JC Penney Business Leadership Plan
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The past several years JC Penney has made drastic shifts to their pricing strategy and store operations, including several leadership changes. Bringing back CEO Mike Ullman, after an 18-month stint of former Apple retail guru Ron Johnson, has helped to stabilize this classic American brand. Since then, JC Penney has posted two quarters of growth for the first time in several years. This strategy was presented at my NYU’s Business Leadership class, where we were tasked with analyzing the company’s current leadership and provides our recommendations for a new sustainable strategic approach. After years of isolating their customers and employees, resulting in industry irrelevance and financial decline, this strategy would bring this American staple brand back to retail prominence. This proposal is meant to take place shortly after Ron Johnson’s departure, prior to the recent growth JC Penney has seen in Q4 ’13. NYU Team Members: - Raquel Vicente (designed deck) - Jessica Aiello - Yulibel Lamorena - Alejandro Munoz
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JC Penney Business Leadership Plan
- 1. A New Leadership Jessica Aiello | Yulibel Lamorena | Travis Leone | Alejandro Munoz | Raquel Vicente
- 2. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION 1902 Founded by James Cash Penney 2002 Mike Ullman CEO 1998 Launched it’s first retail site 1951 Company’s sales exceed $1 billion 2008 Recession hits JCPenney fell flat Macy’s, Kohl’s and Dillard’s sales were soaring 1992 Moved HQ from Manhattan to Plano, Texas 1995 Allocated $2.1 billion in capital expenditures to open 100 new domestic stores and refurbish 500 Expanded its international presence through varied licensing agreements 2011 Bill Ackman and Stephen Roth bought up 26% shares Pushed their way onto the board and demand- ed change Ron Johnson as CEO “I’m not here to improve, I’m here to transform.” Ron Johnson BACKGROUND @
- 3. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION INDUSTRY OVERVIEW | Department Stores operate physical brick-and-mortar shops • Clothing, cosmetics, footwear and home furnishings | In a period of decline and consolidation • Forced to compete with discounters, luxury chains, specialty stores and Internet outlets > “Strong Retail Brand” approach > “Showcase” approach
- 4. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION COMPETITORS | Macy’s • Strength - Brand Value • Weakness - No Foreign Market | Sears • Strength - Layaway Program • Weakness - Dependence on Leased Property | Khol’s • Strength - Layaway Program • Weakness - Limited global presence, especially in emerging economies
- 5. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION PROBLEM STATEMENT | The past several years JC Penney has made drastic changes to their pricing strategy and store operations, isolating their employees and customers; resulting in industry irrelevance and financial decline.
- 7. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION PERCEPTION CHALLENGES | Fragmented brand and store experience for consumer • Ron Johnson had implemented branded boutiques, started new brand campaign | Eliminated sales commission structure • Low customer service perception • Low employee morale | Changed perceived value proposition of products • Raised Prices on new premium partner products • Stopped sales, went with “everyday low prices”
- 8. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION MARKET CHALLENGES | The US Shopping Mall is dying | No new mall has been built since 2006 | Prediction: almost 50% of all malls will close in the next 10 years | Why? • E-commerce and Showrooming • Mobile • Expedited shipping options
- 9. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENTT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION OPPORTUNITIES | Changing Demographics invite a Strategic Repositioning | Redefinition of the Mall Experience | Better integration of the online-offline experience | Increase the quality of mobile experience 0% 2010 Hispanic or Latino Hispanic Population by Ethnicity 2010/2030 Devices US Hispanic and Non-Hispanic Internet Users Use Daily for Local Shopping, Q3 2013 % of respondents Non Hispanic or Latino Non Hispanic 2030 %oftotalpopulation 20% 40% 60% 80% 100% 52.2% 29.1% Tablet Smartphone Desktop Laptop 42.5% 38.0% 40.3% 25.8% 36.6% 27.0%
