Question

The COVID-19 virus crisis has forced many retail companies to declare business bankruptcy. Here is a short list: J.C. Penneys, Sears, Pier 1 Imports, J. Crew, Bed Bath & Beyond, Neiman Marcus, GNC Health stores, etc...

Let's say you were hired as an emergency economist by J.C. Pennys and were paying you $120,000 for a 6- month gig. Your mission is to formulate a "turnaround plan" to get JCP back on its economic feet. What would be some of the microeconomic recommendations?

Rumor: Why has Amazon been negotiating with JCP over the last few days? What do they want? Could they play a role in saving JCP?

Answer 1

J.C. Penneys is the chain of departmental stores with a look of mall, that sells traditional merchandise along with other services and is present in most of the states in the USA. For this chain, some microeconomic recommendations should be as follows:

1. Categorize goods into essential and non-essential categories and focus upon selling of goods that fall in essentials. The company should also arrange to deliver goods at their door steps so that company gets more customers as they always consume essential goods despite their severe economic problems.

2. Offer subscription based supplied to consumers in the nearby areas so that there should be a sizable and stable business to the company. Once it is done, the same customers can be offered other non-essential products at attractive discounts.

3. Keep employees and motivate them to perform word of the mouth publicity to bring more customers and or subscriptions. They should be given some incentives to bring these customers.

4. Make tie-ups with logistics companies so that supply of goods to the company and to the customers remain operational without any problem. It will enhance credibility of the company.

5. Company should come up its own brand to make it a house-hold name among the consumers. It will save costs and profit margin will also increase.

Once the lock down gets over, the company should also organize mega discounts and sale to the consumers for non-essential goods with attractive credit schemes. It should be done by doing tieup with the financial institutions.

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Amazon want to collaborate or acquire with the J.C. Penneys so that it can reach out to its customer base and provide supplies of essential goods. It will help Amazon remain profitable in business, while developing alternative chain to reach out to the customers. J.C. Penneys provides a very good presence among the customers, for Amazon and it is a good business prospect for Amazon.

It will play a role to save JCP, as business of JCP in collaboration will run again, where funding and materials will be supplied by Amazon. So, it will relieve the financial burden, that is currently faced by J.C. Penneys.