Remember Arizona

J.C. Penny’s scored strong sales growth in the late 1980s and early 1990s with its private labels such as Strafford men's dress line, Hunt Club collection of casual clothing, and Arizona Jean Company. However, quality suffered and sales dropped. How much did Penny’s acquisition of Eckerd’s hurt the company's focus on its private label lines?

Now, the Plano, Texas, wants to reinvigorate the brand, but not necessarily reposition it. How will Levi’s and Wrangler’s respond? Will those labels bolster relations with retailers that lack private labels such as Kohl’s? Given the competitive pressures from Kohl’s along with Target, Sears, Wal-Mart, and Gap among others, should Penny’s management spend another amount of its company’s resources on Arizona Jean Company?

I think the decline in quality will prove hard to overcome. Customers fled to mass retailers like Foleys, specialty stores like Eddie Bauer, and discounters like Target. Penny’s faces a daunting but not an impossible task in getting those customers back to these anchor stores. I do not think those retailers will let Penny’s take its new customers away without a fight.

Penny’s should drop quietly its private labels and concentrate its resources on better relationships with manufacturer labels and end customers. Does that make Penny’s too close to Kohl’s?