacturing ecosystem/union jobs has dramatically shrunk the population of middle income consumers.
J.C. Penney is no longer relevant to the number of people that might support 850 250,000 square foot stores choc-a-bloc with mediocre goods, without any humans for customer care.
Current leadership will do what they know, and that is no longer what is needed. Therefore as currently constituted, J.C. Penney is a goner. And they are not alone.
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Retail’s “big middle” has always been a honey pot for large chain store operators who desire to win with scale. For proof consider the once-powerful Montgomery Ward and the extended, slow motion train wrecks at Sears and Kmart.
While the market-size play is a sweet temptation, as I often say, “Trying to be everything for everybody leaves you meaning nothing to nobody.”
This becomes even more true as you move downscale in pursuit of greater numbers of shoppers.
Alas, J.C. Penney finds itself in the same trap, I believe. It needs to stand for something – and soon – or risk irrelevance. Unfortunately even an inspired merchandising and positioning strategy from Ms. Soltau and her team may not be enough to overcome the inertia of too-large stores in too-weak malls.
For my money, a focus on really good home decor products and moderately-priced, high quality apparel is as good a plan as any. I’m just not sure it will bring enough feet into the stores to cover the rent.
President, Protonik
These initiatives are concerning because they don’t feel consistent with the J.C. Penney brand — meaning the expectations that customers bring to the stores.
While none are as extreme as Ron Johnson’s attempts to turn Penney’s into Apple, there is plenty of the same flavor here. It’s unlikely to work until they find the seed for these efforts in existing strengths as seen by their customers.
How many times do we have to see management attempt to impose their own vision of what customers will want rather than listen to customers? La-Z-Boy fought this type of battle in the early 2000s and failed … but survived.
J.C. Penney needs to find the core of its future in what customers already think of the brand. That’s the only starting point which can succeed.
CFO, Weisner Steel
New ideas? Hmmm… the other day it was pointed out that the founder of Primark named his stores (in Ireland) “Penneys” in the hope of fooling people into thinking that’s what they were; perhaps the favor can be returned and JCP renamed….
Ok, that’s probably not the road to go, but I don’t have much else to suggest. If “slow and steady” (improvement) can’t win the race — and to be honest, these sound like things that should have been tried on day one, not day 1283 (or whatever it is) — then I think the race is run.
Retail Transformation Thought Leader, Advisor, & Strategist
Vice President, Research at IDC
Consultant, AdoniisCollections.com
I really applaud their efforts and I Wish them the best. I personally like J.C. Penney!
I am most afraid that the debt burden that they suffer under will most determine the future that they will be subject to.