Bipolar Disorder


Before continuing with the seemingly powerful concept of competitive, integrated merchandising divisions, it is important to first present a short history of antagonism.

Among the several reasons for the success of the J. C. Penney Company covered in this book, two stand out. These were the company's concept of retail partnerships and the evolved power and expertise of its wholesale buyers .

The buying and retailing functions, of course, were the guts of Penney's business. They were also competitive bipolar antagonists. The following, simply put, compares these functions and their politics over the years . Conclusions are then drawn regarding company defects that grew out of these politics.

No question, the most celebrated concept in the company's growth was "partnership." From the beginning, this meant unique autonomy for the store managerincluding doing his own buying. Except for the earliest years, however, that was "buying" in quotation marks. Buyers in New York did the actual buying. After district and region input, they selected the assortments from which managers then chose. Naturally, managers resented the buyers' leverage over them while buyers scorned the managers' lack of street sophistication. But what the buyers hated most was a store manager's status in the organization.

But it all begins with obtaining goods from manufacturers at wholesale for reselling to the public. The business begins with a buy. For most of the century, this was accomplished by the Penney merchandise department, whose buyers were a different breed from Penney store and field personnel. They were, first of all, sequestered in New York City and worked in their own esoteric world. Well dressed, they had an easy and off- putting arrogance , epitomized by the familiar street slogans "Wholesale leads retail" and "Hard to buy, easy to sell."

The trick, of course, was keeping the bipolar buying and selling functions in practical balance. For decades this had been diligently achieved, the New York Office (including buyers) and the stores playing in tenuous harmony. The tone began to shift in favor of the field in the 1960s and became a store solo in the 1980s.

While the Penney store manager had traditionally been a firstrate individual, the increasing political clout of the Penney field was largely due to the great rise in an average store's size . As the company moved from Main Street to anchoring malls, the influence of the field overtook New York's. Store managers and regional executives felt that they, not the Manhattanites, should call all of the merchandise shots. Then exfield executives came to dominate the company's senior management, and total merchandise control passed to the stores. The weakened company that resulted can be explained by two sets of comparisons.

In the stores the concentration on merchandise was necessarily broad and shallow . In buying it was the opposite narrow and deep. A good store associate knew something about a lot of lines. A good buyer knew a lot about one line. Consequently, executives from either camp were always seeing merchandise from opposing points of view. But the real merchandise expertise and contacts clearly resided in New York.

There was another difference.

Buyers had to stay closely in touch with the likes of fiber producers , textile mills, and manufacturers. Hence, of necessity, buyers were aware of (and often influential regarding) what was going to happen in the future. Store executives, of necessity, were focused on what was happening right now.

JCPenney became, therefore, a right-now organization with little focus on the future and diminished depth of merchandise knowledge. This, in turn , led to the good old all-American corruption of executives getting into bed with vendors . Elise Greenberg had been one of the three senior buyers in the men's division before she resigned in disgust in early 1999. "I couldn't deal with the unethical business practices," she saidhaving gone to her boss again and again with ways to save the company a bundle, only to be scolded because she was targeting a favored supplier. [1]

Previously, merchandise and values mattered while professionalism and integrity glued it all together. The customer had been the total reason for being. Profits took care of themselves . But now perquisites, getting ahead, and declaring dividends were the names of the game. And the customer? Shuffled off to Buffalo. These, then, formed the beginnings of deep-seated troubles that would eventually bring down the once-proud organization after nearly a century of success.

[1] From "Penney Pinched," a November 25, 1999, Dallas Observer article by Miriam Rozen; used with permission.




Celebration of Fools. An Inside Look at the Rise and Fall of JCPenney
Celebration of Fools: An Inside Look at the Rise and Fall of JCPenney
ISBN: 0814471595
EAN: 2147483647
Year: 2003
Pages: 177
Authors: Bill Hare

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