J. C. Penney SWOT and PESTLE Analysis

Strength

1. Legacy of more than 100 years with high brand equity: JC Penney marked 100-year anniversaries within Texas and Illinois in 2017. The founder James Penney introduced the stores in 1917 just as the US was entering World War I. Many other locations celebrated their 50 and 75-year anniversaries marking a legacy of style and quality.The company enjoys high brand equity among potential customers and maintains it through its focus on customer satisfaction. This is reflected in the company values created by the founder as he stressed upon “complete satisfaction of the public as best can be served”. By carrying this value for such a long time JC Penney has built a good reputation and for itself, esp. in apparel, shoes, home goods and jewellery, which is hard to imitate.

2. Strong Omnichannel presence with seamless integration: In order to strengthen the framework of omnichannel strategy, the physical stores function as a seamless extension of the omnichannel experience besides providing a competitive advantage. A third-party research firm has rated JC Penney’s firm’s e-commerce website the fifth highest for 2016. Nearly half of all J.C. Penney.com traffic is generated from mobile devices. The app users visit the store almost three times more and purchase 3.5 times more than a non-app user. Shoppers get new and exciting features on the app and exclusive app rewards, gifts, coupons and a digital wallet to store them. The app also allows a simple store price check from their phone by scanning the item’s barcode. Physical stores provide inventory for orders from the e-commerce website thus enabling to offset the last-mile delivery cost.Thus JC Penneyhas a strong omnichannel presence seamless integration of digital and in-store businesses and leverage nationwide store footprint.

3. Diverse product and service line, efficient supply chain: J.C. Penney has growth initiatives namely home refresh, beauty, value, special sizes, omnichannel outlined for their three strategic priorities viz omnichannel, private brands, and revenue per customer. The established brands like Sephora and Salon by Instyle in beauty segment have been expanded. The firm is also one of the largest purchasers of shoes, clothing, accessories etc in the US. With approx. 1100 stores and 14 logistics facilities, J.C. Penney have a robust physical footprint. In 2016, approximately three-fourths of all online orders touched a physical store and with the streamlining of the supply chain, it’s expected to become more efficient. The company has set the standard in supply chain collaboration. For instance, the long term-association with TAL Apparel, Hong Kong based manufacturers, led to direct-ship program. The company outsources the sales forecasting and inventory management to TAL and they decide the quantity, size, colour to be made. Logistics has also played a vital role to perform dynamic routing which works with truckers to create better networks.

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Weakness

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Opportunity

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Threat

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Political

1. Congress laws against formation of monopolies, proposed minimum wages: The retail industry relies heavily on minimum wage regulation with retail being a major job providing industry in the US and workers requiring minimal skills and training to operate, any rise in state-regulated minimum wage may adversely affect profits. Governors of New York and California have last year voted to approve a legislation that will increase the minimum wages for the two states over the next six years. It’s expected to rise to $15 an hour by 2022. Minimum wage in California for instance will rise from $10 an hour to $15 resulting in salaries of full-time wage workers to rise from $20K to $30K annually.The US Congress has also enacted laws against formulation of monopolies and price discrimination to protect consumers.

2. Business uncertainty to rise due to volatile political climate: Retailers are becoming increasingly political and taking their stand on social issues. Facing volatile political climate both in the US and abroad, retailers have realized that social identity behind their brand matters. Political instability, and issuance of government orders such as travel bans by the Trump administration may set a negative sentiment as government policies and regulation directly affect the profitability by affecting the economic environment of the nation. The Asian economy is expanding at a much faster rate than the American one. But red tape and bureaucracy are a major problem there and so expansion into the Asian countries can be difficult. Although JCPenney doesn’t have any strong political affiliation, it will look to neutralize any negative impact of such regulations or policies. The industry as a whole may unite against any business disruptive policy by the government although Trump administration will look for policies that promote local businesses.

Economic

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Social

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Technological

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Legal

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Environmental

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