J.C. Penney Sees Risks in Morale, Efficiency as Employees Leave

[Purveyor]

By Sapna Maheshwari - Dec 5, 2012 12:01 AM ET

J.C. Penney Co. (JCP), the department-store company undergoing a turnaround led by Chief Executive Officer Ron Johnson, said its operating efficiency may be hurt after it fired employees while others left voluntarily.

The company listed new “risk factors” surrounding its workforce reductions, as well as concern that customers may not accept new marketing and merchandising strategies, in its third- quarter regulatory filing yesterday. J.C. Penney, based in Plano, Texas, said the departures of officers and line managers with “specific knowledge” about the company and its industry may be “difficult to replace,” according to the filing.

“We now operate with significantly fewer individuals who have assumed additional duties and responsibilities and we could have additional workforce reductions in the future,” J.C. Penney said in the filing. Combined with the company’s newly decentralized management structure, the changes “may negatively impact communication, morale, management cohesiveness and effective decision-making, which could have an adverse impact on our operating efficiency.”

J.C. Penney’s revenue has declined by more than 20 percent for three straight quarters as Johnson, who joined as CEO about a year ago from Apple Inc. (AAPL), loses customers in a bid to implement an everyday low-pricing plan and turn the chain into a collection of branded shops. The company said that its new strategies rely on customers’ acceptance, and that any changes may be “substantial” and “result in significant additional costs” while potentially disrupting the business, according to the filing.

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http://www.bloomberg.com/news/2012-12-05/j-c-penney-sees-risks-in-morale-efficiency-as-employees-leave.html

[southernyankeebelle]

1. Why do they want to change something that wasn't broken? Maybe they need the change at the

top.

[ParkieDem]

17. Well, it was broken ...

... they brought in the new CEO (from Apple) to try to revitalize things. Their sales have plummeted, and unfortunately it doesn't seem like the new people at the top, or the re-branding (including Ellen's endorsements) have helped.

A new store opened here recently, and while it's nice inside, its largely devoid of shoppers. The problem is that their market (i.e., the middle class) is declining. People who want nicer things go to Nordstrom's or Macy's. If they want more basic things, they go to Wal-Mart (or even Kohl's, where prices are generally lower).

This isn't unique to JC Penney; the same thing happened to Montgomery Ward's and is happening to places like Sears and Dillard's.

[southernyankeebelle]

43. It's kind of sad to see what is happening to these stores. I remember living overseas as

a child and my momma use to order our cloths. Sears always carried the huskey pants mom use to buy for my brother. I haven't bought things from there in years.

[Jeff In Milwaukee]

26. Not Broken?

JCP was (maybe still is - we'll see) a dying company.

[southernyankeebelle]

42. Well for me I live in a rural area and our JCP is doing well as far as I know.

[Lydia Leftcoast]

2. Workforce reduction?

They have too few employees already.

They're my source for socks and underwear, but I notice that the quality of their merchandise has gone down, which is saying a lot, and they're eliminating whole lines. The hosiery that fits me perfectly (on the rare occasions when I dress up) is now catalog only.

[liberal N proud]

10. They have been cleaning out their headquarters

Mostly letting people go and replacing them with former Apple people.

My niece works for JCP at the home office and has watch this whole transformation unfold. She has said that one day someone will be let go and the next day there will be someone replace them who is a former Apple employee.

[WI_DEM]

3. They now want to be JCP--more trendy--and this will explode in their faces,too.

[TwilightGardener]

4. What is a "collection of branded shops"? How does this differ

from a department store? I went there to buy jeans a few weeks ago, and instead of racks and shelves of choices, they had some low tables with a few unfolded, stacked pairs of jeans--I thought it was some kind of funky display-only thing, but then a saleswoman brought me over to them when I asked where the jeans were. Almost nothing worthwhile in petites, and I need petites. Sears still has the old department store thing going on, but they're slowly dying. All I'm going to have left pretty soon is faux-discount Kohl's and the Targets and WallyWorlds.

[ieoeja]

24. My guess is that each department in the store is labeled as a separate store.

You would essentially have a mall in the one store.

We have a dying Sears near me. I was speculating awhile back that Sears ought to convert the building into a mall, turn each department into its own separate store, then have a mall full of stores that just happened to be owned by Sears. Seeing as it is failing so badly for JC Penny, I guess it was a bad idea.

The other idea is give up on the clothes. Stick to appliances and tools which I believe are still a strength for Sears.

And unblock the damn windows! I'm guessing they walled over all the windows during the civil rights and Vietnam rioting days. Reopening those windows so passersby could see your store, and shoppers not feel like they are shopping in a bunker, would do more good for the store than anything else. This damn store is fricking depressing.


