I would love nothing more than to disagree with Nick Egelanian, president of retail development firm SiteWorks. He was quoted in Retail Dive about JCPenney’s announcement to invest more than $1 billion by fiscal 2025 to improve operations and customer experience. Egelanian said,

“All the money in the world cannot fix a relevancy problem. JCPenney is an obsolete retail concept in obsolete real estate with an obsolete business strategy,” said Nick Egelanian, president of SiteWorks.

SPARC on a Wire

Unfortunately, I have been an early, outspoken critic of the whole SPARC mess, which I have amplified through a megaphone since 2021.  Simon https://www.therobinreport.com/sparc-a-losing-combo/ I only hope Marc Rosen is independent enough to be able to strategically reposition JCP for a successful turnaround without SPARC pushing him into decisions that will only give SPARC short-term breathing room, resulting in its ultimate demise. SPARC is an acronym for an entity created between Simon Property Group and Authentic Brands Group. In a sentence, my take on this combo is that it was a knee-jerk, short-term tactical move that offered a home for ABG’s stale brands in stale Simon Property malls. And the fact that SPG acquired JCP instantly gives more space to push ABG’s brands into. And lose/lose, JCP stays in those SPG malls. I see it as a great big negative synergy.

Marc Rosen: A Robin Report Retail Radical

Having said that, I need to disclose why I have some hope for Rosen’s ability to save JCP.  In 2019, Marc Rosen was EVP and President of DTC at Levi Strauss & Co. The Robin Report selected him as a winner of our first Retail Radical of the Year Award. At the time he headed up 30 percent, or about $2 billion of Levi’s total business, including 3000 stores and ecommerce sites dedicated to Levi’s and Docker’s brands. Marc was recognized for his track record of driving growth through consumer-focused, innovative technologies as well as creating and implementing end-to-end merchandising and inventory management systems. We were duly impressed by Rosen’s accomplishments that were not only forward-thinking, but also had a significant impact on revenue. While every one of our winners that year hit the ball out of the park, Marc’s ball set records. At Levi, Marc was credited with creating Indigo, a chatbot on Levi.com that takes a conversational approach to using artificial intelligence to determine a shopper’s style and fit needs. Additionally, he developed partnerships with leading consumer tech brands including Snapchat and Pinterest. And he helped contribute to 11 consecutive quarters of double-digit growth for Levi’s direct-to-consumer business. He was and still is an authentic Retail Radical. And we certainly can’t blame him for taking on the challenge of reinventing JCP.

Rosen’s Big Plan

Rosen has big, new ideas, but that still begs the question: Is a billion dollars going to be enough to execute them? SPARC’s acquisition (which also includes Authentic Brands Group who bought a 17 percent interest in JCP and brought their debt down to about $500 million from $5 billion) is a headscratcher since JCP has been struggling to stay afloat for over two decades. It finally fell into bankruptcy and was bailed out by Simon Property Group and Brookfield (two of JCP’s largest landlords, by the way — wink, wink). Today, their path forward is no less than a monumental challenge.  Just to set the record straight: Last year net sales fell 3.4 percent year over year to $7.6 billion, and net income plummeted 36.3 percent to $221 million. Rosen’s plan for the billion-dollar investment includes making the online experience more seamless and personalized. JCP will upgrade its website and the mobile app. They will also make improvements in search, product details, reviews, and styling recommendations. If you think about it, that’s table stakes for ecommerce. JCP is a dollar short and a day late. So far, over 100 stores in their 650-store fleet have been refreshed and infused with technology tools to make the shopping experience more pleasant and navigable.  They lost Sephora, which went with JCP’s competitor Kohl’s and plan to replace it with other beauty brands from masstige, prestige, and mass brand sources. They are also pursuing collaborations with designers and celebrities and expanding their existing and new private label programs to enhance the JCP fashion image. Rosen also told WWD, that they would be pursuing more exclusive brand partnerships. As they grow digital sales, now at about 30 percent of JCP’s total volume, they will be able to expand the product categories. Centralized POS checkouts, as well as with associates armed with devices for mobile checkouts and access to information on product availability will provide convenience and a faster checkout experience. Rosen said the retailer is “poised for continued growth. JCPenney is on strong financial footing and is steadily increasing relevance and frequency with our core customers.” We hope this isn’t another rodeo that we’ve been to before. Does anyone remember Ron Johnson’s grand design? Timing is everything. Along with buy-in from stakeholders.  But that’s one for the history books.

A Big Question

As I have stressed so many times, this is the distribution century. Actually, with the speed of light technology on our dashboards, the distribution century is truncated to the distribution decade.  Or day. My current fixation on the transformational strategy, being implemented by Macy’s, Kohl’s, and Target is smaller localized neighborhood stores. So, in the case of JCP since it is located in giant malls with owners like Simon Property Group and Brookfield, can it become more relevant and modern when it’s stuck in an anchor position? I have a lot of confidence in Rosen’s vision and gumption.  I don’t have a lot of faith in SPARC’s short-term strategy. Yes, innovation needs capital funding, but strategy needs to be backed by what customers want. On a final note, back to the question of why Simon Property Group and Brookfield brought JCP out of bankruptcy. A no-brainer is that JCP is an anchor in many of their malls, so they want to keep the rent checks flowing. Plus, it’s another opportunity for ABG to push his pool of stale brands into the JCP stores, and/or to fill in the empty spaces within the malls. I only hope Marc Rosen is given an honest opportunity and the runway to do what needs to be done.