Will JC Penney bankruptcy buy time?

When research firm GlobalData surveyed Americans on which stores they were most looking forward to visiting once the Covid-19 pandemic subsided, one household name came out near the bottom, and well below its department-store peers: JC Penney. That helps to explain the news that the retailer — which began life in 1902 as a store called The Golden Rule — filed for bankruptcy protection. Pushed to the brink by the coronavirus shutdowns, JC Penney Co was seemingly left with no other choice. But years of struggle and strategic missteps had laid the groundwork.
After securing $900 million of financing, JC Penney will stay open for now, and its next steps include closing some stores, cutting its debt by several billion dollars and looking at alternatives including a sale. Despite those planned survival efforts, it’s hard to see JC Penney having a vibrant future.
Even before the coronavirus crisis, the retailer, with just under 850 stores in the US and Puerto Rico, had battled to be relevant to shoppers. Changing consumer tastes and incursions from online sellers wreaked havoc on its sales. And so now, unlike in the case
of luxury department-store chain Neiman Marcus Group Inc., which also filed for bankruptcy this month, there may be little for a potential acquirer to pick up.
The downfall of JC Penney — a chain that grew out of a single store opened 118 years ago in Kemmerer, Wyoming by James Cash Penney — is part and parcel with the long, slow decline of the department store. The concept had its heyday from the end of the Second World War through to the 1980s. Often starting life downtown as Americans moved to the suburbs, these venerable names followed, opening in newly built malls. They focussed largely on clothing and the items needed to furnish the homes that Americans were buying. Amid the age of mass car ownership, they were more than happy to drive to these retail attractions.
For many years, JC Penney was known as a family department store. If not somewhere Americans aspired to shop, it offered good value, and solid styles. In fact, it was a bit like Britain’s Marks & Spencer Group Plc, the sort of place you went for back-to-school gear and basics. But at least M&S sold food — because by the 1980s, the environment for department stores was already darkening. In 1988, Walmart opened its first super-center, adding groceries to its non-food selection to encourage more regular visits. At the same time Target Inc., another mass merchant that combined clothing, home furnishings and groceries, was quietly expanding across
the US.
The mid-market, which JC Penney had traditionally occupied, was under attack, not just from discounters, but later the internet, which was rapidly displacing department stores as the one-stop shop, and with cheaper, more transparent pricing.
—Bloomberg