How a Retail Store Flatlines?
JCPenney was once among the greatest retailer in the United States. However, a storm of bad decision by the CEOs and global events caused the rapid decline of this company.
By Alvand Khaleghi and Emin Aroutounians
The 118-year journey of the massive department store JCPenny is one with many successes and failures. From being a household name in the 1900’s to filing for bankruptcy in May of 2020. JCPenny was founded by James Cash Penny in Kemmerer, Wyoming in 1902. Penny decided to try his hand at the retail business after his failed butcher store in his home state of Missouri.
At first JCPenny went by the name of “The Golden Rule” which changed into “JCPenny” by 1914 since it had become a fully incorporated company. The company became publicly traded in 1929 and went through several devastating events such as the world war and the great depression. With the advancement of technology and the growing popularity of the world wide web, JCPenny launched its e-commerce website in 1994.
The products sold at the stores and websites were different, which later on in 2007 they were merged into one at the hands of CEO Myron Ullman. Between 1994- 2006 the e-commerce business grew between 30% and 50% according to the company in 2006, however, once the sales reached 1 billion in 2006 the growth died down and between 2007-2011 sales hovered around 1.5 billion annually. In 2006 JCPenny sales reached the pinnacle at 20 billion dollars, a tremendous amount. This massive sales numbers drew the attention of the French beauty company named Sephora which led to the two major corporations to strike a deal to increase foot traffic.
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Today around 75% of all JCPenny stores include a Sephora. In 2011 Target and Apple veteran Ron Johnson succeeded the previous CEO, and decided to bring many changes to the company which alienated JCPenny’s core customer base. In an attempt to bring JCPenny back to its glory days he decided to change the logo of the company, marketing strategy, brand selection and most damaging of them all he eliminated coupons and discounts which effectively caused a major hit to the company.
He had also de-emphasized the company’s e-commerce program and focused more on physical locations and as a result, in 2012, online sales dropped by 32%. The company continued to falter under Johnsons leadership until in 2013, he stepped down from his position and Ullman came back with an attempt to correct the past mistakes. JCPenny In a hopes to survive brought on a new CEO named Jill Soltau, however, it did no good as she failed at her task and received a 4.5 million dollar bonus. And the start of the epidemic caused them to file for bankruptcy in May of 2020. Soltau who was known as the chosen one and savior exited months after they emerged from bankruptcy due to the sale to Simon Property Group and Brookfiled Asset Management.
Soltau was succeeded by Stanley Shashoua, the chief investment officer of Simon on an interim basis. In the meantime, we should pay close attention to see if the newly emerged JCPenny can be as good as its glory days once more.