“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.
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