J.C. Penney used to be one of those anchor stores that could reliably draw suburban shoppers out to big malls. Now it's just another fading monument to the dying purchasing power of middle class Americans. This formerly venerable department store chain has been bleeding losses for several years with no turnaround in sight. The store's business model is a symptom of a massive change in the structure of American society.
The retail market in our country is permanently splitting into two camps. One end of the barbell, in the bad neighborhood across the abandoned railroad tracks, is for deep discount chains like Target, Walmart / Sam's Club, Costco, and the various dollar stores. They cater to those lumpen Americans living paycheck to paycheck and buying groceries with SNAP EBT cards. At the other end of the street, behind the coded gate and security guard shack, are the high-end retailers like Neiman Marcus, Bloomingdale's, Nordstrom, and other brand names where only our ruling elite and their henchpersons can afford to spend money.
The evaporating middle ground is occupied by those traditional middle class icons - Sears, Macy's, and now Penney's - that cannot adapt to the bifurcation of American society into haves and have-nots. Their products are too expensive for the large numbers of Americans who have difficulty affording the latest appliances and brand-name clothing. Their branding and service are too downscale to attract affluent consumers whose politically empowered employers write their paychecks. Those Americans who remain in the shrinking middle class have figured out that Internet retailers like Amazon offer better value and convenience for many of life's goodies. The mid-range retailers can't compete. Montgomery Ward learned this the hard way ten years ago, and the brand is now re-born as the online discount portal Wards.
The fate of mid-tier retailers like J.C. Penney is obvious to me. Survival options include closing underperforming stores, rebranding into deep discount chains, or following Wards into bankruptcy and online rebirth. The deep discount chains will have plenty of competition at the bottom of the food chain because many Americans will keep getting poorer. The elite chains will do well because their clientele in the finance, pharma, and energy sectors own our planet anyway. I'll wait my turn on the courthouse steps to bid on the bankrupt shopping malls formerly anchored by Penney's. The vacated sites will make excellent permaculture installations and their former shoppers will make dedicated subsistence workers.
I've chosen sides in the class war. Jeeves, pass the Grey Poupon. Smithers, release the hounds. Conchita, make mine a double (*wink*). God bless America, the land of opportunity.
Full disclosure: No positions in any companies mentioned.
