"I've said many times that when a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
It's a sad state of affairs in American consumerism that folks are attracted more to discounts than low prices. Johnson's plan made sense: lower prices to what average selling prices are during promotions and cut back on promotions. Lower noise. Less discount anxiety. Too bad consumers aren't strictly speaking rational in this way (1, 2).
People don't buy discounted items just because the price is low.
We buy discounted items because discounts tell us which items to buy.
For a given product, there are usually several competing choices, and most people don't have enough time to evaluate whether each one is a good deal for the price it's offered at. So the easiest way to select is to just pick the one that's on sale--or if they're all on sale, pick the one that appears to have the biggest discount relative to the MSRP.
The discount also tells us "you should buy this now, because if you buy it later, the price may go up."
Without this important signal, customers don't really know which one to buy, plus there's no urgency to buy the item now, because it's always that price.
So, while Johnson's approach may have "made sense," and may have worked for Apple products because their market position and product lifecycle makes discounts unnecessary, this strategy really didn't play to consumer psychology, at least in the apparel space.
I don't see what is that sad (or even American) about it. Rationally, yes, discounts are not better for consumers than low prices. But humans aren't rational creatures, and nothing done by JC Penney is going to change that.
After all, isn't not accounting for customers' irrationality in your business also irrational?
It would be sad if this were taken to be a failure of low prices vs discounts. There are plenty of other reasons why JCP is still failing. There's a lot of inertia to its existing reputation and customer base, for starters.
I think the more obvious problem is they're a low-margin business at a time where being low-margin is difficult unless you're the biggest guy with the lowest operating costs.
I think chasing the discounts may be part of the excitement of shopping for some people. Someone was explaining how Kohl's does things, and it is completely insane, like there is an optimal one-hour window for buying certain things when the Power Hours and Door Busters and various other promotions combine with your double Kohl's Cash to get your Docker's socks for 85% off if you give them an email address.
Ever shop at one? The layout was really bad. Then to top that off where you found signs proclaiming the low price and such you still had other signs indicating discounts!
Comparing them to Sears, Sears practically screams good deal. Its just up to you to figure out if its not. Plus Sears has Craftsman which sets it apart from other Mall retailers. Not sure what JC Penny has.
The only good job I will give them is, of the few sales people I met there they at least would help me. That stood out because in Macy's I was ignored even when I asked - apparently men are not allowed to shop at the mall or certain stores.
People are attracted to discounts because people love maximizing value. The standing-in-the-grocery-aisle, blink-of-an-eye assumption that people make is that the value of any item on sale for its original price is equal to the value of any other item on sale for its original price, meaning that items with the biggest discounts offer the best values.
I'd love to read some research on why consumers are so infatuated with discounts/sales. We've all had friends/spouses boast about buying things on sale; it doesn't make sense to me but it does to most people. I'm very curious about the psychology behind this.
If they really wanted change, they should probably have rebranded completely.
I'm 40 years old and throughout my entire life, JC Penney has represented a pretty consistent image of being a discount store where old people shopped. I don't think anyone (including Steve Jobs) would have been able to modify that image in my mind in a scant 2 years while keeping the brand name, the image is just too entrenched at this point.
This leaves the store in a worst-of-all-worlds position where people who don't currently shop there maintain the decades-old image of what the store used to be while people who did shop there are put off by the changes.
I don't know anything about the retail clothing business but just based off common sense I could have predicted this short-term result based on the half-way measure of trying to redefine an iconic (for better or worse) brand without actually rebranding. Seems pretty obvious, no?
You are spot on. This is hardly a surprise to anyone who has been watching, and I personally just made a little bit of money on my bet he would get fired :) Time to share my understanding. My connection: I used to live off Legacy Drive in the Deerfield neighborhood in Plano and hence have heard some second-hand accounts about his behavior.
