By Alan Wolf, YSN
Once the reigning queen of junior department stores, the chain has been undergoing an identity crisis and fiscal meltdown since former CEO and onetime Apple Stores chief Ron Johnson tried to move the business upscale eight years ago.
His successor, former Home Depot executive Marv Ellison, helped right the ship somewhat, but also launched Penney’s ill-fated, three-year re-entry into major appliances, further muddying the retailer’s merchandising waters.
Ellison left last year to run Lowe’s and was succeeded in turn by Jill Soltau, formerly president/CEO of craft and fabric chain Joann Stores. Soltau inherited a 117-year-old company still plagued by losses, debt and sagging sales, and in search of a new identity.
In her first series of actions, Soltau brought in a new management team, formally pulled the plug on appliances last February, and refocused on Penney’s roots in the more profitable apparel and soft home furnishings categories, TWICE reported. Furniture was also removed from stores (but is still sold online), and mattresses were pulled from more than half of its 850 locations.
As part of the transformation, Soltau’s team developed new store layouts that included “the reduction of store space previously dedicated to appliance and furniture showrooms to maximize efficiencies, reduce inventory and create an enhanced shopping experience that inspires repeat shopping trips,” the company said.
In her latest series of moves, she’s cleaning up aisles clogged with excess inventory, grouping products by lifestyle in about 10 percent of the chain, and is testing a new prototype store in Hurst, Texas, that may redefine Penney’s place in the rapidly changing retail landscape. The store, located about 45 minutes from Penney headquarters in Plano, features fitness classes, live product demos, interactive fitting room mirrors, on-site stylists, concierge service, 11 lounges, and even a children’s clubhouse.
“We need to be more than just a department store in a mall by delivering an experience,” she told The Wall Street Journal.
But she’d better act fast. Penney’s annual revenue has plummeted from $20 billion to $12 billion over the last 12 years and the company hasn’t turned a profit since 2012, the Journal reported. It’s still saddled with about $4 billion in debt, and its shares hover around $1, putting the retailer at risk for delisting by the New York Stock Exchange. And all that’s set against a backdrop of continued retail consolidation, with more than 8,000 storefronts set to close this year nationwide and companies including Shopko, Fred’s, Gymboree, Payless ShoeSource, Forever 21, Barneys New York and Mattress Warehouse/Mattress King/Sleep Outfitters filing for bankruptcy protection in 2019 alone.
Soltau told the Journal she has no immediate plans for major store closings, as the vast majority of Penney’s locations are profitable, and instead wants to fix the mistakes of her predecessors.
We’d say she has her work cut out for her.