James Cash Penney, the founder of the retail store chain
that shares his name, crafted a unique style of entrepreneurship and
exceptional management that resonated through much of the 20th century. His
journey began in 1902 with a modest dry goods store in Kemmerer, Wyoming,
which, through his perseverance, metamorphosed into one of America's most
notable retail chains.
Born into a poor family in 1875 in Missouri, Penney wanted
to study law after high school but was forced to work as a clerk in a local dry
goods store to help support his family after his father's death. When Penney
was a young man, he was diagnosed with tuberculosis and advised by his doctor
to move to a dryer climate, which he did in 1898 by moving to Colorado. He soon
began working for Guy Johnson and Thomas Callahan, who owned two dry goods
stores called Golden Rule. Johnson and Callahan were impressed with Penney's
business acumen, along with his values of integrity and hard work, so they
paved the way for him to open a third store and gave him one-third of the
profits from the new store, which he opened in Kemmerer, Wyoming in 1902. Within
a year, he had opened another store, paving the way towards developing a chain
of stores. A significant change occurred in 1912 when Penney acquired sole
ownership of the company and changed its name to J.C. Penney.
In 1913, Penney relocated the company headquarters from Salt Lake City to New
York City to be closer to garment production, which comprised a significant
percentage of his profits. By 1927, he owned 773 stores with over $100 million
in sales.
The entrepreneurship demonstrated by Penney was
characterized by calculated risk-taking and remarkable foresight. As a business
model, Penney prioritized quality and value instead of focusing on bargain
sales. He followed in the footsteps of Callahan and applied fixed prices in all
his stores when haggling was still the norm, thus promoting fairness and
integrity in his operations. Moreover, he required his customers to pay in cash
before they could take the goods from his stores.
His method of expansion was unique and highly entrepreneurial. Instead of
following a top-down approach, Penney mentored promising employees and offered
them partnership and managerial positions in new stores, thus fostering a sense
of ownership, dedication, and motivation among his workforce. One of the
expectations of these new associates was for them to find reliable promising
young men and prepare them to open their own store, thus securing the continued
growth of the business.
To help inspire and support the company’s growing workforce Penney started a
monthly newsletter that circulated between 1917 and 1932 called The Dynamo.
The newsletter offered merchandising suggestions, letters from company buyers,
celebrations of store and manager accomplishments, and other general company
news, to name a few, and demonstrated that James Cash Penney really did strive
to build relationships with his employee partners. Each newsletter offered several
articles written by people related to the industry and thus secured a
connection between headquarters and employees that promoted quality and
exceptional service. For example, one saleswoman was celebrated by her manager for
securing a sale by helping the customer envision the finished product using two
yards of fabric that she thought would be a quality substitute since they did
not carry what the customer requested.
Penney's management prowess extended beyond his employees to
his relationship with customers and suppliers. His "Golden Rule" philosophy
built trust and loyalty with his customer base. He treated suppliers as
partners, ensuring prompt payment and building solid relationships. Penney
believed in the power of decentralization and delegated operational authority
to store managers, instilling in them a sense of responsibility and
entrepreneurship. Another distinguishing
pursuit that demonstrated Penney’s business ingenuity was that he was among the
first businessmen to create private labels for the J.C. Penney brand. This
allowed him to cut costs by making high-quality products cheaper than the name
brands. Moreover, since advertising was not required for these items, which
already drew in customers due to the success of the name-brand alternative, he
was further able to maximize profits.
This business strategy is now common in the retail industry.
The 1929 economic downturn was a challenging period for
Penney, who personally guaranteed his company's debt, leading to his financial
ruin. However, his resilience and dedication to the brand saw him through these
turbulent times.
In conclusion, J.C. Penney's story shows how visionary
entrepreneurship coupled with exceptional management can build a legacy.
Penney's ability to identify opportunities, his innovative business model, and
the respect and trust he established with customers, employees, and suppliers
laid the foundation of the J.C. Penney Company. His approach to
entrepreneurship and management was characterized by his pursuit of the
"Golden Rule" policy that he inherited from his Baptist Minister
father not only as a business strategy but also as an ethos that helped weather
financial storms and maintain the relevance of the brand that lasts even today,
although has struggled because of online shopping and the hegemony of discount
stores like Walmart. The retail industry continues to draw inspiration from
Penney's innovative strategies and human-centered leadership.