The Bad News Just Keeps Coming at JCPenney

JCP logo (JCPenney)
The name change from JCPenney to JCP was just one of many miscues made over the past 18 months during the tenure of CEO Ron Johnson — one of the most spectacular failures in recent retailing history.

The folks at JCPenney (JCP) just can’t seem to catch a break.

It turns out that the resignation of the company’s CEO in the wake of disastrous sales and profitability results caused by an ill-fated change in retail strategy was just the biggest clanger in a string of bad news.

Not only did the company’s sales plunge by $4.5 billion to around $13 billion, employment fell to only 116,000 workers — a huge drop from more than150,000 just a year earlier.

A centerpiece of the failed CEO’s retail strategy — opening boutique “stores within a store” — has been under constant fire, not least in the courts, where Macy’s has sued to prevent Martha Stewart-branded merchandise from being sold at JCPenney (citing a pre-existing exclusive sales agreement).

But there’s more.

We also have a report from STELLAService, an independent research company that gathers information on how well the nation’s Top 25 retailers are doing when it comes to delivering merchandise ordered online.

STELLAService has found that Staples, Zappos and Office Depot deliver merchandise the fastest.

And it’s fast all right:  these retailers achieve an average delivery time of one day.

On the other hand, who scored dead last? JCPenney. Its online division was the slowest of the 25 retailers, clocking in at an average delivery time of nine days.

That’s pretty miserable.

Is JCPenney filling the role that Montgomery Wards once played in U.S. retailing? Squeezed by big box discount stores on the one hand, and on the other by department store brands like Macys and Nordstroms the public considers far more exciting, JCPenney is trapped by its its own brand history.

No amount of “polishing the apple” in the mode of Apple’s fabulously successful retail branding can change the simple fact that the JCPenney brand name speaks to an older, middle-class demographic and psychographic audience.

Just-sacked CEO Ron Johnson has now experienced this brand reality first-hand.

One wonders how he could have missed it in the first place. Did his prior positions directing retail strategy at “go-go” brands Apple and Target blind him to the facts on the ground?

Can anyone who rubs elbows with real middle-class shoppers — even tangentially — seriously have thought that dropping store discount coupons would do anything other than turn off loyal customers?

There’s a reason coupon flyers continue to be so popular in the Sunday newspapers … and it has everything to do with millions upon millions of middle class and older consumers.

But unfortunately, JCPenney’s woes go much deeper than mere brand identity. Things appear to be seriously amiss on the operational side as well.

Any top retailer that can’t manage to deliver merchandise faster than an average of nine days deserves to have consumers snap their pocketbooks shut in response.

The next 18 months will tell us a good deal about where JCPenney is headed. Will the retailer end up regaining its brand strength … or will it die a slow death and ultimately be swept into the dustbin of retail history?

To me, the latter scenario seems more likely.  What makes it a particular shame is that the company has made so many unforced errors along the way.  Its own people, strategies and tactics have contributed as much as anything to its current plight.