What Small Business Owners Can Learn from the JCPenney and Forever 21 Merger

Picture yourself in a mall in 2002: racks of trendy Aéropostale hoodies, Forever 21’s fast-fashion treasures, and JCPenney’s dependable mix of apparel, home goods, and Sephora counters. These brands defined an era of retail, but the world has since changed. Fast forward to 2025, and these mall staples are coming together under one roof.

Catalyst Brands, a newly formed entity, merges JCPenney with Sparc Group, the operator of Forever 21, Aéropostale, Eddie Bauer, Nautica, and Brooks Brothers. The merger, involving 1,800 stores and 60,000 employees, represents a bold strategy to adapt to today’s challenging retail landscape. What lessons can we, as small business owners, draw from this move?

The Situation: A Retail Shake-Up

The pandemic was a turning point for many businesses, especially brick-and-mortar retailers. JCPenney, once a cornerstone of American malls, filed for bankruptcy in 2020. Its financial troubles reflected a broader shift: consumers turned to online shopping, and department stores declined.

Enter Sparc Group, a partnership between Simon Property Group and Authentic Brands Group. This alliance acquired JCPenney for $1.75 billion, saving it from collapse. Now, with Catalyst Brands, these stakeholders aim to pool resources, streamline operations, and create a powerhouse of familiar retail names. One analyst described the strategy as “creating something greater than the sum of its parts.”

For small business owners, this is a fascinating case study of reinvention. Let’s dive into why the stakeholders believe in this merger and what challenges they’ll face.

Why Catalyst Brands Thinks It’s the Right Move

What makes Catalyst Brands confident this merger is a winning strategy? Here’s the breakdown:

1. Shared Resources for Cost Savings

Combining supply chains, logistics, and even retail spaces means cutting costs. Consider splitting expenses with a business partner who shares your goals. For Catalyst Brands, this could mean greater efficiency and profitability.

Small Business Takeaway: Could you partner with complementary businesses to share resources or reduce costs? Collaboration might be the key to scaling without overstretching your budget.

2. A Diversified Customer Base

JCPenney attracts traditional shoppers, Forever 21 appeals to Gen Z, and Aéropostale draws in teens. Together, they form a portfolio that spans multiple demographics. This diversification spreads risk and increases revenue potential.

Small Business Takeaway: How well do you know your customers? Could you diversify your offerings to reach a broader audience or address new market segments?

3. Leveraging Brand Nostalgia

Despite their challenges, these brands still resonate emotionally with consumers. Nostalgia can be a powerful driver in retail, and Catalyst Brands hopes to rekindle that connection.

Small Business Takeaway: What’s your brand’s unique story? Even in tough times, your reputation and history can set you apart. How can you highlight what keeps customers coming back?

4. Strategic Real Estate Advantages

With Simon Property Group as a stakeholder, Catalyst Brands can access prime retail spaces without the usual sky-high costs. This ensures a physical presence in malls, which are still valuable hubs for many shoppers.

Small Business Takeaway: If you operate a physical location, are there opportunities to reduce costs by partnering with landlords or other businesses? Could a shared space work for you?

5. Opportunities for Innovation

The merger creates space for fresh strategies—combining stores, developing omnichannel experiences, and exclusive collaborations. It’s not just about survival; it’s about thriving in new ways.

Small Business Takeaway: What untapped opportunities exist in your business? Could merging ideas, products, or even services with others lead to something entirely new?

The Challenges Catalyst Brands Will Face

Every bold move comes with risks, and this merger is no exception. Catalyst Brands will need to overcome:

  • Cultural Integration: Aligning these brands’ operational and cultural differences is difficult. JCPenney’s traditional approach may clash with Forever 21’s fast-fashion ethos.
  • Execution Risks: Synergies sound great on paper but require flawless execution to deliver results.
  • Adapting to Consumer Habits: Shoppers continue to favor online options and personalized experiences, challenging traditional retail models.

For small business owners, these challenges resonate. Every growth strategy involves risks, and success depends on carefully navigating them.

Lessons for Small Business Owners

Now, let’s turn the lens to your business. How can you apply the principles behind this merger to your growth strategy?

  1. Could collaboration open new doors? Merging forces with another business might help you share costs, pool talent, or reach new customers. Have you considered partnerships in your industry?
  2. Are you serving the right audience or missing opportunities? Catalyst Brands leverages multiple customer segments. Could your business expand its reach by diversifying its products, services, or communication strategies?
  3. Are you maximizing your existing strengths? Nostalgia and brand equity give these companies a foundation on which to build. What’s your equivalent? What do customers already love about your business, and how can you amplify that?
  4. Do you have a plan for innovation? A merger like this isn’t just about surviving but thriving. Are you considering what your business will need in the next five years?

Ready to Catalyze Your Business Success?

JCPenney’s journey isn’t just about survival but bold reinvention. Their story challenges us to think bigger and act smarter when navigating constant change. The right combination of ideas, resources, and partnerships might be the catalyst your business needs to thrive.

Are you ready to take your business to the next level? At Slark Consulting Group, we specialize in helping small businesses like yours identify growth opportunities, overcome challenges, and create actionable strategies. Let’s work together to build your catalyst for success.

Contact Slark Consulting Group to schedule a consultation and explore how we can help your business thrive in today’s competitive landscape.

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