If you read anything about this guy's tenure at the company, it becomes apparent he was riding someone else's coattails at Apple and possibly at Target... because all he did was copy org structures from Apple to graft them onto JCP without understanding why or how they worked at Apple. He lacked basic retail understanding and was a typical middle-road MBA pointy-haired boss. I just wish I understood how I could get hired to fail like he and so many other execs do -- the pay is so much better! The joke is clearly on me.
He was no different than a 'Senior dev' copy-pasting a bunch of Stack Overflow Java code in your team's C environment. Guess what, it was convincing at first but doesn't work ("what do you mean C has memory leaks?").
His approach failed for many reasons, but most succinctly the failure is because JCP is a discount brand and Apple is a premium brand. So far our understanding of retail is that premium and discount stores operate differently. He thought he could take premium behaviors and apply them to discounts (in fairness, this is what he took credit for at Target, but having talked to people in MN it seems that credit was JCP PR to explain how he got hired).
My favorite moves from this guy (recalling from memory, apologies for not providing HN-worthy citations):
-- When it became clear JCP was't getting traction with the new promotion structure ('best price' nonsense) last summer he blamed and fired his good friend and longtime colleague who he personally brought to JCP. He had worked with the guy for years, and somehow the execution of a bad idea was the problem. He took no responsibility and charged ahead. Very quietly he started dismantling his bad ideas.
-- He stopped discount sales altogether. At a discounter. Without explaining or convincing others that they would have cheaper prices than competition.
-- He stopped clearance altogether. Most of my purchases at JCP over the years have been from clearance, so people like me had zero reason to step inside the store ever again.
-- He never moved to Plano so he could keep attending church in CA, and he only flew to the HQ 3 days a week (on average). Plano has an equivalent denomination church, and I imagine his CA community would understand the absence. Few people at the company HQ had a chance to talk to him in person. I don't understand how you can turn around a billion-dollar corporation remotely.
-- He encouraged teams not to talk to each other and be secretive, because somehow that led to a better customer experience when everyone was confused. He asked some teams to report directly to him. JCP doesn't build consumer products, they build store layouts and discount structures. The secrecy was stupid when you consider he managed remotely and was a communication point-of-failure. Some 'incubator' teams were allowed full access to disrupt normal operations, and my understanding is that there was quite a bit of friction that led to much lower productivity.
-- The store-within-a-store concept was an udder failure. However, all public reports are that sales/sq-foot were higher in these store-within-a-store and therefore we were to infer a success. The real story is JCP took its best selling items, put them in the innovation, and sure enough they continued to be well-selling. Of course the per-sq-foot space sold better when the best selling items are concentrated. However, sales for the items dropped worse at a store-within-a-store once re-arranged alongside the rest of sales. If you are curious about this pattern in general, you should watch what happens to Best Buy and Samsung with their new store-within-a-store experiment. I personally don't believe retailers should turn themselves into malls :)
-- They had a small layoff where they targeted HQ people who watched too much YouTube. The packet inspection company had a PR-like piece in the WSJ advertising how well it worked to target those shirking employees. The narrative makes sense except the positions eliminated were predominantly _fashion buyers_, who most likely were watching fashion shows and aspiring fashion makers on YouTube because travel budgets had been cut that same year.
-- The Martha Stewart trial is beyond stupid and short-sighted. I think he should have found an up-and-coming who could produce similar quality but CHEAPER products rather than overpay for a has-been brand. There is a reason that Macy's is not giving Martha as much floor space as she expected.
So, this rodeo has been extremely fun to watch, and I sincerely hope the next chapter for James Cash Penny's store is brighter. It is a good company with good people. It should be focused on the founder's values: good value and fair prices.
There is a way to successfully appeal to a broad range of consumers. Target is a master of this. Johnson wasn't or at least felt the scorched earth policy was going to get it done faster.
JCPenney (JCP now?) is SEVERELY lacking a vision. And they have been for years. In my undergrad, I was on the school advertising team competing for NSAC (http://www.aaf.org/default.asp?id=123) and JCPenney was our client. We were tasked with creating a $100,000,000 integrated marketing campaign. All along I knew that this money absolutely did not need to go to a marketing campaign. It needed to go to top-down, business level reinvention. New branding would have to be part of it, obviously, but a culture change inside the company was a lot more necessary.
