Ron JohnsonNearly a year after being named as the next CEO of J.C. Penney (JCP), Ron Johnson seems all too aware that his public image has been transformed. The man once widely thought of as the merchant genius behind the Apple Stores, poised to revive a dowdy department store, is now often characterized as a retailing mad scientist whose wild experiments could do irrevocable harm to the 110-year-old chain.

Media coverage of his makeover of the retailer has been unrelentingly negative.

"I feel like I'm in the middle of a reality show," he told a packed room in New York on Tuesday at an event hosted by Fashion Group International and The Robin Report.

But although the CEO's radical strategy to eliminate nearly all of Penney's sales and coupon events has resulted in sharply declining sales, a 10% loss in store traffic, and shopper defections, Johnson is not only still defending his blueprint for change -- which also calls for transforming Penney into a specialty department store with 100 mini-shops -- but called the naysayers "backward thinking."

Many people didn't believe Apple (AAPL) Stores would succeed when PCs dominated the computer market, for example, he noted.

And when discounter Target (TGT) introduced a trendy line of housewares from architect Michael Graves back in 1998 -- back when Johnson was vice president of merchandising at the chain -- "nobody thought good design would be valued at a discount store," he said.

But both Apple and Target proved the skeptics wrong, and so will J.C. Penney, he said. "Will [Penney's makeover] work? I believe it will," he told the audience.

Making the Case for Mini-Shops

"What we're doing is repositioning our company into a specialty department store," he said, noting his plan to turn Penney into a mall of 100 mini-shops, featuring brands from Martha Stewart to Disney to Canadian fast-fashion retailer Joe Fresh.

Johnson invoked his oft-repeated claim that shoppers have favored specialty stores -- be they H&M or Williams-Sonoma (WSM) -- over department stores in recent years.

Despite Penney's sales dives -- comp-store sales sank 21.7% during the quarter that ended July 28 -- "We've made a lot of progress in the last 10 months," he said.

Ron Johnson

For one, a focus group of 25 shoppers, analysts and retailers alike gave high praise to Penney's prototype store in the Valley View mall in Dallas, Johnson noted.

More importantly, performance at the 12 mini-shops that have already been rolled out to nearly 700 stores is "off the charts."


Defending the 'No Sale' Strategy ... Again

Johnson also restated the case for his much-maligned "fair and square" pricing strategy, which replaced most sales and coupons, and set the base prices for merchandise 40% lower every day.

Although the strategy has so far alienated shoppers and hurt sales, it's the right way to go, Johnson said. "Honesty begins on the price ticket."

But he also knows not everyone will be a convert. "A lot of people said, 'This isn't for me,' and they've left."
JCPenney
In his defense of the new pricing strategy, Johnson has been speaking aloud retail's dirty little open secret: Many "big sales" aren't really sales at all, because stores have been increasingly inflating the so-called "full" retail prices on their goods in recent years.

Johnson conceded that Penney's goofed by eliminating the word "sale" from its vocabulary in favor of "best price," a phrase that proved meaningless to shoppers. But he said that bring the word "sale" back is only a minor course correction, not a strategic shift.

"We will tweak the tactics but won't change the vision," he said. "The fact that sales are down is a temporary thing," he said.

Johnson said it was never his goal to alienate Penney's core shoppers, and that he'd like to "win them back," but the retailer must attract new shoppers if it's going to thrive.

"We're going to reinvent retail all over again," he said.

Stay tuned.

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jonesttll

FIRED ALL GOOD STAFF WHO CARED ABOUT THE COMPANY WITH PRODUCT KNOWLEDGE NOT A SMART IDEA. MANAGERS HIRING NEW STAFF AND NOT TRAINING THEM THE JCP WAY HOW STUPID IS THAT NOT VERY SMART. IT WILL COME BACK TO BITE YOU.. HOPE YOU REALLY GET TO KNOW YOUR MANAGERS AND WHAT THEY ARE REALLY ABOUT...DUMMYS....IS WHAT THEY ARE A BUNCH OF BACK STABBERS...

February 28 2013 at 5:56 PM Report abuse rate up rate down Reply
papadb24

He should have been gone long ago?

January 25 2013 at 8:59 AM Report abuse rate up rate down Reply
stepper777

jc penneys ceo has lost his mind, they had a good thing going , and he decided that he would reinvent the wheel, he thinks the fair and square wheel will roll a lot smoother, than what was a profitable run for this company, so many egomaniacs do not want to hear anything about what anyone else thinks while they rearrange the chairs on the deck of the titantic. he comes from apple , you can put a tent up in any mall parking lot and open a apple store because people want this, when you tell your core customers that we don't want you here anymore and want a younger crowd who is living with there parents, buried with student debt , can't find a job, have car and phone bills, and are pretty much tapped out and think that this will trully save the company it really makes you wonder how his superiors can embrace his dillusional thinking. STEVE JOBS told ron johnson to stay out of retail , but did he listen no , he is from apple trying to run retail which is oranges so he does'nt know apples from oranges

January 01 2013 at 10:18 AM Report abuse rate up rate down Reply
James M

"Johnson said it was never his goal to alienate Penney's core shoppers, and that he'd like to "win them back," but the retailer must attract new shoppers if it's going to thrive"

Here is some math for you Apple boy, (Old core shoppers - attracted new shoppers) < Old core shoppers = ( no more JCP).

Would have been better if you didn't want the old core shoppers to had just dumped the JCP name, reopened as RJ.

The new JCPs is a bad joke. You go in it it feels like there is less mechandice on the floor sacrificed for that mini shop look. Martha Stewart? If i wanted that brand I could go to KMart. She is not a good thing.