I'm with you on the discount stores. I hate buying clothes at those places. But I may have no choice the way things are going.

Interestingly enough we now have the very situation that the theorists behind "Trickle Down" wanted to get rid of. The idea was that people had plenty of money in 1980, but nothing to spend it on. "Pent up demand" was the theoretical problem, and "Trickle Down" was the theoretical solution. Letting investors keep more of their profits would lead them to risk more of their extra profits on new ideas.

But, of course, it led to concentration of wealth. Concentrating wealth means there are not enough consumers. So I have money, but I can not take my car to any of the auto body shops near my house because every freaking one of them has gone out of business. I now take a different route to get to my farm because there are now huge gaps on the old route where there the gas stations went out of business. And so on.

It feels like we are turning the entire country into a ghost town.

[Jeff In Milwaukee]

27. Sears does this with Land's End

They bought Lands End a few years back and then open little mini-stores within the larger Sears store.

[TwilightGardener]

37. I still find good stuff at Sears (even clothes), and still like their

tools and appliances--their website had a TON of stuff, too. We got our bed from the site a few years ago, because they were the only ones to have a good variety of black old fashioned wrought-iron-type headboards and footboards at Not-Pottery-Barn prices (they didn't have it in the store, but at least Sears was able to get my money somehow).

I do feel like things are changing in general, as you say--and not in a good way. The discount stores are limited to cheap discount stuff, which is OK for my cheap-ass self in terms of things like socks and kitchen utensils...but sometimes I want REAL department store quality. I buy stuff off the internet when I can't find what I want in stores--but given the choice, I don't mind driving and shopping to see what I'm getting. But the choices are becoming fewer and fewer for just about everything in terms of brick and mortar businesses. Even Best Buy and Borders are in trouble--hard to believe.

[a kennedy]

5. When our JC Penney reorganized their store......I quit going. Hated it. eom

[pacalo]

25. I was very disappointed with the new set-up, too.

[RockaFowler]

6. The stores look terrible now

And you can't find anything.

A ton of their products are now only available online. Which means you have to pay for shipping. I go to the mall so I don't have to pay for shipping.

The only thing I like about JCPenney now is the salon. They better not mess with that. My hairdresser is the best. Can't lose him

[tanyev]

14. Yeppers. Me too.

I found my hairstylist via word of mouth, she just happens to work at a JCPenney salon. Since the new management took over a lot of their salon employees have quit. She always says she's still doing OK, but every time I go I'm dreading that I'll hear bad news.

[RockaFowler]

15. I go Saturday - I have that strange feeling too

[Berlum]

23. Not only that, try to get a clerk to help you...or even check you out

True in a lot of department stores this year. Short staffed. You can feel damn lonely walking around trying to find someone to help you...

[callous taoboy]

35. Found the same thing last summer when shopping for socks:

Clothing on the ground in piles, shelves rifled through, nobody to help. Sad. It used to be one of the best.

[Brickbat]

7. They'll be gone in a year.

[leveymg]

8. I used to like shopping at Penny's. This is a terrible restructuring - attempt to Walmart the place

A little bit of higher pricing was well worth the much better service and higher quality merchandise. I hate WalMart and everything about its business model. This is killing one of the last retail dept. store chains in order to boost short-term returns for investors. It's hideous to watch this happen.

[Aristus]

9. "Okay, fellow board members,

what else do we need to do in order to cut operating costs while continuing to pay ourselves outrageously high salaries and bonuses?"

"Anybody? Anybody?"

[pacalo]

34. Oh, yes...the bonuses.

I worked there in visual merchandising in the '90's & our office was just down the hall from all the top store managers'. You should have seen how giddy they were when they got their envelopes in December. One said, "I'm going to the bank!"

Meanwhile, the store "associates", of course, got nothing extra. Christmastime was no different; if clerks didn't get their quotas, they owed the difference out of their paychecks. For the big annual Christmas party at a rented facility, everyone was expected to wear cocktail dresses & suits.

I knew something about how employees were treated in the '70's, though. Before Reagan, the company where I worked always shared the profits with the employees. We would get coupons for free turkeys at Thanksgiving & an average of $1k for Christmas bonuses. And, generally back then, we would get an annual 8-9% cost-of-living raise each January. Everything changed after Reagan.

[SheilaT]

11. I had not been inside a Penney's for years until recently.

I bought a winter coat a few weeks ago, and a bathrobe last week.

I do very little clothing shopping, or shopping of any kind, but I probably will go back sometime again.

Of course, my very few purchases won't matter in the long run.

