HispanicBusiness

"And I don't know if they'll come back to Penney's even if they start doing everything right," Gallese said, referring to the new leadership headed by Myron Ullman, Johnson's predecessor who was reinstalled as CEO of the Plano-based chain.

Ann Marie Bishop, a Penney spokeswoman, said Ullman plans to meet with various stakeholders, including customers and suppliers, to assess the problems and develop a plan of action. She said he would evaluate the "shops" concept implemented by Johnson to see whether changes need to be made, but she stressed that coupons and sales are back to stay.

"We now understand that customers are motivated by promotions and prefer to receive discounts through sales and coupons applied at the checkout," she said.Making Penney's task harder is the widening wealth gap in America, where income distribution "looks more like a developing country than a developed one," according to a recent study by Kantar Retail and PwC. Moreover, the United States is the only major developed economy where income classes define the retail channel -- the "haves" gravitating toward upscale department stores and specialty supermarkets while the "have-nots" patronize conventional supermarkets and deep-discount chains.

Ever more shoppers are falling into the "have-not" category, defined as those who are having a tougher time bouncing back from the recession and are "likely to remain a core challenge to retailers," the study said.

"Our consumer market is becoming more polarized," said Al Meyers, a Dallas-based consultant with PwC, formerly PricewaterhouseCoopers. "By 2020, 75 percent all income will be going to 40 percent of households, with the remaining 25 percent going to the have-nots."

None of this makes it easier for Penney's to recover.

"Post-2008, many argue that the hollowing out of the middle class has continued, meaning there are fewer and fewer customers for midmarket stores," said Bruce Clark, who teaches marketing at the Northeastern University D'Amore-McKim School of Business. "People are either migrating upmarket to Macy's and Nordstrom's or down market to Target and Wal-Mart."

Schoolteacher Danny Knowles and his wife drove over to Penney's at Ridgmar last week.

"We're here because we got a coupon," said Knowles, who explained that they don't collect coupons, hadn't missed them when Johnson cut back on the offers and would have come to Penney anyway. "They have decent variety and good prices."

In the end, his wife, also a schoolteacher, made no purchases, but he picked up a few shirts and undershirts, totaling $56 after the 20 percent discount from the coupon.

"Aesthetically, it was a better experience than before," the English teacher said. "What was lacking was customer service. There was really no one close by to ask where the big and tall department was. I eventually found someone but she didn't know."

Together, they eventually found Foundry Supply, Penney's private brand big and tall department. The chain laid off 30 percent of its staff during the downturn.

Danny Knowles' experience illustrates another challenge for Penney.

"As they let people go, they also brought people in for the mini-shops but they apparently aren't trained out," TCU's Leone said.

"I think Penney's future is going to be tough and an uphill battle," he went on.

"The quicker they make the decision on what they want to be and launch a campaign to say who they are, the better their chances. It might just be admitting they lost their way and that the Penney's you knew is back."

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(c)2013 the Fort Worth Star-Telegram

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