There is just a creepy uncomfortable feeling to the store you can't put your finger on. Where once you felt surround by goods, now a large mall box with a few dry goods stack here and there.

I too miss St John's Bay.

November 27 2012 at 9:45 PM Report abuse +1 rate up rate down Reply
James M

"Johnson said it was never his goal to alienate Penney's core shoppers, and that he'd like to "win them back," but the retailer must attract new shoppers if it's going to thrive"

Here is some math for you Apple boy, (Old core shoppers - attracted new shoppers) < Old core shoppers = ( no more JCP).

Would have been better if you didn't want the old core shoppers to had just dumped the JCP name, reopened as RJ.

The new JCPs is a bad joke. You go in it it feels like there is less mechandice on the floor sacrificed for that mini shop look. Martha Stewart? If i wanted that brand I could go to KMart. She is not a good thing.

I too miss St John's Bay.

November 27 2012 at 9:32 PM Report abuse rate up rate down Reply
Craig A. Olson

.Since they dropped the only line I care about (St. John's Bay), I and my family will no longer be shopping at JCP

November 11 2012 at 3:59 PM Report abuse +1 rate up rate down Reply
Brenz111

JCP pretends to listen to what customers want, but "pretend" is the key word. I am certain that their Cabin Creek women's shirts were very popular, and a good seller. I bought them for myself and family members.
Of course, in all of his infinite wisdom, Ron Johnson (CEO), decided to discontinue this brand. Then, he had the audacity to send us emails stating that he would like feedback. I guess you know where that went, never heard from him again. Now JCP will never hear from me again!

CHARLOTTE
I am a retired Jcpenney Associate and I no longer go there unless they send me the coupon (gift) rvrn though I get a 20%

cherkobak
I found that there is no merchandise in the store and it is so empty looking. I had to buy my son a suit and the saleman was very helpful and I think I got a good price for the suit. I haven't been in in a long time so I can't say how it looks. I hate Kohls, talk about a store with no fashion sense at all. I could always find something at JC Penny's.

chevz97
I use to shop there a lot. Now I go in the store and can't find anything I like to wear. I'm in my late 40's and don't want to dress like a 15 yr. old. And were's the staff? The lines at checkout are too long to wait in.

balindasuek
Until recently, I worked for J.C. Penneys. There is NOTHING good I can say about the company or its merchandise. But I would like to let the consumers know that the quality of their merchandise is very cheaply made and DO NOT buy anything from the Fine Jewelry department. There is a reason why they want to sell you the "Care Plan" protection...because the piece will break, stones fall out, and the diamonds are the worst I have ever seen - they look like rock salt. I refused to sell a lot of their diamond pieces because you can purchase better quality at the local Pawn Shops.
If you want to work for J.C. Penneys - DON'T!!!!! They treat their employees like dirt and will work you to death! They expect you to do 3 persons work, that how bad the company has cut down on employees. They look for the young suckers to employee, whom probably don't know any of the labor laws, and they can hire you at minimum wage, no matter what your experience is. Also, BEWARE ladies, the salon employees are hired straight out of beauty school. They have no experience with cutting or coloring your hair!!!!
All the company stresses on is getting the customer to sign up for the JCP credit card, no matter if you have one already, they will sign you up for as many as you want. The interest is around 26%.
I don't have ONE good thing I could say about the company. It is the worst company I have ever worked for, no wonder they have such a huge turn over of employees.
To the share holders...SELL NOW before it gets any lower. The new CEO must have done a lot of drugs because every change JCP has made is pathetic, and I can only see it getting worse.
So from my experience as a consumer and an employee, don't apply for a job with JCP, don't buy t

October 20 2012 at 8:44 AM Report abuse +1 rate up rate down Reply
1 reply to Brenz111's comment
Don

I so agree. I was with JCP for 8 years, Jewelry and since 2004 with a talented VP from Macy's and Zales, the department was carrying the company. Upgrading was the aim of the new Pres and customers were getting what they asked for. Stocks were over $57 a share and the stores were stocked. What happened?? They got rid of people that knew what they were doing, got greedy, couldn't appreciate the numbers the company was doing. Now this guy comes in who is a MERCHANDISER for Apple and Target!! Knows nothing about retail department stores. Directors take a look at what is happening. The stores are cold, no color or excitement. Who needs to high priced Martha Stewart?? It has hurt the company, the employees and now the salons are losing people and maybe closing. Time to reconsider a CEO. Four generations in my family have always shopped JCP but no more!!!

January 31 2013 at 12:12 AM Report abuse rate up rate down Reply
idagney

I no longer shop at Penney's because of their outright contempt for my values. By promoting homos in their ad campaign and tapping Ellen degenerate as their spokesperson, by using deliberately twisted imagery in their T.V. spots, by changing the entire ambiance of their stores, they have completely lost alienated me. I used to spend thousands each year at Penney's, but I have not spent a dime there since the new campaign began.

October 19 2012 at 12:28 AM Report abuse +2 rate up rate down Reply
lynn.drake

Far bigger problems than lack of coupons: 1) Lack of merchandise that customers really want; 2) Discontinuation of several favorite legacy brands, including Cabin Creek and St. John’s Bay (no, the new “jcp” label is NOT a revamped St. John’s Bay!!!! It is an inferior overpriced different brand.); 3) Alienation of the majority of its core customers (the ones who made it a success for over 100 years); and 4) Destruction of employee morale and company culture. These four problems, unless they are solved soon, will be the demise of JC Penney. Very sad to see another formerly great retailer going down the tubes.

October 14 2012 at 7:09 PM Report abuse +1 rate up rate down Reply
Kade

never shopped in a jc penny. not gonna shop there now - even with the cool little 'square' logo

October 10 2012 at 7:30 PM Report abuse rate up rate down Reply