For department store retailer JC Penney, the last couple of years have been tumultuous to say the least. You may remember late last year the store laid off nearly 10 percent of the staff at their Plano headquarters. But no need to fret, the company isn’t dead yet – in fact it may be on the precipice of a big comeback. The company’s fourth quarter earnings were up 4.1 percent.
Plus, JC Penney recently announced their new slogan labeled “Get Your Penney’s Worth.” In other words, selling things for a penny. But haven’t we been here before? Seems like the cycle of headlines hailing the department store’s demise – and subsequent salvation – repeats every few years.
Phil Wahba, a reporter for Fortune Magazine, says that although this is the fourth “turn-around” since 2000, this one appears to have a chance to catch on.
“This one is more promising because JC Penney is not trying to be what it isn’t this time around,” Wahba says. “Basically, JC Penney, under (new CEO) Marvin Ellison, is trying to be the best version of itself. And that means a department store that unashamedly goes after the mid-tier consumer, the household income of $60,000 a year.”
That back-to-its-roots approach is in stark contrast to the company’s disastrous attempt at “reinvention” that nearly tanked the 113-year-old retailer. The rebrand, helmed by then-CEO Ron Johnson, attempted to make the store more hip and upscale, but ended up alienating the company’s core consumer base.
“JC Penney was trying to get a consumer that didn’t want it,” Wahba says.”But at the same time, it also fired these tens of millions of suburban moms in America that were loyal to it.”
Ellison’s strategy will be to streamline operations and integrate e-commerce with stores, Wahba says, like making it easier for customers to shop online then pick up an item at a store the same day.
“So what he brings to JC Penney is not merchandising – their merchandise is fine – but what he brings to it is operations and fixing the chaos that was left behind by that failed turnaround,” Wahba says. “He’s all about unsexy things like supply chain and logistics and making sure inventory management is consistent across the company.”
Wahba says brick-and-mortar department stores like Penney’s aren’t necessarily a thing of the past. The key is to stay with the times and keep up with the changing technological landscape.
“I think that these so-called ‘dinosaurs’ can get a new lease of life if they integrate technology and e-commerce,” Wahba says. “JC Penney fell way behind companies like Macy’s and Kohl’s, but they’re starting to make up for lost ground. That’s what you’re seeing with results like today’s pretty stellar fourth quarter set of numbers.”
Listen to the full interview in the audio player above.
