During more than two decades in retailing, Ullman has seen a slew of competitors go out of business and - as Macy's CEO in the early 1990s - even succumbed to a hostile takeover bid, from Federated Department Stores.
But he says that nothing presented the kinds of challenges that Penneys and other stores face now. He believes this recession has made consumers permanently more frugal.
"There is this new normal," Ullman says. "People are going to be very pragmatic."
Middle-income consumers, in particular, are changing their buying behavior, in his view, much more than wealthy or low-income Americans. "The bottom quartile is very focused on the daily needs," he says. "The top quartile has resources and is not concerned about the day-to-day things."
That means retailers selling discretionary items must focus on the middle-income customer. "That plays to our strengths, and it just encourages us to be sharper on prices," he says.
Penneys, a moderate-price chain with 1,109 stores, offers an alternative to higher-price rivals. Under Ullman's stewardship since December 2004, Penneys has moved from offering mainly store brands to filling its floors with trendy Sephora cosmetics shops and affordable lines from designers such as Nicole Miller.
This fall saw the arrival of "Cindy Crawford Style," a home-furnishing and accessories collection exclusive to Penneys, and JOE Joseph Abboud, an exclusive collection of men's sportswear and tailored clothing. And the company announced it would be the sole U.S. store selling all the Liz Claiborne lines, except for the Isaac Mizrahi-designed Liz Claiborne New York brand, which goes to QVC next fall.
As many other retailers have closed stores or laid off workers in response to the downturn, Penneys has kept investing, most notably opening, in July, its first Manhattan store.
Still, the Plano, Texas, company hasn't escaped the industry's headwinds: Last week, it said that its third-quarter sales were down 3.2 percent from last year's quarter and that operating income plunged 18.9 percent.
The downturn in consumer spending during the last year led Penneys to make "a conscious decision to moderate some of our behavior - expenses, capital, inventories," Ullman said. "And we actually wanted to accelerate our investments in some categories, like Sephora and customer service, rather just saying it's going to be a tough economy and everything is going to change."
A key change is occurring in the company's preparation for the holiday shopping season. Last year, it had too much inventory and had to offer discounts to pare it down. This year, Ullman says, Penneys inventory is leaner and carefully targeted in key categories it believes customers want.
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