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Two Questions Haunting J.C. Penney

J. C. Penney CEO Ron Johnson at the company's headquarters in Plano, TX.
J. C. Penney CEO Ron Johnson at the company's headquarters in Plano, TX.Photograph by Mark Peterson/Redux

When earlier this year J.C. Penney announced it was switching to everyday low pricing, it was clear that the company had embarked on a major redesign of its business model. The proposed redesign was so extensive one could argue that it was almost like starting a new company from scratch. Echoing that view, J.C. Penney’s chief executive, Ron Johnson, announced that he was “treating the department store chain like a startup company.”

The analogy of J.C. Penney to a startup is not so far-fetched. J.C. Penney is rapidly becoming a very different company. It currently is in the midst of redesigning its stores and changing its business concept to stores-within-a-store, switching suppliers, and reshuffling the management team. Its value proposition has also evolved from offering popular brands at discounted prices to offering fashion brands at everyday low prices. Even the century-old J.C. Penney brand was replaced with a more modern-sounding JCP name and logo.