Hicks, who spoke as part of the Center for Retailing Studies’ spring executive speaker series, said a company must have a strong leadership team, a clearly stated vision and financial goals and effective long-term strategies to guide a turnaround. Over the past five years, JCPenney’s once-stagnant and declining profits have more than quadrupled, making it one of the most remarkable turnarounds of the century as four straight years of waning profits ending in 2000 jumped to 7 percent in 2004. JCPenney President and Chief Merchandising OfficerÂ Ken HicksÂ gave more than 100 Mays marketing undergraduate and master’s students a peak at how that turnaround occurred, explaining that the international retailer had to bring in new ideas and re-envision its relationship with each store.
In the early history of JCPenney, individual stores were essentially franchises responsible for their own buying and for displaying items in each store. That sent mixed messages, meaning “customers didn’t know from one Penney’s to the other what we stood for,” Hicks said. With a new CEO in turnaround guru Allen Questrom and a reasonable, five-year plan to hit 6- to 8-percent profit growth by 2005, the company has been able to rebuild the image of its 1,017 U.S. stores and 61 Puerto Rican outlets.
Store-to-store sales have been, on average, above the 2-percent-a-year target Questrom set, helping JCPenney keep a tight hold on its 7- to 8-percent market share. “We had to win the driveway decision,” says Hicks, who came to JCPenney in 2002 as chief operating officer of stores and merchandise operations, part of the team leading the turnaround. “When she backs out, does she go left to Kohl’s or right to JCPenney’s?”
The change, though, isn’t yet complete. Even as Hicks showcased the company’s new advertising campaign â€” targeted at the middle class, 35- to 55-year-old female demographic with such slogans as “It’s all inside” â€” he explained that JCPenney is still recovering and turning its strategy to improved leadership.
“The definition of a merchant is someone who’s a constant critic and eternal optimist,” said Hicks, a former president of Payless Shoe Source with 20 years experience in merchandising. “You look at the last day’s sales and know you could do better â€” but wait till tomorrow. You’re constantly looking at what’s next and what’ll be fun to do to please the customer.”