Why We're Disappointed Ron Johnson Failed at J.C. Penney

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J.C. Penney CEO Ron Johnson shows of a bread-shaped Michael Graves toaster at a Penney location in Dallas, Texas, on February 5, 2013. (Michael Ainsworth/Dallas Morning News/MCT)
Michael Ainsworth/Dallas Morning News/MCTJ.C. Penney CEO Ron Johnson shows off a bread-shaped Michael Graves toaster at a Penney location in Dallas, Texas, in February.
Ron Johnson finally stepped down as CEO of J.C. Penney Tuesday. While the news came as no surprise, it's disappointing that it had to end like this.

Make no mistake about it: J.C. Penney had to fire Ron Johnson. On Johnson's watch the retailer lost billions in sales and saw its stock lose more than half its value. And he was burning through the company's cash reserves trying to make his vision a reality.

But oh, what a vision it was. It's no exaggeration to say that Johnson will go down as one of the most ambitious retail CEOs we've ever seen -- and we may never see another like him.

New Clothes, Fair Prices

Take the "fair and square pricing" scheme, which abruptly did away with J.C. Penney's neverending stream of coupons, sales and promotions. Johnson wasn't just dismantling the company's long-standing pricing strategy -- he was challenging a practice that had become orthodoxy in the retail world.

Johnson saw the irrationality of keeping sticker prices artificially inflated and then constantly lowering them with coupons and sales. He hoped that customers would, too. Alas, the strategy backfired in a big way, proving that consumers are simply too used to being tricked by these sorts of gimmicks.

I think Bob Sullivan of NBC News put it best last May when it was becoming clear that the strategy had failed: "Could we have a moment of silence please for what might be the last heartbeat of honest price tags?"

While we're at it, let's talk about the clothes. Johnson totally revamped the retailer's apparel collections. Gone were the plain, inexpensive pants and sweatshirts; in were jeans bars, Nick Wooster and hip brands like Joe Fresh.

That change was likewise disastrous. We've heard from dozens of shoppers who say they ditched J.C. Penney because the new clothes were clearly intended to appeal to a younger audience.
JCP
JC Penney
But is it such a bad idea to pivot away from an aging customer base so that you can try to attract a younger generation? Johnson transformed J.C. Penney into a retailer where I and other young people would want to shop, and it will be disappointing if his departure does away with that stylish progress.

A Failure to Execute

Still, it's one thing to have a bold and innovative vision. It's another thing entirely to execute on that vision, and that's where Johnson failed miserably.

Johnson simply implemented too much change too quickly. While most product offerings and strategic shifts are tested in select markets before being rolled out nationwide, the new pricing strategy was implemented all at once. According to one report, Johnson shot down an executive who suggested they test the new pricing, retorting that "we didn't test at Apple."

That same philosophy was also on display with the apparel revamp. Johnson could have gradually introduced jeans bars and boutiques. Instead, he wiped out long-established brands like St. John's Bay without considering how loyal customers would react. While Johnson said recently that the company would bring back these "basic" offerings, it may be too late for customers who have moved on to Sears and Kohl's.
JCP
JC Penney


"To lure the new type of customer (20- and 30-somethings) that this CEO was aiming for takes a slow steady plan, not a leap off the high board like he did," chimed in reader Richard Brawer, a novelist. "Now they have an even tougher job, bringing back their old customers."

What's Next

J.C. Penney's stock briefly surged on the news of Johnson's departure -- and then plummeted as soon as word came down that his predecessor, Myron Ullman, would be taking over.

While Ullman's tenure wasn't as disastrous as Johnson's, the company did flounder on his watch -- which was why he was replaced by Johnson in the first place. Johnson may have moved forward too quickly, but investors seem concerned that the board may have swung too far in the opposite direction by hiring an old CEO who did little in the way of innovation.

Some are urging caution on that front -- Cory Johnson of Bloomberg, for instance, suggested that Ullman would continue the strategy of "more Sephora, less Walmart."

Still, many are taking it as a given that the new management will eventually roll back Johnson's strategy, and we've received several emails from disaffected shoppers rejoicing at what they see as the imminent return of the "old J.C. Penney." While it was smart of J.C. Penney to bring back some of the old basics, it will be a shame if it completely ditches its stylish new direction under the new boss.

And I won't be the only one disappointed if that happens. While most of our readers were glad to see Johnson's back, a few said they were sorry to see him go.

"I never shopped there for myself until I started to see the changes being made in the clothes and the look of the store," wrote one reader, who identified herself as a "fashion conscious" 60-year-old. "It might have taken some time before Penney's found a new array of customers, but I believe eventually they would have come. Unfortunately it may not happen now, for I fear Penney's will go back to its frumpy ole ways."

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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Claire

Let's be honest, the only people complaining here are 50+ year old, cheap, unfashionable people that still use flip phones. Listen to the old customers and see how well your business thrives.. the oldies that shop for new clothes say.....once every year if that? Hows that for money making?! JCP had to turn their image around because NOBODY SHOPPED THERE EXCEPT OLD PEOPLE. It's 2013, folks. The **** at JCP was ugly.

