Old Brands Never Die; They Just Come Back As Dot-Coms Or Smaller Stores

A stroll through the 100-plus-year history of J.C. Penney is a walk down memory lane. The retailer’s history ranges from seeking better access to railroads, to the birth and demise of its once enormous catalog business, to an endless stream of management and strategy changes, to its shrinking store count from over 2,000 locations in the 70s to about 650 today, and most recently its delisting from the stock exchange and ultimate bankruptcy filing in the middle of the pandemic last spring.

Today, roughly four months since it emerged from bankruptcy, a much slimmer version of JCPenney is slowly trying to remove itself from life support, at the hands of the two mall landlords who bought it for $800 million in cash and debt: Simon Property Group and Brookfield Property Partners.

Under the watch of interim CEO and Simon executive Stanley Shashoua, “JCP 2.0” is behaving a lot like the original traditional retailing version, rather than vanishing in a cloud of liquidation sales. With no less than a half dozen promotional press releases this month alone, including a big seasonal push for Easter and spring as well as an exclusive bedding brand merchandising agreement with Fieldcrest, JCPenney is clearly trying to reconnect with the exact same loyal customers it has catered to for generations.

“There is a constant drive to refresh our brands to keep up with the changing needs of our customers,” said JCP Executive Vice President and Chief Merchandising Officer Michelle Wlazlo, who joined the company two years ago after working for Target and Gap.

The Digital Flagship

Although its store count has shrunk by a third, JCPenney is still operating over 600 locations in the U.S. and Puerto Rico. But even with that substantial commitment to mall-based anchor stores, JCP has already taken to referring to its website as its “flagship store” and is looking to build upon the traffic surge that occurred in the pandemic era when there were no open alternatives.

“JCPenney is a great American family destination, and our strength is in our storied brands and the services we provide,” Shashoua told CNBC last week, pointing to several areas of “green shoots” that he was witnessing. “We’re seeing week-over-week improvements in the business, and we’re increasingly optimistic as we work our way through this.”

According to Shashoua, who is the CIO at Simon, the refreshed JCP is working with fewer vendors and adding more private labels to boost cash flow.

“It’s a very similar approach in the initial stages that we’ve taken with all the other companies that we’ve managed to turn around,” he said, in reference to Simon’s other retail takeovers including Aeropostale, Brooks Brothers and Forever 21.

Although clearly not its core business, Simon CEO David Simon has not been shy about his retail resurrections.

“We’re certainly as good as the private-equity guys when it comes to retail investment,” Simon said on a recent call with analysts.

The Old As New Normal

With an estimated 12,000 fewer retail locations after record store closures last year alone, as well as dozens of big name debt-laden bankruptcies to pick through, Simon is not the only player in the space that’s looking to give brands a second chance at the right price.

In December, The Wall Street Journal reported on the surge in investors buying up “zombie brands” like Stein Mart and Pier 1 Imports to salvage them and repurpose them as digital-only properties, given the website domains, social-media accounts and customer contact lists that are sold off too.

“It’s always a lower cost and easier to market to an existing customer than acquire a new one,” Greg Campanella, an intellectual property expert at Ocean Tomo.

Lord & Taylor, for example, the oldest department store brand in the U.S., was acquired for just $12 million in October by Manhattan-based Saadia Group, which is reportedly in the final stages of re-introducing a streamlined, digital-only version of the store sometime next month.

Saadia said the brick-and-mortar side of the old Lord & Taylor was dragging down a profitable online franchise that he hopes to revive, and even wouldn’t rule out the possibility of opening a few, small retail locations in key areas where it used to thrive.

In addition to acquiring assets, there’s also a lot of discounted retail talent to be had now too.

“Lord & Taylor has a deep retail history that spans 195 years, and a tradition of innovation and countless fashion firsts,” Jack Saadia, principal and co-founder of the Saadia Group, told Women’s Wear Daily earlier this month, noting the hiring of 40 people from a range of retail support positions from the prior company, Bloomingdale’s, Saks and more.

“We are excited to build the future of the brand, expand the loyal community, and show the world what’s next,” he added.