- 10. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION GOALS & OBJECTIVES | Increase Customer Satisfaction • Increase loyalty program enrollment by 10% by Q1 2016 | Increase Employee Retention / Performance • Increase average employment tenure from 6 months to 18 months • Increase store performance (rev. per sq ft) | Solidify Brand Identity Across Platforms • Increase brand perception by 5% • Social media positive brand sentiment (increase 15%) | Redefine Sales Strategy • Increase # of sale events (rally behind national holidays, events) • More sales available in-store vs online • Incentivize through loyalty program | Repositioning (Focus on Diversity) • Transform 10 stores in heaviest diverse markets in 1 year • Develop regional marketing campaigns
- 12. BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION LEADERSHIP STRATEGY OVERVIEW COHESIVE, ENHANCED EXPERIENCE JCP 360o QUALITY ENGAGEMENTS CUSTOMER VALUE PROPOSITION • Consistent brand experience • In-Store experience • Empower Employees • Reposition product based on diverse cultural market locations
- 13. COHESIVE ENHANCED EXPERIENCE | Brand Stores for consistent experience • Blend old and new stores together • Create involving experiences | Determine visual branding elements - logo, marketing - in the physical and digital space | Retrain employees in-store on brand values, messaging and company vision BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION
- 14. QUALITY ENGAGEMENTS | Incentivize well performing employees • Invest in employees • Eliminate cancerous individuals | Use technology to help improve the experience • Price scanner • Integrate couponing into JCPenney Card BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION
- 15. CUSTOMER VALUE PROPOSITION | Deliver on what the customer wants • Sales > Discounting prices | Focus on new, diverse customer demographics • Research, cater merchandise and appoint appropriate staffing BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION
- 16. NEW LEADERSHIP | Millard “Mickey” Dexter • Current CEO and Chairman of JCrew Group, formerly the CEO of Gap • Credited with rise of Gap in the 1990s • Transformed J.Crew from a once-flailing, lackluster brand to a fashion force • Drove J.Crew company revenues up 170% since taking over in 2003 BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION
- 17. ACTION PLAN BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION PRESENT PRESENT UNAWARNESS AWARNESS UNDERSTANDING TIME MORALE BUY-IN ACCEPTANCE COMMUNICATE IMPLEMENTLEADERSHIP ALIGNMENT MEASURE AND REFLECT TRANSITION PERIOD FUTURE
- 18. ACTION PLAN BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION #1 CREATE THE VISION #2 LEADERSHIP ALIGNMENT • Build the case for Change • Readiness Assessment • Project Governance • Situational Assessment • KPI selection-Benchmarking • Timeline Alignments • Leadership Identification • Steering Committee • Leadership Action plan • Remove Barriers • Situational survey sent and ana- lyzed • CEO-sponsored team created to manage plan • KPI Alignment > Sales > Loyalty program enrollment > Employee Tenure > Rev per square feet > New Store Openings • Head of Marketing, HR and Op- erations to be part of project team • Selected KPIs will bear equally among head of BU’s performance STRATEGY TACTICS
- 19. #4 IMPLE- MENT #5 MEASURE ACTION PLAN BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION #3 COMMU- NICATE • Communication plan • Project Kick-off • Build Awareness • On-going messaging • Training Pilot • Deploy training programs • Reward & Incentive programs • Training Support • Assess Employee Impact • Sales performance manage- ment • Support • Communicate quick and/or big wins • Corporate Rally to announce plan scheduled in Q2 2014. All employees will be part of it • Change plan / KPIs posted on corporate Intranet, employee newsletters, office boards • Mid-level supervisors to com- plete sales/management courses • Commission structured revised • FTE adoption implemented • On-going monitoring of custom- er satisfaction • Monthly performance to be pub- lished and shared across the orga- nization • Assess and implement plan mod- ifications STRATEGY TACTICS
- 20. SUSTAINABILITY | Sustainability • Stores and Operations > Energy efficiency > Waste consumption • Employment > Equal diversity opportunities > Education reimbursement • Supplier Diversity > Support local-culture small businesses • Community > Local community engagement, volunteerism | Social/Environmental Responsibility • JCPcares > Monthly charity association > Integrated into the mobile app experience, making it easier to donate to selected charity BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION
- 21. CONCLUSION 360 o JCP BACKGROUND INDUSTRY OVERVIEW COMPETITORS PROBLEM STATEMENT CHALLENGES & OPPORTUNITIES GOALS & OBJECTIVES LEADERSHIP STRATEGIES ACTION PLAN & TACTICS SUSTAINABILITY CONCLUSION COHESIVE, ENHANCED EXPERIENCE QUALITY ENGAGEMENTS CUSTOMER VALUE PROPOSITION