The Reinvention of a Retail giant

1. J.C. Penney The Reinvention of a Retail giant

2. Company History • The Golden Rule store, was founded in 1902 by James Cash Penney, Guy Johnson, and Thomas Callahan in Kemmerer, Wyoming. (pictured left) • The company incorporated in 1913 as J.C. Penney. • By 1928 there were 1000 locations and $190,000,000 in sales. • In 1940 Sam Walton the, founder of Wal-Mart, began working at J.C. Penney. • 1912 – 34 stores, by 1941 – 1600 stores • The J.C. Penny credit card was introduced in 1959 • Over the next few decades J.C. Penney continued to grow reaching its production peak in 1973 with 2,053 stores before the recession of 1974. • James Cash Penney died on February 12, 1971

3. Current Situation • In recent years JCP has seen their presence in the retail clothing industry taper off in the midst of competition from many other chains, most notably Macy’s. • In June 2011 the company announced that it would be bringing in Ron Johnson, former head of Apple’s retail department, to take over as CEO in an attempt to turn the company stagnant growth around. • Johnson who was also a vice president at Target outlined plans to turn JCP into a modern retail store. This included removing the word “sale” from the company, as well as changing the pricing structure, which was causing the company to lose money due to discounting because retail value had not increased at the same rate as prices. Johnson also did away with coupons calling them a “drug” consumers had to be weaned off of.

4. Also included in this outline was the idea of getting away from having one big store but instead having the brands have smaller stores inside JCP locations and introducing a “JCP Genius-Bar” concept in the center. • One of the first steps in this reconstruction process was the introduction of the new JCP logo. The fourth in the company’s history. The new logo is supposed to represent the “fair and square” philosophy of JCP.

5. Next on the agenda were the introduction of the new pricing schedule and introduction of the new advertising campaign. • JCP introduced a new pricing which consisted of three different new types of prices: 1. Everyday, regular prices; 2. month long values; and 3. Best Prices on the first and third Friday of each month. • This pricing plan was designed to get away from the “sale” mentality that JCP customers had become used to. No promotions, no coupons, and just flat pricing(no change amounts) • A series of television commercials designed around the different months of the year. Different colors and themes for all the different months of the year.

8. Johnson has had to overcome some rather strange problems that have since arisen from his JCP transformation. • JCP entered talks to open stores and sell Martha Stewart Living products in their stores. However MSLO had a contract with Macy’s which Macy’s claims the venture with JCP violates. A court ruling on Friday July 13 2012 blocked MSLO from selling certain merchandise in the JCP stores they are planning to open. • In February of 2012 there was also controversy over the decision of JCP and Ron Johnson to bring on a spokesperson for their company. The controversy was over the selection of Ellen DeGeneres. The organization One-Million Moms publically protested the choice of Ellen due to her openly homosexual lifestyle.

10. Over the last seven to nine months we watched as the situation at JCP worsened. Many factors contributed to this enormous decay: • Natural disasters around the world affecting cotton prices. • Changes in the JCP PR and Ad departments. • The systematic layoffs of 600 of the nearly 6000 employees at the Plano headquarters, many upper level execs, thousands of middle management, reductions in the home office and the closing of call centers. • The elimination of commission for retail employees. • These developments sent the investors running. Stock value plummeted to an all-time low and the worst day in JCP business history, April 16 2012.

12. Where does JCP go from here? • JCP is undergoing a complete reworking. The cuts to upper, middle and commission were said to be made because Johnson felt it was in the company’s best interest although there is much speculation that they were done to stop the “bleeding” that was taking place with the company’s cash flow. Started by bringing back “sale” but not “discounts” • As with any rework or reimagining there is a large portion of time that is required to see if the decisions made were the correct ones. Only time will tell if Johnson is a genius or if this is will be a blemish on an otherwise shining resume. • This is a bold new decision as to the direction to take a 100 year old company that has made such a household name for itself. The question now is how much time is too much time? The board and investors have to decide how much the want to put up with before they cut Ron out and salvage what may be left of JCP.

13. Works Cited • Minato, Charlie. THE JC PENNEY DISASTER TIMELINE: How Ex-Apple Guru Ron Johnson Is Destroying The Company. Business Insider, 16 June 2012. Web. 27 Sept. 2012. • Maheshwari, Sapna (Aug 10, 2012). "J.C. Penney Rises After CEO Says Overhaul Is ‘On Track’". Bloomberg. Retrieved 13 August 2012. • D'Innocenzio, Anne (2012-02-02). "Penney hopes Ellen DeGeneres can boost its image". Asheville Citizen-Times. Associated Press. • Dorfman, Brad. Macy's sues J.C. Penney over Martha Stewart deal. Ed. Kenneth Barry Barry. Yahoo Finance , 16 Aug. 2012. Web. 29 Sept. 2012. <http://finance.yahoo.com/news/macys-sues-j-c-penney-175047051.html>. • Brown, Abram. J.C. Penney's Ron Johnson: A Master Magician Of Investor Confidence. N.p., 13 Aug. 2012. Web. 28 Sept. 2012. <http://www.forbes.com/sites/abrambrown/2012/08/13/j-c-penneys-ron-johnson-a-master-magician/>. • Zmuda, Natalie. JC Penney Reinvents Department-Store Retailing. Advertising Age, 25 Jan. 2012. Web. 28 Sept. 2012. <http://adage.com/article/news/jc-penney-reinvents-department-store-retailing/232339/>.