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What’s Hurting J.C. Penney? Lack of Change and Clarity

BY CSA STAFF

By Kathy Gersch, VP at Kotter International [email protected]

After the larger-than-expected 12% drop in quarterly revenue J.C. Penney posted on Tuesday, I believe that the company’s time is running out. The drama among the Board, swapping CEOs, and new lines of credit are just distractions from the core problem. J.C. Penney has failed to make the big changes in its strategy to prosper in today’s retail environment – changes they need to make in order to survive.

The retailer’s leadership has made clear statements about future: They are going to stop following the path laid out by former CEO Ron Johnson and they are moving away from his no-coupon strategy. In other words, they have clarified what they aren’t going to do, but as I’ve said in the past – this is not a path forward. J.C. Penney’s leadership must make clear what they are going to do.

One key problem is that they have yet to identify who their target customer is. They haven’t clearly defined what’s different about the new J.C. Penney. What will be new and compelling enough about the J.C. Penney retail experience to draw the customer in? What will they deliver to keep these customers coming back in a world where there are lots of options – online and off?

If J.C. Penney doesn’t want to fade into history like retailers Circuit City and Borders, they’ll need to focus on three key actions:

1. Clearly define the path forward. So far, J.C. Penney has spent far too much time focusing on the problems that have brought them to where they are, rather than how they plan to move forward and get out of their slump. It is imperative for CEO Mike Ullman to clearly define a vision for where the company is headed and what it needs to do to compete. This vision must be specific, it must be actionable, and it must be communicable.

2. Communicate this vision to the company. Whatever the path forward is, the retailer must clearly communicate the new vision internally to its employees to create urgency around the new strategy. Most leaders fail to communicate their visions adequately. J.C. Penney must frequently and continually share compelling reasons for their own employees to believe that this future path is one worth supporting and working toward. If their own employees don’t understand and believe in the new vision – if the retailer can’t win their hearts and their minds – then any efforts to develop brand-loyal customers will fail.

3. Make a dramatic change. This is the most crucial step for J.C. Penney. The company must do something dramatic enough to draw customers back into its stores. Bringing coupons and promotions back is not a significant change. In fact, it’s far from it. If J.C. Penney continues to make small, incremental changes that largely involve going back to pre-Johnson-era practices, it will continue to lose ground to its competitors – which it was doing even before Johnson took over.

J.C. Penney has been on the ropes for quite some time now. Until they follow these steps, they will continue to spiral. Even if they start now, it may be too late.

Kathy Gersch is an executive VP at Kotter International, a firm that helps leaders accelerate strategy implementation in their organizations. She can be reached at [email protected].


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P.Rosenblum says:
Aug-26-2013 01:10 pm

Hi Kathy, The biggest problem JCP has, and in fact, the problem that has existed since before Ron Johnson's tenure is that it doesn't have enough cash to execute any kind of major change. If you look back to 2011, you'll see that $900 million was burned on a stock buy-back, and another $270 million, give or take on buying the Liz Claiborne brand (reported as $267 mm but the fees are always serious money in these transactions. Dropping revenue 25% during the Johnson era didn't help much, and I believe the company was about to become insolvent when it finally let Mr. Johnson go. Mr. Ullman has enough clout with factors to have kept those dogs at bay and also gain some more needed working capital, but there's just no room for re-invention. The question is, does JCP bring enough differentiated value to exist? One could ask the same of Sears and Kmart, and I think the answer is the same for all three. Not really. It's sad but its true. Johnson's ideas weren't bad. He was trying to move away from the pack. They were just poorly funded and accompanied by a marketing campaign that's right up there with the original Infiniti ads and New Coke introduction as "worst in history". So what are we left with? The core customer? The old one, who the company is begging to come back. The core products? What Mr. Ullman was working towards, assuming they can get rid of the home products brought in under Mr. Johnson's regime (which its old customer will not buy. The strategy? Survive. That's the story.

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Tommy Hilfiger celebrates partnership with Autism Society San Diego

BY CSA STAFF

NEW YORK — The Tommy Hilfiger Group enlisted actor Josh Bowman and professional surfers Kalani Robb, C.J. Kanuha and Alek Parker to participate in Autism Society San Diego’s annual summer surf camp.

In June, Josh Bowman and Kalani Robb, along with Gary Sheinbaum, CEO, Tommy Hilfiger North America and InStyle Magazine fashion director Cindy Weber-Cleary, co-hosted the opening event for the newest Tommy Hilfiger store opening in San Diego’s Fashion Valley Mall, benefitting the Autism Society San Diego.

Inspired by Autism Society San Diego’s mission and programs, Bowman and Robb came back to dedicate a day to teaching classes at the organization’s surf camp. Held at San Diego’s La Jolla Shores, the annual surf camp provides five weeks of one-on-one surf and swim instruction to persons with autism ages five years and up.

Through corporate donations and funds raised through consumer events, the Tommy Hilfiger Corporate Foundation is underwriting Autism Society San Diego’s annual Surf Camp program to cover the costs for underprivileged families living in San Diego through 2016.

It designs and markets menswear, womenswear, children’s apparel and denim collections under the Tommy Hilfiger, Hilfiger Denim and Tommy Girl brands.

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Russell Athletic and Pierre Garcon deliver uniforms to HS football teams

BY CSA STAFF

Russell Athletic brand deployed its brand ambassador and Washington wide receiver Pierre Garcon to three Washington, D.C.-area high schools. Garcon delivered Russell Athletic uniforms to the school’s respective football teams.

The teams selected were from Thomas Jefferson (Alexandra, Va.), Theodore Roosevelt (Washington, D.C.) and Springbrook (Silver Spring, Md.).

"I want to thank Russell Athletic for helping me give back to the Washington D.C. community in such an impactful way," said Garcon. "Seeing the look on these kids’ faces, it definitely reminds me how fortunate I am to be in the NFL and have a platform to make such a difference in their lives."

Garcon visited all three schools in one day. On each stop of the 40-plus mile trek and nearly eight-hour day, Garcon delivered the uniforms, gave an inspiring pep talk to each team and participated in a Q&A with high school players and community members, where he signed autographs and posed for photos.

"Pierre is a phenomenal role model and we’re privileged to have him be a part of the Russell Athletic family," said Gary Barfield, EVP, Russell Brands, LLC. "We hope our selected high schools enjoy their uniforms and give them a great sense of pride each time they take the field this season."

The schools won the new uniforms by entering a social media contest hosted by Garcon’s team earlier this summer.

Russell Brands is a leading supplier of apparel and team uniforms at the high school, college and professional levels. Russell’s collegiate licensed products and athletic wear are broadly distributed and marketed through department stores, sports specialty stores, retail chains and college bookstores.

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