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And J.C. Penney is not alone. Retailers everywhere are vulnerable to new and formidable competitors that are closing in on all sides. In 2001, Marks & Spencer, a venerable English retailer, became locked in a battle for survival. Faced with plummeting market share, it embarked on a massive reorganization plan that included closing 38 stores throughout Europe, shuttering its catalog operation in the United Kingdom, and divesting its Brooks Brothers clothing stores and Kings Super Markets chains in the United States all in an effort to refocus on its traditional core strengths of food and clothing. One year later, Marks & Spencer seemed to be on the road to recovery: profits were up and it had regained some of its lost market share. But the cost for losing its way was high, and the lessons of its U.S. counterpart, Montgomery Ward, serve as a reminder how fragile this comeback may be. Beyond the retailing industry, such harsh competition and dramatic defensive maneuvers characterize the Focus Stage. It s a mistake to believe size and scale can insulate a company from the pressures of the Endgames curve. Remember: the bigger they are, the harder they fall. Discount retailers. Sam Walton may be forever known as the CEO who built an empire on discount retailing, but without the pioneering and somewhat duplicitous efforts of Eugene Ferkauf, Walton might not have enjoyed the same success. In 1948, Ferkauf opened one of the first discount stores in the United States, E.J. Korvette. But there was a problem: the Robinson-Patman Act of 1937 dictated that retailers must charge the manufacturers suggested retail price. To circumvent this law, Ferkauf claimed his store was a membership store that was not open to the general public, which effectively exempted him from the Act; Ferkauf then simply passed out membership cards at the door. Eventually Ferkauf was challenged in court, but support for the Act had waned and Ferkauf and his successors were free to stay in business. The E.J. Korvette chain peaked at 58 stores; it performed well in the Opening Stage, but never mastered the Scale Stage and went bankrupt in 1980. It did, however, set the stage for subsequent discount retailers as well as for the current spate of membership retailers such as Sam s Club and Costco. By the 1960s, with changing demographics and the rise of the sub- (root (make simple-page-sequence)) User Settings Management Years Experience
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