J C Penney Company, Inc. is an apparel and home-furnishing retailer (JC Penney Company, Inc., 2014). The Company is dedicated to being a preferred retail location for unparalleled attractive, quality, and value at approximately 1,100 stores and at jcp.com (Penney, 2013) . Customers have discovered an inspiring shopping environment that includes a collection of private and exclusive brands along with many new and exciting attractions (Penney, 2013).
More than a century ago, James Cash Penney founded the company as an active and responsible community member thus earning a distinctive place amongst American families (Penney, 2013). Mr. Penney opened the first store and practiced many courtesies that are now commonplace (Columbia Business School, 2001). Practices such as money-back returns, uniform pricing, quality merchandise, and pleasant customer service set the store apart from the competition (Columbia Business School, 2001). By investing in the business and remaining committed helped build the company’s legacy. This mode of corporate citizenship continues to contribute to the advancement of social, environmental, and ethical standards (Penney, 2013). In fact, adherence to high ethical standards is an integral part of the organization’s legacy and is vital to shareholders, customers, and suppliers (Penney, 2013).
The author will evaluate the changes of J C Penney’s management style, explain the shift from a catalog-based retailer, and discuss the decision to use celebrities as company spokespeople. The author will close by providing ideas that influence employees and customers and lastly the author will predict if J C Penney’s can adapt to the changing needs of customers and the market by suggesting changes in the management structure that prove beneficial to the company.

J C Penney’s management style
J C Penney hired a team of in-house designers to support the strategy of becoming an in-house stylish alternative to more expensive department stores such as Macys and Dillard’s (Columbia Business School, 2001). For example, J C Penney centralized product planning and buying operations, enabling the company to acquire merchandise that is more fashionable (Columbia Business School, 2001).
J C Penney was one of the first traditional retailers to unveil a website and at present has one of the most productive online stores amongst mainstream retailers as the web site enabled the company to attract a younger customer base (JC Penney Company, Inc., 2014).
J C Penney has always been on the cutting edge of innovation (Columbia Business School, 2001). For example in the 1960’s, the store expanded offerings to include, styling salons, restaurants, automotive and garden centers to provide shoppers with a greater selection and convenience. Because of this initiative, sales exploded particularly amongst catalog sales that by the 1970 surpassed 200 million dollars in revenue (Columbia Business School, 2001). Since inception, J C Penney has altered the company’s management style several times. However, the most recent modification included changing vendors and discontinuing coupon use and other widely used promotions that customers had grown accustomed. The shift served as a disservice to the company because the shift alienated the loyal customer base, and contributed to a significance loss of confidence that American families had bestowed upon the company just a century ago (JC Penney Company, Inc., 2014).