[Gidney N Cloyd]

12. Doesn't anybody know how to run a damn retail store in this country?

Operations like Penney's and Sears shouldn't be falling apart like this. Seems like every time you hear of new management taking a store over the first thing they do is find a way to piss away customer loyalty and any semblance of 'brand' instead of treating those things like key assets and building from there. Sure. sometimes the model just stops working (Blockbuster) but people still do like to hop in their cars and shop.

[ananda]

13. Best Buy has changed for the worst too and..

.. is going down too.

[Gidney N Cloyd]

16. They're "Amazon's Showroom" but that means people are Coming Into The Store. A smart retailer...

...should be able to make that work. Getting butts into the store aisles is the hard part.

[RebelOne]

40. I am still going to Best Buy.

I always buy all my computers and electronics there. I would mourn if they closed.

[Gidney N Cloyd]

44. Me too, but I may be odd. When I buy something I want it in my hands then and there.

And I'll pay a little extra for that. I don't like waiting 3 or 4 days for Amazon to drop it on my front steps.
Plus I like having salespeople to answer questions, even if they can't always answer all of them.

[ParkieDem]

20. It's hard, for sure

Online competition is real, as is "showrooming" like Best Buy is experiencing. Customer loyalty is very, very feeble nowadays. It's kind of like air-fare pricing; if your prices are just a tad lower (e.g., Wal-Mart), people will flock to you.

Also, it seems to me that consumers today (kids nowadays!) don't like interacting with other people as much. They'd rather go to a Wal-Mart or Target where they can get their item off the shelf, go through the self-checkout and be on their way, rather than deal with a salesperson. If this trend is real and continues, stores that employ floor sales people (like Sears, Penney's, Dillard's) are in for more trouble.

[kentauros]

21. I do most of my clothing shopping at Academy Sports & Outdoors.

Not that I'm shopping for sports and outdoors clothing, but they do have plenty of clothing choices

Dillards is still around, too, though I don't know how well they're doing. I haven't shopped there in ages.

[pacalo]

38. The Dillard's at the mall closest to me closed last year.

We still have one at the other end of town & it seems to be doing great, though.

[ieoeja]

30. Concentration of wealth has led to fewer shoppers.

Numerous places I used to frequent are no longer there. I'm doing fine in this economy. But there are not enough people doing so well to keep the places I like to shop in business.

I can afford better than the discount stores. But when Sears goes and it comes to a choice between high end and lower quality, I will opt for the lower quality. No middle class workers means no middle class stores.

[MrScorpio]

18. MBAs will be the death of American business

What are they teaching in today's business schools?

[Gidney N Cloyd]

28. My dad used to say that about "Harvard MBAs" back in the 60's.

Apparently there was some blowback against Harvard business school grads back in the day.

[ieoeja]

32. Guess where JCP CEO Ron Johnson got his MBA.

Yes, it was from Harvard.

[99Forever]

19. Welcome to the new, improved...

.. United States of Austerity.

Shut up and eat your catfood.

[Agschmid]

22. I love the new JCP!

This store used to seem "old" and "rundown" but I know love their remodel program.

The new gateway to the store offers hints of what the seasonal message is:





I love the clean industrial look in the new Men's Levi bars:



I spend about 3x the amount of money at this store than I used to. I get that not everyone does like the remodel especially since their past 3 quarters have been horrible. And although it has not caught on with their customer base, competitors are beginning to copy their "shops" ideas:

[thelordofhell]

29. Morale tends to fall when you fire employees

idiots

[Yupy]

31. CEO should be FIRED Used to love JC, shame on him!

[jschurchin]

33. Not to worry.

In a couple years Ron Johnson will have completed destroying the Penny's brand and for his efforts he will be rewarded with a $20 Million buy out while 10,000 employees will lose their jobs and some fucking idiot on CNBC will claim how he gave his best effort but it was just too far gone.

[KharmaTrain]

36. The Downward Spiral Of Corporatism Defined...

...since too much money has been squandered on acquisitions and bonuses and profit margins need to be maintained, it comes out of the employees (who are always looked upon as a expense, never an asset). As more profit needs to be maintained more bottom line is cut that reduces company productivity and morale that ultimately leads to lower profits that lead to more downsizing and workforce reduction that begats even less productivity and so on and so forth down the rathole.

Of course Johnson will get some kind of bonus for his "good work"...

[obamanut2012]

39. Thank the gods for Belk

Great sales, great selection, and still decent customer service. Plus, Belk card holders get a lot of extra deals.

[watercolors]

41. Ust to be my fav store, do not like the new JP at all!