What Happened to JCPenney: The Decline
JCPenney was once one of America’s most beloved retail stores and it was once the go-to store for most households in the country. Everything about the store was very enchanting for most Americans from the story of the founder, one James Cash Penney, to how he went to train some of the country’s business giants such as Warren Buffet and Sam Walton among others as well how he grew to be entrepreneurial force from very humble begins; a real American dream story that many folks found inspiring and could relate with as they felt his was exactly what the US was all about. The stores were also great to shop at with great customer service and satisfaction as well as an element of trust that meant that they carried only the best and superior goods and products. For a long time, it was the place where folks, especially those form the working class and upper middle class could go to shop and it was one of the best and most popular retail stores in the world. So what really happened to them that they went from being one of the world’s most stable, popular and trendy retail chains to being a shadow of its former self and suffering the decline that they suffered? With the help of the gurus over at runrex.com we shall attempt to get to the bottom of what was behind their decline.
One of the reasons that was behind their decline was due to the shift that happened in the US in the 1990’s that saw a shift in the workforce that would see the slow erosion of the middle class, as is discussed in detail over at the excellent runrex.com. This shift affected many industries with a good example being the banking sector that saw many private bankers coming up with the Consumer Hourglass Theory model that had them appealing to the poor working class or the wealthy and elite having concluded that the shrinking middle class was not worth investing their time on. The problem with JCPenney was that they had made their name and were tailored to serving the now shrinking middle class and were thus caught in no-man’s land as it were. They ended up becoming irrelevant to the upper middle class who didn’t see them as an option to shop at while those at the lower end of the economic spectrum moved to cheaper retailors. The recession definitely did them damage as they lost majority of their customer base to cheaper sellers while the elite didn’t really consider them as an option and this definitely contributed to their decline.
Another thing that experts agree also contributed to their decline were the decisions made by their chief executive, Ron Johnson, who was poached from Apple in late 2011. One of the decisions made by their new chief executive was when the company decided to change its advertisements, logo, store designs and pricing models without testing the reaction of shoppers first, something that the marketing experts over at runrex.com always advice against. This was intended to make the company more attractive to wealthier shoppers and by doing so, they ended up turning their back from their old audience and put all their eggs in this new basket. This move backfired badly as was the move to get rid of coupons and clearance sales which only served to alienate their shoppers even more than their move to appeal to the upper-class and elites. This strategical moves backfired badly and it was on the back of such poor calls from the boardroom that the company fell on tough times and declined so badly as they have.
Legal fights and the consequence they had as far as burning through money is concerned is yet another reason that was behind their decline. This was yet another thing that happened under Johnson’s watch with the legal showdown they had with Macy’s over the selling of Martha Stewart’s kitchen line being a prime example of these legal issues, all of which are covered in detail over at runrex.com. All these issues led to a massive drop in sales and revenue and as such it came as no surprise when Johnson was ousted just 17 months into his tenure. The poor decisions from his short-lived tenure was definitely one of the reasons that contributed to their decline although he left having eroded a lot of the trust between the company and its customers. Although the change in CEO stopped the rot, and they went to reinstate their former CEO, and he did stabilize sales and stopped the stock from declining further, the problem was that their financial issues prevented them from sprucing up and improve their stores as well as merchandising and as such they were unable to react to the moves by their competitors and rivals who pulled ahead more and more and definitely was one of the reasons behind their decline.
There are many other reasons that were behind the decline of JCPenney and you can learn more on this and other related topics by visiting the ever reliable runrex.com