Yoshikami: The Ron Johnson disaster at JC Penney

“The replacement of CEO Ron Johnson at J.C. Penney caps what has truly been a disastrous turn of events for the 110-year-old retailer,” Michael Yoshikami writes for CNBC. “Johnson was brought in to revitalize the brand and he took bold action that was not readily accepted by J.C. Penney’s current customer base. It’s as if the focus was to make J.C. Penney like Apple (where he headed up the Apple stores division) and bring the same consumers to that retailer. Clearly with plummeting sales and losses mounting, the strategy was not effective.”

“So what went wrong?” Yoshikami writes. “Johnson attempted to remake J.C. Penney into a one-price-product marketplace with boutique shops. This ‘no sale’ perspective has not been the standard practice for retailers for the last 100 years. The focus has been on promotional discounts based on events and seasons. The goal was to make J.C. Penney like Apple; products were never on sale but essentially provided the value necessary for consumers to pay listed prices.”

Yoshikami writes, “That was a big mistake in my view. The reality is J.C. Penney products are not like Apple products. Apple sells 20 different items; JCP sells thousands of items easily purchased at other locations. Commoditization exists in retailing. Additionally, attempting to change one’s current customer base virtually overnight is fraught with danger. Clearly (and it’s very easy to say this in retrospect), a more methodical approach would have been more appropriate.”

Read more in the full article here.

Related articles:
Ron Johnson: Apple Stores vs. J.C. Penney – April 9, 2013
Will Apple bring Ron Johnson back? – April 8, 2013
Ron Johnson out as JC Penney CEO, says source – April 8, 2013
Ron Johnson starting to look a lot more maniacal than brilliant – March 8, 2013
If JC Penney fires CEO Ron Johnson, analyst predicts bankruptcy – March 8, 2013
J.C. Penney CEO Ron Johnson cuts 2,200 more jobs as sales plunge – March 8, 2013
J.C. Penney posts large loss as sales sink further – February 27, 2013
JC Penney CEO Ron Johnson capitulates, brings back sales – January 28, 2013
Apple retail’s Ron Johnson and John Browett have proved the Peter Principle is alive and well – November 13, 2012
CEO Ron Johnson switches J.C. Penney to two-tier pricing with price-match guarantee – July 26, 2012
Why is Ron Johnson’s retail strategy for J.C. Penney failing? – June 26, 2012
J.C Penney’s stock tumbles after key exec’s abrupt exit – June 19, 2012
J.C. Penney reports loss and plummeting sales in 1Q – May 15, 2012
Why Ron Johnson left Apple to head JC Penney – April 30, 2012
J.C. Penney lures another executive from Apple – April 26, 2012
Steve Jobs’ ex-lieutenant Ron Johnson adds $1.5 billion to J.C. Penney in two days – January 30, 2012
J.C. Penney CEO Ron Johnson: What I learned building the Apple Store – November 21, 2011
New J.C. Penney CEO Johnson hiring former Apple co-workers – November 9, 2011
Why Apple’s retail genius Ron Johnson is paying for the privilege of running J.C. Penney – June 15, 2011
Apple’s retail store chief Johnson off to J.C. Penney; expected to become CEO within months – June 14, 2011

18 Comments

  1. JC Penny and shoppers (some of them) are what I called “Old School”, they are not mentally inclined to accept new kind of shopping experiences. I will not call RJ a failure at JCP, it’s just a mismatch between RJ and JCP expectation.

    1. I am an Apple enthusiast to the point of being ridiculous and I also shop at JC Penney, its probably the only major department store that I shop at regularly, but when I shop at Apple I expect something very different than when I shop at JCP. I hated the changes Johnson adopted and once implemented I frequented JCP far less

    2. Malls in Europe basically have no sales. So that model works. Just not in America.

      Plus, JCPenny’s admits that the areas of the store that RJ remodeled was extremely profitable.

      1. Agree. I’ve picked up great deals for clients on the Refurb site. And the refurbs look and run as new as new can be. Sometimes better because someone has had to go over them carefully before release to the refurb store.

    1. It isn’t that they cut him loose too soon, it’s that his plan was the impossible dream. It wasn’t practical. There isn’t enough money in Fort Knox to support a grandiose plan such as his. Ron Johnson read his own press clippings a few too many times. And believed what he read. And he was arrogant to boot. That board should have gone with him. They okayed the whole thing. Idiots!

  2. If JCP Board of Directors hired him, they must have known and strongly desired his plan to transmogrify the retailer into something akin to an Apple store. That’s why he got the job. How will they fare after all this settles? I’d make sure their heads were all chopped and put on a pike for display in their new “boutiques”. Ron should get his deposit back!

  3. Ron’s problem was a fundamental miscalculation of merchandise velocity, not customer acceptance. A certain other retailer has fooled the public into thinking it gets a better value when “low everyday prices” are advertised (but of course customers don’t, because “low everyday prices” are not necessarily lower then the competition except on special runs of goods that Wally World specs out at an atrocious quality level.

    JCP, which sells a huge array of higher-quality merchandise from multiple manufacturers, will invariably have some goods that don’t sell well. It will have seasonal merchandise. It will have a certain size or color that unpredictably sells out — or doesn’t sell hardly at all. The purpose of the sale is to move out the old inventory.

    Apple doesn’t have this problem. It has relatively few products. Some are custom order, but most are WYSIWYG. Customer demand is relatively predictable, returns are rare. Hence, very little need for sales.

    The Apple refurb store is not the “sale” section. It’s the place where Apple clears out goods whose original boxes were damaged in shipping.

    1. Few have touched on the realities of the merchandise and the interchangeability of sources. You can buy most of jcps products in a dozen different stores and last seasons merchandise has to go somewhere if it didn’t sell. I suspect RJ was planning on honing his supply chain and his merchandise offerings to work those issues, but wasn’t given the time. 110 years of entrenchment is a hard thing to overcome. Who knows how many floor staff and department managers (the face to the customer) were bad mouthing the new direction when confronted by a customer expecting to find what they had always experienced. It’s too bad. I guess I’ll shop at RJs other retail success, Target.

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