This was during the time when "New look, new day, who knew?" was their tagline. Which was utter shit when every time you go into a store it looked like it was in shambles, and telling people you had a new look when they could clearly smell the same pile of dung from a block away doesn't increase customers. It was bad.
Then about 4 weeks from competition, they release a new logo and a new tagline (honestly we were rebranding towards a JCP moniker during our ideation phase anyways), basically throwing us under the bus. We had to make something for their rebrand - it had been 10 years since they did anything previously.
It's no surprise to me that anything unconventional was discarded quickly, and Ron was booted. These people are short-term thinkers, that are entrenched with the big-box department discount store mantra. They were getting close with store-in-a-store ideas like MNG by Mango and Sephora taking up space inside. It's just unfortunate that they're so worried about providing discounts and racing to the bottom with cut-rate merchandise (even their self-created brands like St. John's Bay had a ~4% profit margin).
The market is huge, but they are stuck in the stone age.
The point of those mini-stores (store-within-a-store) that make Target so successful is that you can possibly get things that you don't have access to. It brings people looking and those people will hopefully see your other stuff while they are there.
JCPs that are big enough to have a Sephora are typically in a large enough mall that already has a Sephora. What new customers are you getting into your store then? Why go into a JCP if you just need something from Sephora? They are also typically located in the front of the store. Go in, get Sephora, walk out. They don't even see any of your other stuff (although I don't think the Sephora consumer overlaps with the JCP consumer).
Whether his strategy is flawed or not is, unfortunately, not the issue at hand. As great as it would be to discuss the technical merits of what he was trying to achieve, it seems like Johnson's biggest failing was not properly contextualizing what he was trying to do to the company.
For instance, JCP has been rather drastically upgrading the quality of their menswear. They've not only started catering to a much more fashion-oriented consumer (they even brought on Nick Wooster, who was previously at Bergdorf Goodman and Gilt Groupe's high end retail site Park & Bond - http://www.jcpenney.com/dotcom/jsp/browse/marketing/promotio...) but they took a stand that such clothes should be wearable and affordable. It's an audacious, if respectable, goal that anyone should be able to see can't be achieved in a year or two. It took JCrew much longer than that to make a similar transition.
Shareholders should have been very aware that things will get much worse before they get better, as it takes time and conditioning to expunge "bargain basement" from the brain and into something that more closely resembles a homegrown Uniqlo. People gave Johnson credit for doing so at Target but to be fair Target didn't gain traction on the upward move till years after he left. He should have never put himself in a position where people were expecting progress barely a year after taking the reins.
Turning around an entrenched company like JCP is a task that really doesn't follow much of Apple's game plan, and I think Johnson's decade in the tech sector might have spoiled him in estimating customer trends (especially with regards to reconditioning behavior). It's a bummer, as someone into clothes AND tech I feel like the JCP transformation could have been a really great story.
It all comes back to the pricing debacle at the start of his tenure. Getting rid of sales and clearance was just not a good idea: it chased away old customers and didn't bring in many new ones. That drove sales dramatically down at the stores, and when it was reverted, it took away a lot of his credibility.
I think this is an amazing example of an employee who is a bad fit. Ron was clearly a star at Apple but he was a dud at J.C. Penny. There will be lots of arguments about why that is, from classic operational economics to somewhat fuzzier buyer happiness metrics, but the more interesting message is that the problems can't be fixed by swapping out one piece.
This is true in groups too. I've seen groups lose a star player, only to have another 'star' swapped in but with a different vibe and it all goes to hell. This seems to be magnified with CEOs.
I know that I do not have the fortitude that it takes to be successful in a walmart/target/costco kind of retail space. So I wish him luck.
There's nothing left to say except the people who hired Johnson are idiots. He was successful at marketing a high-end brand as high-end and had no clue on how to tactfully re-brand a company that had been around for generations. Especially considering it didn't need to be re-branded.
