Business free essay: JC Penney Change Management Plan
- C. Penney (JCP) Company, Inc is one of the oldest and renowned departmental stores operating in the US. Then headquarters of the company are located in Plano, Texas. The company operates as a retailer, and it sells products through its departmental stores. By the third quarter of 2013, the company had more than 1000 stores in different locations (Loeb, 2016). Although most of the stores were located in the US, the company had a few stores in Puerto Rico. The main products sold by the company include clothing, footwear, jewelry, housewares, appliances, furniture, electronics and cosmetics (Loeb, 2016). Considering the nature of the retail market industry and the poor performance of the company during the recent years, there is a need for a change in the company’s operations that would enable the company to become more profitable and to compete well in US retail industry.
JCP was established by a person called James Cash Penney in 1902. The company grew continuously during the rest of the 20th century. JCP had opened stores in foreign countries such as Belgium, Italy, Chile and Mexico during the 20th century, but it closed them in 2003 (Uranga, 2017). Puerto Rico is the only foreign country where the company did not completely cease from operating. Although the performance JCP during the first ten years of the 21st century was not very strong, the company was able to compete well with other retailers in the US market. However, its performance started declining sharply after Ron Johnson became the CEO in 2011. Even after Mike Ullman, a former CEO of the company, replaced Johnson in 2013, the poor performance of the company did not change (Uranga, 2016). However, the company’s performance has been improving since Marvin Ellison replaced Ullman as the CEO in 2015 (Uranga, 2016). Despite this, there is a need for significant change in the current operations of the company so that it can be able to survive in the retail market for a long time.
A Need for Change
During the 21st century, and especially over the last seven years, competition in the retail industry in the US has become very stiff. To deal with the competition, most retailers, including JCP, have resorted to reducing prices for their products. When Johnson became the CEO of the company, he replaced the use of coupons with reduction of prices for the company’s products (Uranga, 2017). However, the approach did not have a significant in increasing the sales made by the company mainly because the approach was taken by many other retailers, including Wal-Mart. JCP has been incurring losses since 2011 in most of its stores in the US (Uranga, 2017). Just like many other retailers in the retail industry, JCP has been compelled to close some of its underperforming stores and to lay off workers to reduce the fixed costs it incurs (Uranga, 2017). If the trend continues, JCP might be forced to close all stores. Since the survival of the company in the retail industry is at stake, there is a need to take the most effective actions that will help to rescue the company.
Goals for JCP
The best rescue strategy that JCP can take at the moment is to close or sell the underperforming stores and use the resources to improve product diversification in the remaining stores. The products that JCP has been selling, especially clothing and footwear, are too common among retailers and thus, there has been nothing unique offered by the company that would help to lure more customers (Uranga, 2017). Adding more products that are not sold by other retailers in the company’s portfolio will help to make the company more attractive. The approach has already been proved to be effective since the sales of the company started to increase after CEO Ellison added electronic products such as phones in some of the company’s stores. The company can make further improvement through adding more services, such as financial services in its stores. In every target are, the company should determine the types of products that can be added to the existing portfolio (Uranga, 2017). The organization will be able to do so if it can sell or close some of the underperforming stores and divert the resources to support the product and service diversification strategy. The strategy will be very effective if it is combined with the use of coupons to enhance customer loyalty.
Loeb, W. (2016). Why J.C.Penney Will Survive And Become Stronger. Retrieved from
Uranga, R. (2016, December 19). How Sears, JCPenney fight to survive in the mall. The
Mercury Times. Retrieved from http://www.mercurynews.com/2016/12/19/how-sears-jcpenney-fight-to-survive-in-the-mall/
Uranga, R. (2017, January 3). Sears, J.C. Penney seek to survive in quickly changing retail
world. The Gazette. Retrieved from http://www.thegazette.com/subject/news/business/sears-jc-penney-seek-to-survive-in-quickly-changing-retail-world-20170103
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