STORES Magazine - October 2008 - (Page S3)

KEYNOTE ADDRESS J.C. Penney’s Bridge to Somewhere As is the case with everyone else in retailing these days, the economy and its impact on consumer spending is high on the list of concerns for IT professionals. J.C. Penney Company chairman and CEO Myron E. (Mike) Ullman III and Tom Nealon, the company’s executive vice president and CIO, acknowledged as much during their opening keynote presentation at the NRFtech IT Leadership Summit. Ullman noted that, while earlier recent slowdowns of this sort were driven by a falloff in employment, a spike in oil prices or some other reasonably short-term difficulty, today’s spending issues fundamentally are being driven by consumers’ concern about their overall net worth. “Virtually all homeowners are experiencing some doubt as to the equity they have in their houses,” he said. “Moreover, home equity lending constituted the bulk of consumer lending over the past few years, and in a falling housing market, unwise mortgage practices are giving rise to some basic balance sheet worries.” This problem is exacerbated by the current condition of the stock market. “Practically everybody has a 401(k),” Ullman said, “and the combination of not being sure what his house is or will be worth and not being sure what his nest egg is going to be worth, plus no savings rate puts the consumer in a very, very difficult position.” Ullman seems to consider the debate about whether the U.S. economy is or is not in a recession to be a moot point. “Parts of the economy — the oil industry, for example — are clearly not in a recession,” he said, Myron E. (Mike) Ullman III but “if you factor out the export-based industries, we are definitely in a recession.” As to how long the economic doldrums will last, Ullman said it would be unwise to expect a quick turnaround. “No one has any idea what’s going to happen with interest rates,” he said. “We’ll be in a consumer downturn for a while — a year, two years, three years, maybe longer.” Slowing the recovery J.C. Penney had been experiencing a fairly dramatic revival of its own fortunes. The once-ubiquitous middle-American brand had become tired; by the late 1990s the company was generating a slight 1 percent operating profit. The board brought in Allen Questrom — a legendary retail chief and the first non-insider CEO in company history — in 2000, and the following year J.C. Penney’s operating profit was back near 7 percent. When Questrom retired in 2004, the board turned to Ullman – another veteran outsider — to take J.C. Penney to the next stage of its development. “The challenge that was put to me was to define the next area of growth,” Ullman said. “We were doing all right financially, but it was clear to the board that if we just kept doing what we were doing, we’d wind up right back where we were. We needed to reinvent the business.” Under Ullman’s strategy, J.C. Penney strove to: • Become the preferred shopping choice for middle America • Make an emotional connection with its customers • Be an easy, exciting place to shop • Be a great place to work • Consistently rank in the top quartile of industry performance. For a while, this strategy worked beautifully. The STORES / OCTOBER 2008 Tom Nealon WWW.STORES.ORG S3 http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - October 2008

STORES Magazine - October 2008 Contents Executive Editor's Page President's Page Force of a Different Collar What Shoppers Think Bagging the Competition 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Favorite 50 Sticky Strategies for Retention Concept2Watch Kiosks Online Business Intelligence RFID NRFtech Wrap-up E-Commerce Credit Warehouse Systems Logistics Selling Tools Supply Chain LOEB Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - October 2008

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