JCPenney – Your Time Is Up
When I was a child growing up in a blue-collar home, JCPenney was considered high-quality and special. You would find the retailer at most malls and even a few stand-alone locations throughout the Midwest.
The signage was usually white lettering, placed against the backdrop of deep brown. When you walked into a store, it was usually busy, with patrons milling through sales items, such as sweaters and coats.
As I write this article, I can still remember going to a summertime wedding anniversary for my uncle (circa 1988) and him sporting a lightly starched, white button-down. When I asked him where he bought it, he proudly proclaimed, “I get everything from Penney's – even these dress shoes.”
Later that year, during Christmas, my uncle’s holiday gift was a pair of men's slacks, nicely wrapped in a JCPenney box. The label read Stafford, which is the retailer’s private label brand.
Fast forward to today.
JCPenney still carries Stafford. It still has a presence at some malls. But in every measurable way, the company has become a shadow of its former self. To give you an idea, in 1973, the company had around 2000 stores. In 2021, fewer than 700 remains. It could be me, but with each new month, it seems like more closures are announced.
During its height, “Penney’s” had over 150,000 employees. Today, it is estimated less than 60,000 remains. Let's face it – the company founded in 1902 by James Cash Penney in Kemmerer, Wyoming, is no longer the powerhouse it used to be. It’s also no longer a favorite shopping destination for men like my uncle – or his wife for, that matter.
I’m going to just come right out and say it. JCPenney needs to die. I recognize this may be a painful thing to read, particularly if you are still employed by the company. Nobody wants to see an iconic American brand go away. But if we are being brutally honest, the time has come for JCPenney to shut down.
Here are five strong reasons why.
1. Rebranding didn’t work
Hemorrhaging cash, Penney’s appointed Apple executive Ron Johnson as the new CEO in 2011. To his credit, he tried modernizing the retailer’s look and feel, even changing the logo to “JCP”.
Long story short, consumers didn’t like it. Part of this was because Johnson nixed long-standing sales initiatives and discounts, hoping to mold JCP into something like the Apple model. It failed miserably.
In 2013, the JCP board fired Johnson and hired back its old CEO, Mike Ullman. Since that time, it has cycled through six leaders. More on that in point four below. Meanwhile, the losses continue to mount.
2. Nothing special about JCP
Today shoppers are looking for two specific things for in-person shopping: One: quality products at a discount and two: an experience.
When you walk into JCP and look at many of their offerings, it is painfully obvious both are missing. Its highly-touted Fieldcrest bedding is nothing more than overpriced cotton. Discounts on some clothing items are present, but nothing so dramatic that it draws in throngs of shoppers.
The truth is consumers can buy many of the same clothing and home goods products at Wal-Mart for much less and get the same or better quality.
3. Boring AF stores
Have you been into a JCP in the past year or two? If the answer is no, there’s probably one of two reasons why. The most likely is that JCP has closed down wherever you live. In 2020, the company shuttered nearly 200 stores alone.
The second reason is that the store itself sucks. Before to the COVID-19 pandemic, I made a trip to one of the remaining JCPs by me at the Ford City Mall in Chicago. Honestly, I thought I had stepped back into 1985. It was beige, white, and brown with absolutely zero personality.
And the shoppers? Let’s just say they were not younger people. Instead, I saw grandmas and grandpas on their walkers, many of whom were simply milling around as part of their daily exercise.
It was a snooze-fest. Even seniors weren’t shopping.
4. CEO revolving door
I’ll keep this point short and sweet. JCP has gone through six CEOs in the last 15 years, with its most recent leader, Jill Soltau, departing in December of 2020.
At some point, there needs to be a recognition that nobody can “lead” JCP out of its death spiral. People don’t shop there because the products suck, the pricing stinks and the stores are badly dated.
What’s more, the 2011 rebranding process didn’t work. A new CEO who tries to revamp again will find the same problems that existed before – a dwindling customer base resistant to change and younger shoppers who aren’t interested in JCP’s ugly stores.
5. Crappy online presence
Have you been to JCP online? You aren’t missing much. The website mirrors the nasty in-store experience. It’s drab, boring and feels like Dollar General but without the discounter’s prices.
Visiting JCP Online is really crappy. You’ll get bombed with ads for the JCP credit card and clearance notices for up to 80% off on clothes nobody wants to wear.
As an aside, why didn’t JCP invest money in its website, like Target, to make e-shopping interesting? That is a question only the company can answer. One thing is for sure, the digital experience sucks.
Summary
JCPenney emerged from Chapter 11 bankruptcy in November of 2020. The buyer? The Simon Property Group scooped it up for $800 million in cash and debt.
Just so you know – “Simon” is one of America’s largest REITs and owns (or an investor in) over 200 malls. With the goal of self-preservation, they purchased the carcass of JCP because they knew if the company shut down, many of its malls would lose renters.
In the short-term, this was a smart move. The hard truth is once an anchor leaves a mall, many other renters bolt. The thinking at Simon was to preserve JCP for as long as possible and keep its remaining tenants.
But this really is a short-term strategy. JCP will continue to bleed cash. They haven’t turned a profit since 2010. Its recent ad campaign for Fieldcrest bedding may help 1Q liquidity, but that’s about it.
Instead, Simon should enter into active negotiations with companies like Amazon and Walmart to convert its dead locations into distribution centers.
The nice thing about this approach is doing so may preserve jobs and communities. Let’s be real. The industry has been heading towards online shopping for years. We’re already seeing dinosaurs like Macy’s focusing on digital sales and jettisoning many stores.
Simon would be smart to get ahead of the train and lead the effort. Start courting the e-tailers big time and salvage what you can.
I’m sorry to say if the goal is to resuscitate JCP, it will not work. The brand needs to die. In fact, it should have been buried a decade ago.