Do you know why Nike doesn't sell shoes in Target or Walmart? You'd dilute the brand. So they bought Converse. The opposite is true as well, however. You certainly can cause brand confusion where your old customers don't like the changes and your new higher-end customers - well, they are still shopping at Nordstrom.
Every step he made was fraught with clear consequences. Getting rid of discounts. Over-streamlining stores to a point they look partially empty. Trying to bring Target's successful ideas (like their mini-boutiques) into JCP just on a bigger scale. And trying to steal Martha Stewart from Macy's was just plain dumb, that's going to cost the company a lot of money.
The board should've hired a CEO from the ranks of Target, Macy's, or Nordstrom instead of Apple. The high-end tech marketing didn't translate to middle-tier consumer shopping marketing.
Every time my wife drags me into JCPenney, I ask myself the following question: What is this company about?
- Brand recognition (status)? Nope.
- Low Prices? Nope.
- Quality (higher than) products? Nope.
- Cutting edge fashion? Nope.
- Fashion for average folk? Nope.
They are simply without a defined aim. And that's why their business lacks. Retail is still alive and kicking, but not for companies who still live in the days of The Brady Bunch.
I'd say that a lot of Johnson's strategy addressed many of your concerns.
Personally, I shopped more at JCP over the past 8 months than the previous 15 years. There was an appealing mix of brands, quality, and fair prices that struck a chord with me. Unfortunately, it clearly didn't work for the majority of the mall-shopping public that has been trained to only buy when there's a sale or coupon.
I'm not completely up to date on the happenings at JCP, but my understanding was that Ron's strategy was going to take time to be fully realized. I would not be surprised if this is short term thinking getting in the way of a long term strategy. Regardless, JCP shareholders should be very worried since now they've traded a potentially flawed strategy with effectively no strategy at all.
While I'd normally agree that shareholders can't be trusted to make sound long-term strategy decisions, in this case Johnson demolished JCP's financials over the past few quarters.
I think part of the problem is that he had short term changes and long term changes. His long term changes, which include making over the store to have mini-stores in it and new brands, seem to be pretty successful. But his short term changes like getting rid of sales were pretty much complete failures, and caused the sales at the existing stores to drop disastrously.
Honestly, if he had not changed the pricing strategy, he would probably still have a job.
The problem was not that people like discounts more than low prices. It was that the company never got rid of discounts. They advertised new low prices and no discounts and then still had discount racks all over the store, leading customers to recalibrate the goods in their minds as being less expensive (and possibly "cheaper") then before while still allowing them to wait for discounts.
The company also introduced a lot of product lines that were supposed to be specialty brands which led to entire stores looking like disjointed flea markets. There was no way to tell what was unique or special because everything was branded as unique and special.
Dangit. I really liked shopping at the new JCPenny. Every price was rounded to the nearest dollar (and usually the nearest 5 dollar) and included tax. I could walk in, try the things on I needed, hand the cashier exact change, and get out, all without needing to do stupid coupon crap. I could buy jeans and shirts and the cognitive load was really low.
I liked not having to think really hard while clothes shopping. I liked it a lot. But I suppose a target market of "people who hate clothes shopping due to the artificially high cognitive load" is a pretty slim market segment.
I liked what he was trying to do, but he may have been too upscale for what that JC Penny as brand has become. Also the fact that JC Penny was based in Texas is just a bad omen for a company focused on making retail fashion exciting.
I went to JC Penney this past weekend and it was wonderful. I got some jeans and a shirt for like 40 bucks.
They had a coupon though, it was spend 50 get 10 off. I didn't have one and the cashier used the one at the register. She also used an iPhone to ring up up instead of the cash register sitting in front of her.
NPR had a great piece about JC Penney's about a month ago. The reporter, her sources, and the customers she talked with made a very convincing case that in its zeal to attract trendy fashionistas in the coastal cities, it had driven away its long-time customers (mostly middle-aged and older) looking for deals.
