Know your customer has been the mantra in retail for 10 or more years and this has been the focus for many a successful retailer, particularly those able to exploit the rich data they receive for free from online customers.
But for a retailer that thinks more in stores rather than customers, it comes as no surprise to many that JCPenney has filed for bankruptcy, having carried a whacking $4bn debt burden, weighed down further by massive interest payments.
Letting stores run the business is the wrong approach
Thinking stores first rather than customers was once the right thing to do, so it’s easy to understand why this has been JCPenney’s focus, given it has over 840 stores, some of them among the largest in the US retail estate.
But if the company had focused more and sooner on its customers, it might have made it through, even allowing for debt and Covid-19. Even under the plans to begin the preparations to re-emerge from bankruptcy, which included 200 stores, no one can yet know what the business might look like on the other side.
All we have so far is CEO, Jill Soltau, saying that the retailer was expecting to emerge from “Chapter 11 and this pandemic as a stronger retailer.”
Walmart, Target, Amazon to name but a few
Which brings us onto the competition, not least two of the US’ mightiest retailers, Walmart and Target. And that is without even mentioning Amazon. JCPenney was both late to invest in its stores and late to develop its online business. And of course, while it now has less competition in its own department store sector, consider that the sector was worth over $11bn in April 2019; a year later, and it is down to $6.1bn, not all of which can be put down to Covid-19.
Does the world need JCPenney?
In short, there are long-standing systemic problems in the department store sector, and any plans that JCPenney has to come out fighting will have to focus on customer data, a much smaller store estate, better brand relationships and a strong and relevant online offer.
All of which begs the question, do they really think they can do any of those things better than anyone else?