The shift from a catalog-based to an Internet retailer

In early 2001, senior management announced that the company would close 44 department stores and 3 catalog outlet centers. In the same year, the company reported a net loss of 705 million dollars. In February 2001, J C Penney converted the department stores to centralized merchandising a move intended to assist the company introduce new fashions faster.
In addition to the converting several stores, J C Penney also sold, the direct marketing services unit, which included all company insurance operations (Columbia Business School, 2001). Given the depths of the problems at J C Penney and a corporate culture that was resistant to change (Columbia Business School, 2001). Senior leadership understood that it was evident that a complete turnaround would not happen overnight (Hoover's Company Profiles: JC Penney Company, 2014). Because of the resistance, management projected that a full-scaled turnaround would take five years (Columbia Business School, 2001). As the company continues to navigate through the midst of the aforementioned multiyear turnaround, J C Penney still needs to prove that the company could drive sustained sales growth without damaging potential profit margins (Hoover's Company Profiles: JC Penney Company, 2014).
As the company celebrated its 100th anniversary, the company altered the corporate structure to a holding company format essentially becoming a subsidiary that concentrated on the department stores and related catalog and Internet channels (Hoover's Company Profiles: JC Penney Company, 2014). In an effort to support this initiative, the company closed another 29 underperforming department stores as overall profits improved to 405 million dollars (Hoover's Company Profiles: JC Penney Company, 2014). Because of the restructure, the company posted a comparable store sales gain of 2.6 percent, boasting one of the best results in the industry (Hoover's Company Profiles: JC Penney Company, 2014).
While revamping the department stores, the company also restructured the catalog business (Hoover's Company Profiles: JC Penney Company, 2014). The company continued to cut costs and eliminate unprofitable categories (Hoover's Company Profiles: JC Penney Company, 2014). As customers increasingly shifted from catalog shopping to Internet transactions, the company implemented more changes such as the shutdown of the Atlanta catalog-fulfillment center (Columbia Business School, 2001).
Meanwhile, as the department stores were receiving a fashion booster, J C Penney reached a deal to become the provider of several exclusive women’s apparel that included trendy and upscale clothing (JC Penney Company, Inc., 2014). Under new leadership and new designers, the company transformed an Arizona private-label line to appeal to younger customers looking for trendier clothing. This transformation sponsored by the broadest marketing campaign since the original brand launch a move that is proving to benefit the veteran retailer (JC Penney Company, Inc., 2014).
Evaluate management decision to use celebrities as key merchandise
Research supports the theory that the company initially did not have a clear image of what customers wanted (Stone, 2013). Adding to the problem was that senior leadership lacked the status to compete with other upscale retail establishments (Stone, 2013). Because of the retailer’s reluctance to make changes and comprised the company’s ability to remain relevant and competitive (Stone, 2013). One major hurdle that continues to plague the retailer is brand identity (Stone, 2013). This identity or lack thereof is one reason why the retailer began using celebrities (Stone, 2013). A move that the struggling retailer believed would help the company expand the retailer’s customer based and realize a stronger profit margin (Picchi, 2013). The process however, was not seamless, and conventional wisdom appears to lean toward problematic at least in terms of the relationship between the retailer and Martha Stewart as JCP and Macy’s continue to fight over a judge’s ruling, which allows to J C Penney to sell Martha Stewart-designed products under the JCP Everyday label (Stone, 2013).
Innovative ideas that contribute to positive impact
J C Penney is unquestionably legendary for the company’s innovative ideas. One way in particular is the company’s Door to the Floor (Penney, 2013). This technology assists store management efforts to discern what merchandise is scheduled for delivery up to 48 hours in advance, allowing for optimal planning and preparation to getting merchandise off the truck and onto the sales floor (JC Penney Company, Inc., 2014). This process builds greater efficiency in terms of merchandise speeds to the floor and sets execution and overall increased productivity (JC Penney Company, Inc., 2014). The company reinvests that time in customer facing activities, which in sum total equate to the Company Customer FIRST initiative (JC Penney Company, Inc., 2014).
In add to JCP legendary innovative ideas, the retailer created an independent think tank within the company to generate new ideas (Tice, 2010). This new initiative has already connected with magazines to cross-promote apparel to new ecommerce sites such as the Clad label geared toward men. (Tice, 2010).
J C Penney continued the company’s innovative edge by introducing a store within a store concept (Tice, 2010). For example, Sephora, a visionary beauty-retail boasting an open-sell environment that features classic and emerging brands across a broad range of product categories (Sephora, 2014). The purpose of this move was similar to that of JCP early days, which was to provide customers with more options and convenience (Columbia Business School, 2001).
Conclusion
The challenge for all traditional retail is the growth of on-line retailers (Stone, 2013). In a small margin business with high fixed costs, like traditional retail, even a small revenue loss has a big impact on net profit (Tice, 2010). For every 5% revenue decline 50-90% of that lost cash comes directly off the bottom line because costs do not align with profits (Hartung, 2013 ). For example, every quarter more customers are buying more merchandise from online retailers such as Amazon and rather than brick and mortar stores (Hartung, 2013 ). It is the loss of revenue that is devastating the profit margins of the traditional retailers like Sears and J C Penney and are weakening, nearly everyone else including Wal-Mart (Hartung, 2013 ).
Certainty, J C Penney made a huge mistake by bringing on the wrong leadership, which was evident by the loss of revenue as well as the loyal customer base (Malcolm, 2013 ). It is noteworthy that the stockholders immediately recognized the mistake, and made the necessary steps to correct although the data trends indicate that the retailer needs to accelerate growth and increase profit margins (Malcolm, 2013 ). While it may be too early to determine if the previous rehired chief executive officer can produce the infusion that the struggling retailer will require in order to remain competitive and relevant (Hartung, 2013 ).