He's a one trick pony and clearly out of touch. He doesn't really seem to have any grasp of the market JC Penny was actually in or that discount cheap clothes is a pretty radically different market then high end premium electronics. (further whereas Apple was the sole supplier/manufacturer, JC Penny was just reseller of various brands they picked). Then he executed the one strategy he know that apparently just luckily worked for him at Apple. Sadly, based deeply outside of reality it epically failed to execute as hoped here and JC Penny lost half their market.
The whole thing is a little sad. Thankfully he's gone and maybe for the company's sake they can pull out of his tailspin. If not oh well, that's also what you get for not vetting people and just buying into their PR and dropping a rockstar into the driver seat and giving him the keys without vetting him.
I don't think that's a fair appraisal. He's a smart guy, he tried a bold, risky strategy at JCP that he _thought_ would work well, and it didn't. Sometimes when you take bold risks, you win. Sometimes you lose. I actually don't think one iota less of the guy after this experience - I think he tried and failed and that's fine. The guy should be commended for his effort, despite it's lack of success.
When I shopped for my wedding, I had to convince both my mother and my wife that JCP would have the highest quality at the lowest price. They disagreed, I was proven correct.
Has long amazed me that JCP couldn't brand properly when their other competencies were so strong.
I was absolutely aghast when I first heard what Johnson was doing. It sounded — almost literally — insane, and never for a moment looked or sounded any better. Marketing is marketing. Target and Apple did the marketing for him, so apparently he never really learned what marketing is.
"during his helm as CEO, shares of J.C. Penney have plummeted by 51 percent while the company's market cap dropped from $6.84 billion to $3.49 billion."
I have often said that wholesale website redesigns are a bad idea because they alienate the hardcore fans while swapping one set of problems for a different set of problems. I hadn't, before this, realized that the same might hold true for department stores.
[+] [-] riggins|13 years ago|reply
-Warren Buffett
[+] [-] drewda|13 years ago|reply
[+] [-] siglesias|13 years ago|reply
1)http://cl.ly/image/2y1T1L2M1s0e 2)http://cl.ly/image/1a3D3c1J1Z0I
[+] [-] kyllo|13 years ago|reply
We buy discounted items because discounts tell us which items to buy.
For a given product, there are usually several competing choices, and most people don't have enough time to evaluate whether each one is a good deal for the price it's offered at. So the easiest way to select is to just pick the one that's on sale--or if they're all on sale, pick the one that appears to have the biggest discount relative to the MSRP.
The discount also tells us "you should buy this now, because if you buy it later, the price may go up."
Without this important signal, customers don't really know which one to buy, plus there's no urgency to buy the item now, because it's always that price.
So, while Johnson's approach may have "made sense," and may have worked for Apple products because their market position and product lifecycle makes discounts unnecessary, this strategy really didn't play to consumer psychology, at least in the apparel space.
[+] [-] Kylekramer|13 years ago|reply
After all, isn't not accounting for customers' irrationality in your business also irrational?
[+] [-] jcampbell1|13 years ago|reply
The largest retailer in the world is Walmart, which doesn't really use discounts except to clear inventory, and advertises "always low prices".
American consumerism does love low prices. The problem is that if you play that game, you compete with Walmart and lose.
[+] [-] pslam|13 years ago|reply
I think the more obvious problem is they're a low-margin business at a time where being low-margin is difficult unless you're the biggest guy with the lowest operating costs.
[+] [-] dubya|13 years ago|reply
[+] [-] Shivetya|13 years ago|reply
Comparing them to Sears, Sears practically screams good deal. Its just up to you to figure out if its not. Plus Sears has Craftsman which sets it apart from other Mall retailers. Not sure what JC Penny has.
The only good job I will give them is, of the few sales people I met there they at least would help me. That stood out because in Macy's I was ignored even when I asked - apparently men are not allowed to shop at the mall or certain stores.
