During the 90s department stores got hit with the emergence / domination of specialty retailers like Victoria’s Secret and other powerhouses in their respective categories which took share from the department channel. Then sometime in the last 5-10 years – I’m not sure when exactly – there was a downshit in quality at department stores since they could no longer compete with high-end specialty retailers (except JWN, the exception). At the same time this market was shrinking, the mass merchant players (TGT, WMT) were moving more into softlines and capturing additional share because they had a natural traffic flow of price-focused consumers in their stores anyway.
What you’re left with as those shifts play out is a department store channel that has too much capacity, high fixed costs, high capital intensity, difficult to break leases and a shrinking sales base. This is not an amazing recipe for value creation. Someone was going to lose in that equation, and it was JCP (they had cancer). Then Ackman came in and tried what we all now know what a dumb idea (it seemed pretty dumb right away IMO). That gave JCP AIDS because you don’t rehire your core customer after firing them, and JCP is probably also going to have supplier issues.