“What If” Sears Shutters its Stores & Reopens Selling (only) Made in USA Products

NOTE: The article below was originally published in 2014 under the original title, "Innovate or Die...the Big 'What If'" and was intended as an open letter (strategy) to JC Penny. In subsequent years I have reposted the article and re-posed the question whether certain ensuing world/geopolitical/economic/social events had made the strategy more or less viable.

Those ensuing events included the rising tide of populism, Brexit, bankruptcy by Sears, the woes of the U.S. retail offline sector generally, the election of Donald Trump, the Trade War with China, and the general philosophy underpinning the current administration, amongst others.

Now, the world faces a new set of challenges in COVID-19, which has amongst other things amplified use of such terms as "supply chain disruption," "decoupling," "food security," etc.

Is COVID-19 a true black swan event...a stake through the heart of globalization?

Does COVID-19 make the "Big What If" strategy more or less viable/likely/valuable going forward?! Inquiring minds would like to know...

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Innovate or Die…the Big “What If”

An open letter to JC Penny…and any other retailer who might be listening

When I was a kid, my friends and I were avid comic book readers/collectors. Back then the dividing line was Marvel or DC, you had to pick a side. If you tried to ride the fence you were generally shunned as lacking the courage of your conviction.

For my part, I was a Marvel junkie, and one of my all-time favorite titles was a series called, “What If”. The premise was quite simple, in an alternative universe, “what if” Peter Parker never became Spider Man, Wolverine never joined the X-Men…? You get the picture, basically “It’s a Wonderful Life” translated into the world of costumed crusaders and super villains.

Although comic books were already my fantasy world, “What If” was a fantasy within a fantasy, a dream within a dream.

And while I’ve long since passed on the comic book torch to my son, the spirit of “What If” is still with me. Indeed, as a strategist/lawyer, my survival depends on exploring these “what ifs” to craft creative solutions to my clients’ most vexing problems.

Yes, I’m getting to the point of this post, but a little additional background is required – so please indulge me as we finish setting the stage and completing the cast…

Back in 2011, JC Penny hired Ron Johnson – the “genius” behind the success of the Apple Store. It was hoped/expected/prophesized that his prowess would translate onto the larger more traditional retail platform of apparel & appliances.

Put simply, the board of JC Penny bet the shareholders’ money that Mr. Johnson could find a way to be innovative…to transform “cold product” into something that consumers could not do without…that he could “Apple-ize” Penny’s.

Mr. Johnson’s story became personally interesting to me because shortly before he was enshrined as CEO, a good friend was being actively courted to join his executive team. She eventually passed on the opportunity, but my interest was piqued and I continued to follow the company thereafter, along with a host of its competitors, including Target, Sears and the like. The question, I wondered, was what could Mr. Johnson take from his Apple experience to deliver “value” at JC Penny, both for its customers and shareholders?

It is well recognized that Mr. Johnson inherited a company at death’s door, and to his credit, he met the challenge head-on. He jazzed up storefronts and merchandising, spent mightily on new technology, launched new campaigns and attempted to inject some of that Apple sense of cool and panache into a beaten down work force.

Unfortunately, the experiment was a colossal failure, and within less than two years Mr. Johnson was shown the door. In his defense, some might argue that Ron Johnson had attempted to be innovative, and that the brand and its customers simply weren’t ready.

I don’t know if that’s the case or not. But I do know that for a great many of us, “innovation” has become synonymous with “technology” – bigger screens, more memory, sleeker, more stylish…never mind the fact the underlying “engine” driving whatever it is may not have advanced/changed at all. And for me, that is the reason why I find it very difficult to rush out to buy the latest greatest gadget, because I see very little “value” in being able to take better pictures of myself, for example.

And therein lies the crux of this particular, “WHAT IF”.

What if, instead of tinkering around the edges, Mr. Johnson and JC Penny had attempted something as truly innovative as the MAC or the Ipod.

What if, instead of launching coffee bars and self check-out, Mr. Johnson had come out swinging – like the Juggernaut , the Hulk or The Thing – i.e., like the superhero the board thought it was getting.

WHAT IF, Mr. Johnson’s first communication to the world had sounded something like this:

Dear Customers, Shareholders & Bankers,

• We recognize that in this world the consumer has many choices when it comes to retail.
• We further recognize that our brand has gone stale, not because we haven’t tried, but because we are no different than our competitors; we offer the same thing that you can get anywhere – in other words, we offer very little in the way of true value. And although you haven’t said it in these exact words, we can feel your sentiment, we know what you’re thinking – we are being shunned for lacking the courage of our conviction.
• We recognize that in business one must innovate or die…we refuse to die!
• In light of this, we will shutter each and every one of our stores (nationwide) for 90-days, on a rolling basis.
• When one of our stores reopens, it will stock only merchandise made/sourced “here” – on terms we define and will abide by.
• This is more than an opportunity for us, it is also an opportunity for you. This is an opportunity for us to return true value to the American consumer – by providing them a channel and a platform to buy, develop, create and manufacture products made here.
• For the would-be entrepreneurs out there, moms & pops, artisans, craftsmen, designers…we challenge you to stock our shelves with quality well made products…we challenge you to be inventive and innovative.
• For the venture capitalists, private equity firms, crowd funders, peer-to-peer lenders and micro-financiers, we challenge you to find seek out, cultivate, incubate and accelerate the types of businesses that we need to grow our inventory.
• The extent to which our stores are empty or filled to the rafters, will be a reflection of the true state of the American economy.

Sincerely yours,

Mr. Johnson

To my mind, traditional U.S. retailers, JC Penny being a prime example, have been found lacking. Why? Because there is little to no differentiation amongst them – so they compete entirely on price, sale after sale, coupon upon coupon, ads (ad nauseam – pun intended), selling imported disposable “stuff” that barely lasts long enough to get it out of the box. They offer little in the way of value, particularly as the notion of “value” rapidly is evolving for most Americans, as it sinks in – cheaper isn’t always better, and you’re only as good as what you create…and the best job to have is not one that’s been given to you, rather the one you make…

Innovate or die… WHAT IF!