[+] [-] nlawalker|13 years ago|reply
[+] [-] smackfu|13 years ago|reply
[+] [-] MatthewPhillips|13 years ago|reply
[+] [-] unknown|13 years ago|reply
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[+] [-] georgemcbay|13 years ago|reply
I'm 40 years old and throughout my entire life, JC Penney has represented a pretty consistent image of being a discount store where old people shopped. I don't think anyone (including Steve Jobs) would have been able to modify that image in my mind in a scant 2 years while keeping the brand name, the image is just too entrenched at this point.
This leaves the store in a worst-of-all-worlds position where people who don't currently shop there maintain the decades-old image of what the store used to be while people who did shop there are put off by the changes.
I don't know anything about the retail clothing business but just based off common sense I could have predicted this short-term result based on the half-way measure of trying to redefine an iconic (for better or worse) brand without actually rebranding. Seems pretty obvious, no?
[+] [-] yajoe|13 years ago|reply
If you read anything about this guy's tenure at the company, it becomes apparent he was riding someone else's coattails at Apple and possibly at Target... because all he did was copy org structures from Apple to graft them onto JCP without understanding why or how they worked at Apple. He lacked basic retail understanding and was a typical middle-road MBA pointy-haired boss. I just wish I understood how I could get hired to fail like he and so many other execs do -- the pay is so much better! The joke is clearly on me.
He was no different than a 'Senior dev' copy-pasting a bunch of Stack Overflow Java code in your team's C environment. Guess what, it was convincing at first but doesn't work ("what do you mean C has memory leaks?").
His approach failed for many reasons, but most succinctly the failure is because JCP is a discount brand and Apple is a premium brand. So far our understanding of retail is that premium and discount stores operate differently. He thought he could take premium behaviors and apply them to discounts (in fairness, this is what he took credit for at Target, but having talked to people in MN it seems that credit was JCP PR to explain how he got hired).
My favorite moves from this guy (recalling from memory, apologies for not providing HN-worthy citations):
-- When it became clear JCP was't getting traction with the new promotion structure ('best price' nonsense) last summer he blamed and fired his good friend and longtime colleague who he personally brought to JCP. He had worked with the guy for years, and somehow the execution of a bad idea was the problem. He took no responsibility and charged ahead. Very quietly he started dismantling his bad ideas.
-- He stopped discount sales altogether. At a discounter. Without explaining or convincing others that they would have cheaper prices than competition.
-- He stopped clearance altogether. Most of my purchases at JCP over the years have been from clearance, so people like me had zero reason to step inside the store ever again.
-- He never moved to Plano so he could keep attending church in CA, and he only flew to the HQ 3 days a week (on average). Plano has an equivalent denomination church, and I imagine his CA community would understand the absence. Few people at the company HQ had a chance to talk to him in person. I don't understand how you can turn around a billion-dollar corporation remotely.
-- He encouraged teams not to talk to each other and be secretive, because somehow that led to a better customer experience when everyone was confused. He asked some teams to report directly to him. JCP doesn't build consumer products, they build store layouts and discount structures. The secrecy was stupid when you consider he managed remotely and was a communication point-of-failure. Some 'incubator' teams were allowed full access to disrupt normal operations, and my understanding is that there was quite a bit of friction that led to much lower productivity.
-- The store-within-a-store concept was an udder failure. However, all public reports are that sales/sq-foot were higher in these store-within-a-store and therefore we were to infer a success. The real story is JCP took its best selling items, put them in the innovation, and sure enough they continued to be well-selling. Of course the per-sq-foot space sold better when the best selling items are concentrated. However, sales for the items dropped worse at a store-within-a-store once re-arranged alongside the rest of sales. If you are curious about this pattern in general, you should watch what happens to Best Buy and Samsung with their new store-within-a-store experiment. I personally don't believe retailers should turn themselves into malls :)
-- They had a small layoff where they targeted HQ people who watched too much YouTube. The packet inspection company had a PR-like piece in the WSJ advertising how well it worked to target those shirking employees. The narrative makes sense except the positions eliminated were predominantly _fashion buyers_, who most likely were watching fashion shows and aspiring fashion makers on YouTube because travel budgets had been cut that same year.
