J.C. Penney is on the ropes, reaching the limits of its many recent cost-cutting moves
— including shuttering stores and laying off workers
— and struggling to participate in a retail boom that has been lifting rivals in recent quarters.
It hasn’t been a good time to be rudderless, but, in May, chief executive Marvin Ellison left the project behind after three years on the job. And that wasn’t the only shake-up of late. Last year the retailer let go longtime chief merchant John Tighe, axing that position completely, and earlier this year, CFO Jeffrey Davis and Chief Customer Officer Joe McFarland also exited.
Penney has been in turnaround mode for a while. But, since the dramatic 2013 ouster of former Apple stores guru Ron Johnson, who in two years as CEO set in motion extreme changes that alarmed the retailer’s most loyal fans (and investors), the work of Penney’s chief executives has seemed more like damage control than actual reform. The retailer brought Mike Ullman out of retirement to undo what many (though not all) observers saw as Johnson’s disaster. The reins finally went to Ellison, who instituted a long overdue reduction of Penney’s vast store count, expanded its successful partnership with Sephora and brought back appliance sales in hopes of picking up the dregs from Sears store closures. None of it has done much for sales.
Soltau, who was tapped as J.C. Penney’s CEO last week, leaving crafts retailer Joann in the midst of a significant upgrade in branding and merchandising, and a test of a new concept store that takes full advantage of the creative maker market fueling the likes of Etsy and Michaels.
Last year as part of its brand revamp under Soltau, Joann launched a new marketing campaign highlighting its core crafting business, acquired online crafts education video company Creativebug and rolled out a new mobile app. This year the retailer also reached out to pro crafters with a new program, dubbed JOANN+, that offers bulk ordering and shipping options, dedicated customer service and sales teams, rebates and financing plans, and special pricing, among other services. Meanwhile, its new concept store sports eye-catching signage and tech that includes special-order kiosks and live online streams of in-store classes.
Before landing at Joann, Soltau worked her way up through the ranks at Midwestern retail chain Shopko, most recently as president after serving as executive vice president and chief merchandising officer. She has also worked at Sears, Kohl’s and regional department store Carson Pirie Scott. J.C. Penney declined an interview for this story. But in her statement last week, Soltau said that “every position I’ve held has prepared me for this role.”
“JCPenney is a quintessential American brand with a strong and loyal customer base, and I couldn’t be prouder to lead such an iconic retailer,” she also said. “I am highly passionate about the customer and I spent my entire career focused on the needs of a value-based consumer by researching, understanding and meeting her expectations for style, quality and inspiration.”
The daunting challenge
In a way, Soltau is really taking over from Johnson, who was hired to transform Penney for a new era, even if he was fired for going too far. Her resume and her results at her past posts, especially at Joann, bode well, according to GlobalData Retail Managing Director Neil Saunders.
“The great thing about Jill Soltau is that she ticks so many boxes for J.C. Penney,” he told Retail Dive in an email, which he said includes “extensive retail management experience,” direct experience in apparel, a customer-centric focus and proven turnaround success at Joann for a digital era. “Fifth, everyone I have spoken to is very positive about Ms. Soltau. They see her as passionate, driven and inspirational. JCP needs a good dose of all of those things.”
“Of course, as JCP is in such a mess and lacks direction there is a lot of work to be done,” he also warned. “But this is the kind of appointment JCP has been crying out for.”
Saunders isn’t alone. Several experts say that Penney’s situation is dire, so it’s not clear that Soltau’s core strengths will be enough at this point. “Parallel to focusing on the customer, she needs to stabilize the C-Suite, where turnover has been rather extraordinarily high, and not unnoticed by the market,”
Ray Hartjen, director of content marketing and public relations at RetailNext, told Retail Dive in an email. “Without a strong leadership team in place, it will be difficult to execute on strategies. And, execution is where JCP has been falling short.”
In fact, Columbia University Business School retail studies professor Mark Cohen sees the retailer’s leadership vacuum dating well before even Johnson’s arrival. And he warns that for years Penney has failed to stand out in its discount department market segment. All that will complicate Soltau’s work.
“J.C. Penney is in a precarious position,” he told Retail Dive in an email. “It has suffered episodically from poor and catastrophic leadership since 2005. The most recent CEO really had no compelling plan to remediate the company’s lack of performance, other than to lower, somewhat, its unworkable debt. The ‘Man in the Middle’ strategy that has traditionally defined J.C. Penney in the marketplace has become a killing ground for retailers who fail to aggressively differentiate themselves both in their brick and mortar stores and their online presentation. Today J.C. Penney is nowhere.”
The ticking clock
If J.C. Penney is going to get anywhere under Soltau’s leadership, it will have to get there pretty fast. The holidays will be her first test, and the season had really already begun before her arrival.
“Holiday is going to be critical for Soltau and JCP,” Hartjen said. “The company doesn’t have the financial strength to absorb another miss. The question is, ‘Does she have time to affect holiday?’ I’d say she won’t be able to drastically change holiday plans. There’s room later in December, perhaps, but as for the early part of the season, retailers should have that locked down.”
It’s those merchandising chops that could help her pull it off, according to Hartjen. “The company knows its current core shoppers are women aged 44 and above, and it needs to engage them and really appeal to their needs and desires, particularly as it relates to fashion apparel,” he said. “With Soltau’s merchandising experience, there’s a puncher’s chance in this fight. We won’t have long to wait to see if it works. By the end of January, we’ll have a good idea as to JCP’s mid-range and long-term viability in the marketplace.”