Thursday, February 28, 2013
The Death of J.C. Penney
Yesterday's business news reported that J.C. Penney lost over a billion dollars last year. Now in its third year of staggering losses the pundits of Wall Street are preparing to write the century plus old company's obituary.
James Cash Penney is no doubt spinning in his grave these days. The "Sam Walton" of his day, Penney built a retailing empire based on the concept that you provide good quality at a reasonable price. Penney's always offered a point or two of higher quality merchandise than their then competitor Sears Roebuck & Company.
And, like Sears, Penney's maintained a retail presence in just about every small town in America, either through a retail store or through a catalog store. If Penney's didn't have it, or couldn't order it, you didn't need it.
I haven't been in a Penney's store in years, unless you call passing through the local mall store to get to the Apple Store. Penney's became too "hoity toity" for my taste. Too fancy and far too expensive. Ironically, it was the fellow, Ron Johnson, who teamed with Steve Jobs to establish the Apple Stores, who has served as Penney's CEO for the past three years. And he ended up making Penney's worse. He cancelled all sales and proclaimed that Penney's prices were already bargains, as priced. He set up fancy little boutiques within the store specializing in Levi's jeans and Nike gear. He began giving out free haircuts to children of Penney's shoppers. Through print ads and television ads he placed the Penney's brand squarely behind social justice issues like political activism and gay marriage. He would hire Ellen Degeneres as their celebrity spokesperson.
Now I don't know how many American shoppers were turned off by the celebration of the gay lifestyle ( I happen to believe Ellen Degeneres comes off as a nice person, and sweet and funny) but if ten percent of America decided they didn't care for their retailer becoming a champion of alternative lifestyles, perhaps that ten percent was the difference between retail success or failure.
To me it was simply the cost factor. I have no kids that need haircuts and I find clothes of higher quality at T.J. Maxx at half the costs.
I can still recall my old Penney's store in my hometown. It was the only place we could buy our Boy Scout uniforms and Penney's had a little ten square foot booth in the store, with a uniform Boy Scout mannequin to show you how smartly you'd look in B.S. uniform. Back then Penney's had those vacuum tubes to handle transactions. The clerk would write up your order, take your cash, put both in a vacuum tube where it would be whisked away. After a few moments your receipt and your change would come whooping down those same tubes. Magic!
When I finally got old enough to work and to buy my own clothes I shopped at J.C. Penney's. Their Towncraft brand of shirts and slacks were just fine; good quality, long lasting and stylish. I miss those good old days when retail stocked what YOU wanted to buy, unlike today when they want to tell you what you should be wearing, and what you should think about cultural and social issues. Someone must have stumbled on that fact recently. Penney's new TV ad campaign is aimed squarely at "middle America"..the new one minute commercials spend 50 seconds triumphing old fashioned American virtues before they fade out with a J.C. Penney logo. Sadly, it may be a bit late for that for those who despise social activism as part of their retailing model.
Now, here's the real irony. James Cash Penny, lived to his mid-nineties. He ran the stores from 1902 to 1971, his death. Penney is as well known today as a philanthropist than he is as a businessman. His foundation supports environmental sustainability, world wide human rights, government accountability and various other social issues. And yet, during the 75 years of Penney's greatest success, a customer would never know of this. Penney believed his customers just wanted a good retail deal and that was his business.
So, J.C. Penney, philanthropist, lives on, providing millions every year to the causes he valued, while J.C Penney, the social activist retailer is hemorrhaging a billion dollars a year and at death's door. Any lessons to be learned here?