-- The Martha Stewart trial is beyond stupid and short-sighted. I think he should have found an up-and-coming who could produce similar quality but CHEAPER products rather than overpay for a has-been brand. There is a reason that Macy's is not giving Martha as much floor space as she expected.
So, this rodeo has been extremely fun to watch, and I sincerely hope the next chapter for James Cash Penny's store is brighter. It is a good company with good people. It should be focused on the founder's values: good value and fair prices.
[+] [-] Zimahl|13 years ago|reply
Too much, too fast for the JCP core consumer.
[+] [-] argonaut|13 years ago|reply
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[+] [-] bennyg|13 years ago|reply
This was during the time when "New look, new day, who knew?" was their tagline. Which was utter shit when every time you go into a store it looked like it was in shambles, and telling people you had a new look when they could clearly smell the same pile of dung from a block away doesn't increase customers. It was bad.
Then about 4 weeks from competition, they release a new logo and a new tagline (honestly we were rebranding towards a JCP moniker during our ideation phase anyways), basically throwing us under the bus. We had to make something for their rebrand - it had been 10 years since they did anything previously.
It's no surprise to me that anything unconventional was discarded quickly, and Ron was booted. These people are short-term thinkers, that are entrenched with the big-box department discount store mantra. They were getting close with store-in-a-store ideas like MNG by Mango and Sephora taking up space inside. It's just unfortunate that they're so worried about providing discounts and racing to the bottom with cut-rate merchandise (even their self-created brands like St. John's Bay had a ~4% profit margin).
The market is huge, but they are stuck in the stone age.
[+] [-] Zimahl|13 years ago|reply
JCPs that are big enough to have a Sephora are typically in a large enough mall that already has a Sephora. What new customers are you getting into your store then? Why go into a JCP if you just need something from Sephora? They are also typically located in the front of the store. Go in, get Sephora, walk out. They don't even see any of your other stuff (although I don't think the Sephora consumer overlaps with the JCP consumer).
[+] [-] colbyh|13 years ago|reply
For instance, JCP has been rather drastically upgrading the quality of their menswear. They've not only started catering to a much more fashion-oriented consumer (they even brought on Nick Wooster, who was previously at Bergdorf Goodman and Gilt Groupe's high end retail site Park & Bond - http://www.jcpenney.com/dotcom/jsp/browse/marketing/promotio...) but they took a stand that such clothes should be wearable and affordable. It's an audacious, if respectable, goal that anyone should be able to see can't be achieved in a year or two. It took JCrew much longer than that to make a similar transition.
Shareholders should have been very aware that things will get much worse before they get better, as it takes time and conditioning to expunge "bargain basement" from the brain and into something that more closely resembles a homegrown Uniqlo. People gave Johnson credit for doing so at Target but to be fair Target didn't gain traction on the upward move till years after he left. He should have never put himself in a position where people were expecting progress barely a year after taking the reins.
Turning around an entrenched company like JCP is a task that really doesn't follow much of Apple's game plan, and I think Johnson's decade in the tech sector might have spoiled him in estimating customer trends (especially with regards to reconditioning behavior). It's a bummer, as someone into clothes AND tech I feel like the JCP transformation could have been a really great story.
[+] [-] smackfu|13 years ago|reply
[+] [-] ChuckMcM|13 years ago|reply
This is true in groups too. I've seen groups lose a star player, only to have another 'star' swapped in but with a different vibe and it all goes to hell. This seems to be magnified with CEOs.
I know that I do not have the fortitude that it takes to be successful in a walmart/target/costco kind of retail space. So I wish him luck.
[+] [-] Zimahl|13 years ago|reply
Do you know why Nike doesn't sell shoes in Target or Walmart? You'd dilute the brand. So they bought Converse. The opposite is true as well, however. You certainly can cause brand confusion where your old customers don't like the changes and your new higher-end customers - well, they are still shopping at Nordstrom.
