By Dave Gardner on May 17, 2020
JCPenney declared bankruptcy Friday, May 15th. I wish I could say I hadn’t seen it coming but I have for many years. It had all the excitement of Blockbuster, Kodak, K-Mart, and so many others. Another iconic brand imploding.
Sadly, this will have an impact on some of the brand’s current 85,000 employees. Just how many is not known at this point.
Let’s look at interesting research courtesy of Web Smith (@web on Twitter):
…JCPenney achieved 105 years of success.
It shifted resources away from a successful eCom operation as debt-to-equity rose (.71 to 5.65) between 2005-2020. JCP preceded Amazon in marketplace eCom, succeeded, and quit.
1900’s: Founded by James Cash Penney
1960’s: Issued its first 1000 page catalog. Grew to 2,053 stores.
1990’s: Pioneers retail model with website and email-based catalog sales
2005: eCom sales grow to $1 billion
2011: Divests in eCom and catalog sales
2102: 30% of HQ bandwidth used for YouTube videos (wasted time!)
2018: There are 872 stores remaining
I often say that I can’t want more for a client than they want for themselves. If they don’t see themselves as bigger, more successful, solving real problems, shifting paradigms, etc., then they don’t need me.
JCPenney innovated itself into an on-line $1 billion retail business before Amazon, Walmart, Sears and others. Yet, the CEO they hired in 2011, Ron Johnson, saw JCPenney as a brick and mortar retailer only.
What was JCPenney known for? Selling everything at a discount. At one point, they stopped all coupons and sales fell precipitously.
Businesses in marginal condition pre-COVID-19 are in dire straits at this point in time. JCPenney isn’t the only retailer in its sector that is in trouble. Sears and Kohl’s are in trouble. If JCPenney were to become extinct, who, other than their employees, real estate holders and some suppliers would feel the loss?
I, for one, don’t know how consumers are going to feel about going into retail stores for some time. What is JCPenney going to do to excite people about shopping with them? Are they going to create an online shopping experience for their customers? How quickly can they make that happen?
Marshall Goldsmith says, “What got you here won’t get you there.” Truer words have never been spoken. JCPenney hasn’t heeded those words and they are paying a price today. I fault the CEO, Ron Johnson, and the board of directors for allowing this to happen. The board needed to ask tougher questions.
Photo Credit on Blog Post: Mike Mozart, Flickr.com
Thought for the week:
“It is the service we are not obliged to give that people value most.” – James Cash Penney
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