5 business lessons from JCPenney
On our way back to Colorado from a visit to Yellowstone National Park this summer, my wife, The Lovely Christy, and I found ourselves getting fuel in a little town in Wyoming called Kemmerer. Little did either of us know this was the location of the first JCPenney store until we saw signs pointing us in its direction.
We took a couple photos and I shot a video for my followers in front of the location before driving on. However, we were curious to learn more about the story behind the well-known brand and the man who started the company in this small Western town, as well as what business lessons can be taken from the past successes and recent challenges the company is experiencing.
The shortened version of the JCPenney company story is as follows: James Cash Penney (great name for an entrepreneur, by the way) was initially hired by a dry-goods store called “Golden Rule” Mercantile Company, owned by two partners. In 1902, because Penney was an ethical, skilled salesperson, the owners offered him a one-third share in a new store they were opening in Kemmerer, Wyo.
With a $2,000 investment, and at 26 years old, he bought in and ran that store. Five years later, he purchased interest in all the stores from the partners, incorporated the company under his own name, and grew to 1,392 stores by 1929. When JC Penney died in 1971, at 95 years old, company sales hit $5 Billion, and in 1973 the company hit its peak number of stores at 2,053.
Like any business, the company has had its challenges, even when experiencing huge growth. They managed to thrive through the Great Depression, though, because of their reputation for quality goods at a fair price, and that was extremely important to people during that time of struggle. Understanding their customers’ needs and wants, as well as diversification of offering, was paramount to their success.
Fast forward to today. JCPenney is not doing as well as they used to, for multiple reasons. In fact, I heard they are in the process of shutting down more than 130 stores this year. Granted, this is all part of their plan to be more profitable and “bounce back” from recent issues, but I always look at situations like this and try to analyze what I can learn from it.
From what I can gather, the company simply lost sight of what was important to their customers, didn’t communicate the value of their product and experience well enough and failed to relate their unique value proposition through media channels. Instead of talking about what they could’ve done better, however, let’s look at what lessons we can learn from them.
Always adapt to the ways people want to do business with you. As we all know, technology is constantly changing the way we do business because it’s changing the way our customers want to do business with us. Just as people like to order retail goods online, they also prefer to schedule services online, communicate through email and text, read reviews, compare prices, etc. If we aren’t making booking, communication and the overall sales call as painless as possible for our customers, they will go to our more technologically-advanced competitors.
I remember getting the huge JCPenney holiday catalog in the mail growing up, and I’m sure they did a great deal of business from those catalogs at the time, but you don’t see those any more. Maybe a smaller version of the catalog still exists, but they obviously had to create a strong online presence as well. Make sure you are always learning about new trends in consumer behavior and paying attention to what your clients really want. Joining a group of fellow forward-thinking entrepreneurs is a great way to help you stay up on trends and more efficient ways of connecting with clients’ needs and wants.
Stay true to your identity. Understanding who you are as a leader, as well as what your brand represents and who your clients are, is one of the most crucial lessons one can learn.
In 2013, JCPenney fired their CEO for a few performance-based reasons, but I believe one of the biggest issues was that specific CEO didn’t understand the company’s customers and, therefore, didn’t speak to them in the right language. That company had built a strong brand based on a certain customer niche, then tried to speak to them differently; the customers got confused about the brand and why they should even shop there.
We always hear the term “branding,” but it’s really about having a solid, consistent identity that your customers can relate to. Don’t try to be all things to all people; try to be the one company your customer really wants and needs. Make sure your USP is strong and clear, and think in terms of what really matters to your clients.
Don’t compete on price alone. People love to compare prices online. How do you combat that? By understanding your unique offerings and speaking in terms of value — not price alone. During his early days of success, Penney realized that private-labeling items was the perfect way to avoid competing based on price — customers got more quality for less money, and he could have higher, more controlled profit margins. He also brought goods from the Eastern U.S. that people in the Western mining towns couldn’t access otherwise. We can learn a lot from this way of thinking by always asking ourselves what value we are providing that our competitors aren’t.
Hire forward-thinking team members. Guess who worked in a JCPenney store as a sales trainee in Iowa? You might have heard of a guy named Sam Walton, who started a little company called Walmart. Now, I’ve had techs leave my company to go out on their own before, but that really puts things in perspective.
When you find a potential hire who might think a little differently or have a unique approach, go for it. There’s a growing segment of the workforce right now (millennials) who just happen to fit this description. Don’t be so scared that they might go on their own or have ideas of their own that you don’t hire them.
Never give up — just regroup. As business leaders, there are days we just want to throw in the towel, right? (Though at least we aren’t closing more than 100 stores this year like JCPenney.)
The lesson here is that JCPenney is not shutting down completely; instead, they are working on growth plans, partnering with relevant brands and testing different product offerings. They are closing those stores to sharpen their focus on what is working for them. Sometimes, what looks like a step back is actually a step in the right direction. We will see how it plays out for them, but remember — when things get tough, we just need to get creative.
Little did I know that a quick stop in a small Wyoming town would give an interesting look into business history and provide some great perspective and reminders. You’ll probably never look at that store in the mall the same again, and I hope it will provide some inspiration for you to look at your company differently, too.