April 20 2013 at 1:19 AM Report abuse rate up rate down Reply
Claire

I had never stepped foot into jcpenney until wooster took over...in fact, i avoided it because i didn't want to be caught dead in there. maybe the duggar family wont go there anymore for their long jean skirts and oversized dress shirts.. but that's what sears is for... a new crowd of trendier people were starting to catch on.. and if the mom jeans and oversized corduroys resurface...your new customers will go elsewhere and sooner rather than later, your old ones will die. Maybe it wasn't the new look that pushed people away.. maybe JCP just sucks at marketing....a business can't change the logo, the look of the store and put an ad on tv that never airs... how is ANYBODY supposed to know that the dept store has a new image?? they were headed in the right direction and if they dont reach a happy medium they are doomed... The image is right.. the approach is wrong. Keep the old coupons and add in some stuff for the younger crowd too... and pray for nick wooster to come back... call him a douchebag, but the man is very respected in the fashion world.

April 20 2013 at 1:09 AM Report abuse rate up rate down Reply
Brian

I personally think JCP has a decent selection of Mens clothing. Most of it is stylish ,and they even offer the more "hipster" trendy styles at a fair price. For Women and Kids, not so much, it is more "Senior Citizen casino bus or Church" wear.

April 10 2013 at 10:04 PM Report abuse rate up rate down Reply
Brian

Always understand that the majority of people that shop in department stores are senior citizens. They don't want hip, young, or modern. In fact, they want the total opposite of that. They want more of the same old fashioned style at a price they are comfortable paying. They want coupons. They want someone to ring them up that is dressed in a suit and tie or a blouse and skirt, not skinny jeans, chucks and a t shirt, I still do not think Ron Johnsons idea was bad, I think it was very poorly thought out, executed, and it isolated the loyal customers that have the money to shop. Teenagers and 20-30 somethings do not shop at department stores. They shop at places like AE, Hollister, Abercromie, Aeropostale, and other speciality retailers. AE has shown that that rewards and coupoms and a style that is fresh, modern, priced right, and appeals to ages 14-40 has worked very well for them. If JCP can do that, they might be on to something great.

April 10 2013 at 9:55 PM Report abuse rate up rate down Reply
vegaswalch

Save the styles! I am among a growing group of women who looked forward to JC Penney's fun, fresh take on fashion and Americana in its weekly ad circulars. What's more, I loved shopping in the clean, bright store so much so that in the past year I started there rather than Dillard's, TJMaxx/Marshalls, Target and JCrew. I could find fashionable, classy clothes for every member of my family at a reasonable price -- without having to show up on a certain day with a certain coupon to find a good deal. I just happened on Matthew's article this week -- and, coincidentally, a new on-line magazine RecessLV (Las Vegas) highlighted JC Penney's new take on fashion not realizing that the company was set to scrap the ideas. If only (sigh) JC Penney's had gotten on the radar of a few more blogging moms (I am not one by the way) faster. Then, I believe fashion and a new approach might have trumped frump (or in Las Vegas the glut of nightlife clothing). (sigh)

April 10 2013 at 2:16 PM Report abuse rate up rate down Reply
strayoiler

OK, not so hard, listen to old customers, supply products they want and are loyal to. Advertise the old brands are back. The old customers will come back, they want to.
The young have always shopped at JCP they always had cute styles for everyone.
Quality was good and selection was fine and customer service was excellent. That's why everyone was so upset with the changes. Johnson wanted to play. He had a vision. It's just so sad his vision included JCP. He's left a mess behind him but it can be fixed. So roll up your sleeves JCP, we'll all be watching.

April 10 2013 at 10:16 AM Report abuse rate up rate down Reply
1 reply to strayoiler's comment
Claire

Their styles were so far from cute that the young avoided that store. Quality is the same, selection didn't exist (unless of course you want pleated khakis, olive green corduroys, or lee jeans that make a woman's rear appear like an upside-down heart.) Customer service is still mediocre. Johnson had a fantastic vision to keep the business alive because the old customers don't shop as much as the younger generations. He is clearly great at showcasing an item, but nobody knows that because nobody knew the store was changing their image. Social Media Marketing was minimal, and the old, beloved coupons were gone...even though somebody trying to get a discount on a $5 shirt must have a serious financial problem and shouldn't be shopping in the first place. Lucky for the oldies... even after the facelift, the store still carries a plethora of unfashionable and unflattering clothing in the women's department- with the exception of the newly introduced brands. If the "old customer" is really that big in to looking awful they can visit Sears or QVC.

April 20 2013 at 1:39 AM Report abuse rate up rate down Reply
rankincap

Mr. Johnson had the arrogencethat he thought every retail venture was like Apple and he showed his magic while at Apple. Well it was not Mr. Johnson it was a product you had a market on its own. He never understood who Penny's customer was, the limits of the brand. He could easily let the promotions become limited. He will go down as the worst retailer in history. Change was needed at Penny's but he was dumb.

April 10 2013 at 10:16 AM Report abuse rate up rate down Reply
jbucha2511

Johnson made so many changes so quickly...why?? surely he could have reviewed what was selling and not selling before implementing changes. why get a guy from a Apple to be a CEO at a retail store..did he really understand the retail market: doubtful a techno guy would be a good fit for retail.

April 10 2013 at 10:04 AM Report abuse rate up rate down Reply
Scottilla

One CEO ran the company into the ground, and his replacement couldn't turn it around.

Out of the BILLIONS of people on earth available to run the company, the ONLY one they could think of was the ONE WHO RAN IT INTO THE GROUND. It's time to write off JC Penney.

April 10 2013 at 8:15 AM Report abuse rate up rate down Reply