Every step he made was fraught with clear consequences. Getting rid of discounts. Over-streamlining stores to a point they look partially empty. Trying to bring Target's successful ideas (like their mini-boutiques) into JCP just on a bigger scale. And trying to steal Martha Stewart from Macy's was just plain dumb, that's going to cost the company a lot of money.
The board should've hired a CEO from the ranks of Target, Macy's, or Nordstrom instead of Apple. The high-end tech marketing didn't translate to middle-tier consumer shopping marketing.
[+] [-] zacharypinter|13 years ago|reply
http://www.npr.org/blogs/money/2013/03/08/173829409/episode-...
[+] [-] helper|13 years ago|reply
It takes a long time to change the image of a brand. Alienating your old customers before you have gotten new ones is a strategy for failure.
[+] [-] orangethirty|13 years ago|reply
- Brand recognition (status)? Nope.
- Low Prices? Nope.
- Quality (higher than) products? Nope.
- Cutting edge fashion? Nope.
- Fashion for average folk? Nope.
They are simply without a defined aim. And that's why their business lacks. Retail is still alive and kicking, but not for companies who still live in the days of The Brady Bunch.
[+] [-] nathos|13 years ago|reply
Personally, I shopped more at JCP over the past 8 months than the previous 15 years. There was an appealing mix of brands, quality, and fair prices that struck a chord with me. Unfortunately, it clearly didn't work for the majority of the mall-shopping public that has been trained to only buy when there's a sale or coupon.
[+] [-] pclark|13 years ago|reply
[+] [-] gfodor|13 years ago|reply
[+] [-] nathos|13 years ago|reply
[+] [-] smackfu|13 years ago|reply
Honestly, if he had not changed the pricing strategy, he would probably still have a job.
[+] [-] iamabraham|13 years ago|reply
The company also introduced a lot of product lines that were supposed to be specialty brands which led to entire stores looking like disjointed flea markets. There was no way to tell what was unique or special because everything was branded as unique and special.
[+] [-] pmb|13 years ago|reply
I liked not having to think really hard while clothes shopping. I liked it a lot. But I suppose a target market of "people who hate clothes shopping due to the artificially high cognitive load" is a pretty slim market segment.
[+] [-] michaelpinto|13 years ago|reply
[+] [-] rsuttongee|13 years ago|reply
[+] [-] emehrkay|13 years ago|reply
They had a coupon though, it was spend 50 get 10 off. I didn't have one and the cashier used the one at the register. She also used an iPhone to ring up up instead of the cash register sitting in front of her.
[+] [-] ilamont|13 years ago|reply
Found it: http://www.npr.org/blogs/money/2013/03/01/173203739/sales-ar... (I recommend listening to the audio, which has more detail)
[+] [-] mindstab|13 years ago|reply
The whole thing is a little sad. Thankfully he's gone and maybe for the company's sake they can pull out of his tailspin. If not oh well, that's also what you get for not vetting people and just buying into their PR and dropping a rockstar into the driver seat and giving him the keys without vetting him.
[+] [-] nlh|13 years ago|reply
[+] [-] nell|13 years ago|reply
He clearly made a mistake at JCP. That doesn't make all his previous successes invalid or luck.
[+] [-] bpm140|13 years ago|reply
JCP stands a better shot at dominating the "discount" market, which everyone associates it with, than combating half a century of marketing.
[+] [-] MartinCron|13 years ago|reply
[+] [-] QuantumGood|13 years ago|reply
Has long amazed me that JCP couldn't brand properly when their other competencies were so strong.
I was absolutely aghast when I first heard what Johnson was doing. It sounded — almost literally — insane, and never for a moment looked or sounded any better. Marketing is marketing. Target and Apple did the marketing for him, so apparently he never really learned what marketing is.
[+] [-] DannoHung|13 years ago|reply
[+] [-] nnethercote|13 years ago|reply
No board will put up with that.
[+] [-] MartinCron|13 years ago|reply