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Showdown on 34th Street --- With First Manhattan Outpost, J.C. Penney Chief Squares Off Against
Macy's on its Home Turf; 'We're David.
By Rachel Dodes
1 August 2009
The Wall Street Journal
J.C. Penney Co. unveiled its first Manhattan store on Friday, marking a milestone in chief executive Myron
E. Ullman III's five-year attempt to turn his company into a stylish alternative to the giant down the road,
That giant also happens to be his old employer, where a takeover battle robbed him of the CEO job more
than a decade ago.
The store is one half of a consumer test in a laboratory the size of a single city intersection, with each retailer
taking a page from the other's playbook. On one corner, J.C. Penney, long a seller of cheap basics to Middle
America, highlights trendy new lines made by designers like Ralph Lauren and Charlotte Ronson for
Penney's own brand names. On the other corner, Macy's, famous for stylish brands, is pushing both its
designer labels and its "Everyday Value."
Their struggle is playing out across the country as a long-term reshaping of the retail industry, combined with
an unrelenting recession, blurs the lines between retailers that never used to compete. Specialty shops like
Gap Inc., discount chains such as Wal-Mart Stores Inc., and traditional department stores are now all
descending from different parts of the industry to lure the same shoppers.
Mr. Ullman's own role in that fight is part of a journey that started across the street from his new store. As
chief executive of Macy's in the early 1990s, Mr. Ullman tried to fend off a hostile bid from Federated
Department Stores Inc. He lost, and Federated used the Macy's brand to secure its position as the country's
largest department store chain.
Now CEO of J.C. Penney, Mr. Ullman, 62, has been leading an aggressive remaking of the company. He
has persuaded high-end brands to create products for J.C. Penney, hired a team of in-house designers to
retool the company's own brands and poured money into ad campaigns. A recent one declares the chain is
"Stepping Up Our Style."
Recently Mr. Ullman, who has a neuromuscular condition that limits his walking, rode a battery-powered
Segway through the center aisle of the women's department of the new Manhattan store. Some 200 sales
associates chanted "JCP! NYC!" Speaking to the group while balancing on his Segway, Mr. Ullman framed
the coming fight: "We're the David, and they're the Goliath across the street." Outside, banners hung from
lampposts encircling Macy's, announcing that Penney is "now open on 33rd and 6th."
Macy's chief executive, Terry Lundgren, says he's not worried. He says Macy's flagship store is an icon of
New York life, occupying an entire city block, with more than a million square feet of selling space. Penney's
is a tenth of that size, and located inside a mall.
Penney's might have lower prices, says Mr. Lundgren, but Macy's carries the most sought-after labels in the