Amazon Didn’t Kill JC Penney And Sears Jobs, Bad Leadership Did


. (AP Photo/Mark Lennihan, File)

The biggest job killer in American retailing isn’t the Amazon technology that features stores without cashiers. It’s bad leadership, which distances itself from its core customers; and the wave of store closures that sends everyone straight to the unemployment lines.


At least that’s been the case for two large department store chains, Sears (SHLD) and JCPenney’s (JCP).  They have been closing scores of stores and lay off thousands of employees, and started to do so long before Amazon (AMZN) made its move to the traditional retail sector.

A Sample of J.C. Penney’s layoffs 2012-14

Date

Number of Layoffs


2012 total

43,000

March 2013

2,200

January 2014

2,000

Total

47,200

For decades, American retail icons Sears and JCPenney had one thing in common: they’d been serving the middle class working American family with quality merchandise at affordable prices; and providing thousands of jobs for cashiers and sales associates in the process.


In the last decade, they developed something else in common: they both distanced themselves from other retailers through a series of strategic mistakes committed by their leaders at one point or another, which resulted in the loss of hundreds of thousands of job.

JC Penney’s woes began with a change in the retailer’s pricing strategy –replacement of coupon sales with everyday low prices when Ron Johnson assumed leadership of the company and began modeling the company’s stores after those of Apple. That move took away shopper hype and buzz, which brings in the store traffic.


Meanwhile, the company changed its corporate focus, from traditional inexpensive merchandise — which caters to the average shopper who seeks something better than the merchandise carried by Wal-Mart — to more expensive merchandise carried by upscale stores. That shift alienated J.C. Penney ’s customer base.

Company

Stock Price

EPS


Sears

$6.95

-14.19

J.C. Penney

4.56

-0.36

Best Buy

55.18

3.72

Sour ce: Yahoo.finance.com 6/23/2017

Source: Yahoo.finance.com 4/4/2013

Sears’ woes began long before JC Penney’s. Back in 1981, Sears, Roebuck & Co. decided to diversify outside its “core” retailing business into financial and real estate services, by purchasing the Dean Witter Reynolds securities firm and the Coldwell Banker real estate operation.

These are business lines with little synergies with the company’s core business.


Meanwhile, this move offered Sears’ competitors — like Macy’s Inc., Wal-Mart Stores and Home Depot Inc. — an opportunity to invade the company’s market.

More recently, Sears restructured its operations into several units, split off its Lands’ End and Sears Auto Center brands, and sold-off company stores.

To be fair, both companies have taken steps to correct their strategic mistakes. J. C. Penney has taken a number of steps — like bringing back coupon discounts, and by selling additional shares to raise cash. But it has failed to bring the hype and buzz back. This offers  a valuable lesson to modern marketers: once the buzz has faded away, it is hard to light it up again.

Sears has been raising cash from store sales, and spent the funds to refurbish and modernize the remaining stores. But these measures do not seem to have worked either. As graphically described by New York Times David Gellies in “For Once-Mighty Sears, Pictures of Decay.” Sears seems to be moving downscale, at least when it comes to consumer experience.

Meanwhile, the sales jobs lost in the two iconic companies will never come back.

Our Stock Of The Week: Williams-Sonoma

2017-08-06 23:14:33

17 Health Hazards You Want to Avoid This Summer

2017-08-06 22:14:32

Here's Advertisement


Company

Stock Price

EPS

Sears

$50.29

-8.78

J.C. Penney

14.61

-4.49


Best Buy

24.28

-1.42