JC Penney is an iconic American retailer with a rich history that dates back to 1898, when James Cash “JC” Penney began working for a two-store operation called Golden Rule Stores.
Within four years, he was offered a partnership in a third store. In 1907, he bought out his partners and purchased full ownership all Golden Rule Stores. JC Penny’s root go back further than any other major retailer except Sears (Sears, Roebuck & Company, established 1886), has outlived behemoths such as Montgomery Ward, and played a role in mentoring Sam Walton, founder of today’s dominant Walmart. At its peak, in 1973, it operated over two-thousand stores.
JC Penney is an interesting case study, in that this long-lived and once thriving brand is suffering, and many industry observers question whether it can survive. It has faced hard times before, most notably during the great depression and in the mid-seventies when the entire retail industry was hit hard by recession. However, in the last ten years, it has declined dramatically while other retailers have flourished. In the last ten-years it has had three dramatic management turnovers that failed to turn the company around. In early 2013, JC Penney reported the worst quarter of any major retailer in history, with a same store sales drop of 32%, nearly a third sales decrease in one year. Last year it announced the closing of 10% of its remaining stores. The current stock price is $5.45, even lower than its bottom during the Great Depression.
This playbook proposes a strategy for JC Penney. It will be interesting to see what steps their current management takes and what results they achieve. Whether they survive, thrive, or fail, the case is a reminder that JC Penney, as any business in a free economy, must continually evolve and alter strategy to remain relevant and competitive.

Current Situation
Regardless of JC Penny’s storied history and largely the result of recent management decisions, the facts are stark and the future is grim. Its stock price is at a historic low, it recently announced the closing of a twelve percent of its stores, and it has been overtaken by its key competitors (Isadore, 2017). It is undifferentiated in a saturated retail marketplace and has no unique value proposition. How long it will survive is a topic of open discussion throughout the retail industry. The assessment and recommended approach outlined here are represented in the game plan infographic that follows. This diagram illustrates the characteristics the company must apply to move from its current place backfield toward a winning goal.

Assessment
J.C. Penney has suffered from a decade of erosion in its brand equity and reputation. In 2007, the company had its second best in its history, in terms of dollar sales, under the direction of Mike Ullman; adjusted for inflation, however, Penney’s sales had been relatively flat for almost five years. Its Board of Director’s was growing impatient when a recession hit in 2010, hitting the retail sector hard. Penney’s decline was steeper than its competitors, in part due to Ullman’s decision to close its catalog unit and the resulting sales loss as it shifted [successfully over time] to online selling. At the same time, sales at Kohl’s surged and this competitor took over Penney’s position, just behind Macy’s and Sears. Under pressure, Ullman retired, and The Board brought in Ron Johnson who had past success at Target and had become a “wunderkind” at Apple, developing the Apple retail store concept and the Genius Bar. Johnson is broadly credited with nearly destroying the century-old retailer in less than 18 months. He upended nearly every aspect of outward facing, from the logo to store formats to their pricing model. He shifted merchandising, eliminating customer’s favorites and harming billion-dollar store brands, such as St. John’s Bay and Worthington, in favor of offering upscale $3,000 couches to Penney’s current middle-market consumers. In so doing, he confused and alienated Penney’s existing customer base while failing to attract the new segments the company targeted. He made dramatic changes with a secretive, top-down style that alienated employees, jettisoned long-time executives, and implemented massive change with almost no marketplace or consumer testing.
At Apple, Johnson was immersed in a blue ocean environment; innovative products attracted consumers in new market spaces with minimal competition. Now he was selling coffee makers, underwear, and socks. Johnson was a victim of inside-out thinking. He executed his vision without surveying Penney’s loyal customers, and he drove the change too quickly without the testing and feedback loops that allow for refinement and course correction. His vision was not necessarily far off-base, but he drove too much change too quickly. In short, his revolution failed where evolution may have had success. Today, Penney must reboot, with about 24 million less customers in its base, a dramatic loss in institutional knowledge, and a muddied marketplace presence.
Recommended Approach
The “playbook” analogy is fitting, and the recommended game plan consists of three phases implemented over time. An overarching strategy used to anchor decisions andactions, and the execution of each play feeds back into the strategy and tactics of the next, driving towards a common vision and long term goal.
1. Focus – Penney strives to place itself in a space between mass merchandisers and upscale retailers, offering value and contemporary products to the middle market. At the same time, it seeks to expand
2. its current and aging customer base, adding younger and slightly more affluent (but still mainstream) customers. It must cement its purpose (mission), objectives (vision), and methods (values), communicate these more clearly and frequently than in the past, and align all its activities and decisions with them.
3. Positioning -- This phase establishes where on the field Penney’s chooses to play and what its value proposition is for its stakeholders
4. . Here, research and development is critical, as a key success factor is its ability to leverage exciting private label brands to attract and retain

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