Companies not likely to last but is J.C. Penny one of them?
By Dian Vujovich
Every year reports from different sources predict which companies are likely to bite the bullet in the coming year. In June of 2010, for instance, a few of the companies that 24/7 WallStree.com predicted wouldn’t make it through 2011 were British Petroleum (BP), RadioShack (RSH), and Moody’s (MCO). Turns out RSH’s stock is headed beyond south and closed under three bucks a share today (8/14/12) while Moody’s and BP are about five bucks away from their 52-week highs.
Last week InvestorPlace Insights published a piece titled 9 American Companies That Are Doomed. A few on their list included Groupon (GPRN), Sprint Nextel (S) and Dell (DELL). In the No.1 slot was J.C.Penney (JCP).
Now, I’m not suggesting that you invest in any of the companies mentioned or that you buy shares of JCP. It’s trading near 23 bucks a share or about half of what its 52-week high. But I do want to use JCP as an example of how new corporate management can go amuck but not having a clue as to who its customer base is.
JCP has been around for 100 years. Really. It was incorporated in 1913. I remember 50 years ago when my uncle used to refer to the chain as Jacques Penne. Ya gotta love how a French name can make anything sound more exciting. Even a department store.
A couple of talking heads on TV last Friday were discussing the future of JCP. One thought it had a future. The other didn’t. Clearly, neither have driven I95 near Palm Beach Lakes Blvd, in West Palm Beach, FL and read the huge “JCPenny Here To Stay” sign at the old Palm Beach Mall. For if they had, they’d know that JCP has staying power.
When the Palm Beach Mall opened in 1967, JCP was one of its anchor stores. Throughout the decades, and before the mall officially closed in 2010, stores such as Lord & Taylor, Walgreens, Woolworth, Dullards and Sears along with the mall cinemas and a grocery chain had all closed their doors. But not J.C.Penny.
The store is expected to be a part of the new Palm Beach Fashion Outlets mall coming sometime soon.
Ron Johnson took over as CEO of J.C. Penny last year. His claim to fame, and it’s a substantial claim, is that he was the guy who brought us the Apple Retail Stores and their Genius Bar. Impressive for sure.
What’s not so impressive is his lack of understanding about who J.C. Penny’s loyal customers were and are. Apple may have taken over the high-end personal computer world, but thinking their customers are Penny’s customers is and was just plain goofy. Penny’s hardcopy and TV ads make that clear. I don’t see them as a fit for JCPs shoppers and think that they are too slick and not audience appropriate. Basically, out of touch with the reality of their shoppers.
Speaking of shoppers, think about it: The retail Apple customer shopping at one of their in-house stores doesn’t know what a discount coupon is. Their brand has been full-tilt full-price all the way. Ever seen a sale rack in one of the stores? Never.
J.C. Penny shoppers, on the other hand, love sale racks. Toss in the numerous coupons received in the mail for those who shop often and use the company’s credit card and every day can be a bonanza shopping day filled with great deals.
Like many who have been fortunate enough to hit the big time with their careers, and windup living the very very good life, remembering how the other three-quarters live can easily and quickly be forgotten. And often on purpose.
I’m hoping Mr. Johnson has seen the light, come back down to earth and realized that what makes a loyal Apple customer is not the same as what makes a loyal Penny’s customer.
The WPB store’s interior is cleaner and more appealing that ever. Their merchandise shows better. Their pricing attractive. I know for many on Main Street that’s appreciated. Let’s hope it gets appreciated on Wall Street, too.
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