Former J.C. Penny CEO, Marvin Ellison, left the struggling retailer in May to join the apple of Bill Ackman's eye, Lowe's Hardware. So, Penney scrambled to find a replacement and just in the nick of time they found the right people for the job,
After Mr. Ellison’s departure, Penney created an Office of the CEO consisting of four executives to run the company temporarily. None of them have apparel experience.
And although the new executives have no apparel experience, it shouldn't be hard to be hard to beat Ellison's success.
As other retailers turn a corner after several tough years, Penney continues to flounder. Its shares have fallen about 24% this year and now trade below $3. Shares of Macy’s and Kohl’s Corp. are up roughly 59% and 36%, respectively.
Like someone wearing an outfit comprised of a checkered pattern shirt and striped pants, it was clearly time for changes to be made.
In the Department Store Olympics, Macy's and Kohl's are doped-up Russian athletes, and Penney is a pudgy Polish man stuffing his face with perogies as he approaches the starting line.
Over Ellison's tenure, Penney made changes in a futile attempt to stay relevant. Most notably, Ellison saw an opportunity to capitalize on estranged Sears customers.
Mr. Ellison tilted the company toward home appliances, a competitive business that Penney had exited in 1983, in an attempt to win shoppers as Sears HoldingsCorp. closed stores.
There was one problem: Appliances have gross margins of around 20%, compared with 40% for apparel. As Penney rolled out appliances to 600 of its roughly 860 stores, its margins shrank.
The logic was that appliances would draw shoppers to Penney’s stores and increased sales would compensate for lower margins. But sales haven’t increased much. After 18 months, Penney’s share of the appliance market stands at 0.9%, according to TraQline, a unit of Stevenson Co.
Mr. Tysoe said the strategy was worth trying. “Time will tell whether it’s a business we stay in,” he said.
Oh yes, time told us the entire story in just a year and a half. The same amount of time it takes a young college student to find love in the Freshman Spring, only to realize they wasted time and money on a few good memories, and all they got in return was a lifetime of hatred from the respective ex's friends.
This was a terrible strategy because Sears was failing and it was clear their products had lost their market. Also, anyone shopping at Sears in the year 2015 probably smelled like old cheese and likely wore a train conductor's hat in every social setting. These are the exact kind of people that don't want to go into J.C. Penney, and more importantly, the kind of people Penney doesn't want to see in their stores
“We did lose our way,” said Mike Robbins, Penney’s executive vice president of supply chain and a member of the CEO Office. He said the problem wasn’t a lack of apparel talent, but rather a push to woo millennial shoppers “that took our eye off our core customer.”
In recent years, Penney launched brands such as Belle & Sky, Libby Edelman and a line of women’s clothes inspired by the TV show “Project Runway” to better compete with H&M and Forever 21. The new brands were given prime space near store entrances, crowding out more established labels favored by its older customers such as Liz Claiborne, Worthington and St. John’s Bay.
Now, Penney is trying to win back women in their 50s and 60s. It recently held an event at its corporate offices modeled after the TV show “Shark Tank,” where executives pitched ideas “to make her love us again,” Mr. Robbins said.
Just like most successful twenty-somethings, Penney pushed away from the moms of the world until they realized they missed the only person who actually loves them or cares about their dumbass Instagram posts (also because it's great to have someone to cook your meals and do your laundry WITHOUT asking about the skid marks lining the bottom of your underwear).
Although Penney is acting like a child coming back home, elderly female consumers are delivering an academy award-winning performance as upset mothers
Brenda Hodgkiss, of Monmouth County, N.J., said she hasn’t bought much at Penney since the chain reduced promotions under Mr. Johnson, the former CEO. These days, the 78-year-old does most of her shopping at Macy’s, which she said has a bigger selection and better quality.
“People don’t really talk about Penney anymore,” said Ms. Hodgkiss. “They’ve almost become irrelevant.”
Brenda is not amused by Penney and she shows it by being passive-aggressive as hell. For Penney to recover, it is imperative they stick out this strategy for the duration of their temporary dejection, similar to the scolding you receive for not calling enough when you first step in the door. And they need to survive whatever other maternal strategies the consumer's use to thwart their comeback attempt.
What's next, they ask Penney about that lovely college girlfriend they regret breaking up with as they stroll through the door? Or maybe say they've had one beer too many when they're only on their second? Worst of all, they may want to make amends via a competitive game of scrabble. If Penney finds itself in this situation, it is imperative to lose or else the moms will be livid.
It is going to take Penney a while to come back, but it's possible with a little patience and some solid mom jeans.