Robert Barnes | Getty Images
JCPenney became one of the many businesses worldwide that the Coronavirus pandemic drove out of business. While some businesses have managed to deal with these financial difficulties better, others have failed. JCPenney, a century-old retail giant, had been struggling for a few years now. The Coronavirus outbreak just fastened its struggles to an extent where the company was no longer able to hold on. They finally filed for Chapter 11 Bankruptcy on May 15, 2020. In this article, we will take a closer look at the company’s journey from a multi-billion-dollar retail company to a bankrupt one.
Founded on April 14, 1902, the 118-year-old company started as a single retail store, “Golden Rule Store”. The Founder, James Cash Penney, bought out his partners’ shares in the company and in 1912, incorporated the business under the name J.C. Penney Company. In 1914, the headquarters were moved to New York City to be closer to the financial and trading hubs of the country. In 1952, the company crossed the 1-billion-dollar mark in annual sales, becoming the biggest retail organization of its kind in the world. This marked the start of a period of exponential growth and development for the company.
It is interesting to note that the company inspired the creation of another retail giant, Walmart. Sam Walton, Walmart’s founder, worked at one of JC Penney’s stores in 1940, founding his own company 22 years later.
1962 was when the company re-evaluated its business plan and gave up its cash-only business by introducing credit operations. With several company acquisitions, the business expanded and diversified its operations. 1971 marked a sad year for the business, as owner and founder James Cash Penney passed away. In the next 20 years, JCPenney would continue to expand and grow, ultimately opening its online store in 1998 as jcpenny.com. In 2002, 100 years since the company’s foundation, jcpenny.com becomes the biggest online retailer in the world. However, the company would struggle to maintain its high standards after a couple of years.
Read: How to Prepare your Business for the POST-COVID-19 World
The last 10 years have marked a decade of changes, inconsistencies, and struggles for the company. Constant changes in executive leadership slowed progress and introduced a sense of confusion and disarray. With its last profitable year in 2010, the business was clearly struggling. Since the beginning of 2011, JC Penney has shut more than 20% of its stores while getting rid of more than 40% of its employees.
With the rise of the digital age, more people were shopping online, leading to a fall in demand for physical retail stores. This was damaging JCPenney’s departmental stores, along with the rise of low=price competitors like Walmart, Costco, and Target. These retailers provide buyers with an added option: Groceries. These factors led to a decade long struggle for the company, with 2020 Pandemic being the last straw.
Read: Why a Financial Crisis is Ideal for Starting a Business
2020 marks one of the worst economically performing years ever. With the outbreak of the coronavirus pandemic, various businesses have closed as operations have halted due to a worldwide lockdown. JCPenney was one of those companies, failing to survive these difficult financial times. They filed for Chapter 11 Bankruptcy on May 15, 2020. The company was in a rebuilding stage and blamed the pandemic for its need to file for bankruptcy. They claimed that their rebuilding efforts were already paying off when the pandemic struck and changed everything. Hence, JCPenney became the fourth US national retailer to file for bankruptcy over the last month.
So, what is next for JC Penney? How will retailers survive this pandemic if lockdown persists and physical shopping declines? Let us know in the comments below.
Read: COVID-19: How your Business can survive during this pandemic