J.C. Penney, founded in 1902, was once a powerhouse department store that was home to women and men fashion, home appliances, bedding, auto center, and even ammunition and guns. However, within the last decade J.C. Penney has been fallen into a state of ruin, as it faces branding and marketing problems.
The Texas-based department store was a victim of bad guidance on behalf of their CEO. In November 2011, Ron Johnson, former retail boss at Apple and Vice President at Target, was named CEO of J.C. Penney. Once recognized as a retail genius, Johnson is known predominately known for the demise of J.C. Penney due to his new strategies implemented through his time.
Within his short amount of time at J.C. Penney, Johnson got rid of coupons, launched a new pricing strategy, and even created a new logo, which was the third one in three years. Though Johnson thought he was doing more good than damage, his advice and governance was too similar to that of Apple’s.
Many critics claim that although Johnson’s new strategies were great, it did not fit the criteria needed for a department store. According to the Business Insider, Johnson even introduced his new plan in an “Apple-style conference”.
Consequently, J.C. Penney results were detrimental. Sales were horrible, claiming that the company lost $1.3 billion in 2013, which caused thousands to be fired, from retail associates to high CEO corporate employees. It also caused over a thousand store locations to be closed.
Once the company saw that Johnson’s strategies were not working, the company switched to “everyday value”. Margins, was and still is one of J.C. Penney’s biggest problems they face today. According to CNBC, “the back-and-forth between coupons and every day low price (EDLP), the company could not catch a break as comparable store sales dipped below 20 percent.” With horrible margins and an overstock of clothes, J.C. Penney had no choice but to put everything back on sale and were victims of repeat clearances, thus lowering the name of their brand. Although, consumers love a bargain, when a company is always on sale, it is seen as a cheap brand and undesirable.
Due to margins and low cash flow, it was no surprise that costs were beginning to become a problem for J.C. Penney. Without making a significant change to store numbers and their limited utility/maintenance account, the customer service in J.C. Penney also took a turn for the worst. A Huffington Post article shows the J.C. Penney department store not looking up to par with display cases disorganized or not full of merchandise, little to no assistance nearby, and clothing on the floor. The visual presentation was not attractive, thus not attracting any customers as well. Personally, seeing messy racks and not finding any retail associates around, tell a lot about how a company wants to be represented, and leaves a mental image in my head before entering the location ever again.
Although analysts say that J.C. Penney is not completely ruined due to the latest earning release, they still have a long way to go to get back to the prime department store that they once were.
http://www.fastcompany.com/3008059/ron-johnsons-5-key-mistakes-jc-penney-his-own-words
http://www.cnbc.com/id/100627721
http://www.huffingtonpost.com/2014/02/19/jcpenney-photos_n_4810896.html
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