How J.C. Penney and Sears Could Have Steered Clear of the Slope of Death

Though nearly as old, J.C. Penney, on the other had, is essentially the inverse of Sears. The store stuck to its niche, catering to a middle-income, fashion-conscious, largely suburban demographic. Though never as celebrated as Sears, JCP did boast a dedicated following … a following that dissipated with the 2011 appointment of erstwhile Apple exec Ron Johnson as CEO.

So what could Penney and Sears have done early on to steer clear of the Slope of Death? In hindsight, that's readily apparent:

Pick a niche and stick to it. Sears tried to be a one-stop shop to the entire planet, even bringing a financial services provider (Dean Witter) and real estate firm (Coldwell Banker) under its umbrella. For its part, Penney could have actually broadened its focus, but not before remerchandising each store first.

Location, location, location. Meant figuratively as well as literally. J.C. Penney and Sears never cornered a market, giving them a confused place in the public mind. They're not Nordstrom, not Target, not really anything. Moreover, JCP isn't Apple, which can open a successful store no matter the location. Market research and solid execution should have been used.

Forget financial engineering. Sears is controlled by a hedge fund manager and Penney hired a CEO based on hedge fund input. Running a successful business and operating and successful hedge fund aren't one in the same.

Like the Slope of Death itself, business distress is often a long time in the making before having a material impact. Hopefully, Penney and Sears serve as a wakeup call to all.

Dan Scouler is chief executive of Scouler & Company, a financial consulting, restructuring, crisis management and transaction services firm.