We bet the board of J.C. Penney thought they were being too cool for school by bringing in a guy from Apple to be their new CEO. Well, as Derek Zoolander once said: “I’ve got a news flash for you, Walter Cronkite. You aren’t.”
Apple-Certified Genius Ron Johnson (former Senior VP of retail – but how hard was it to sell Steve’s iPods, really?) came on board at Penney in November 2011, replacing Myron Ullman, thanks to the efforts of board member Bill Ackman, who wanted to shake things up. Johnson got over $50 million but also effectively contributed just as much of his own personal cash and stock stash when taking the job. He brought along some other Apple-heads like Michael Kramer, who he made COO.
Johnson almost immediately rebranded J.C. Penney (“JCP” in da hizzy!), hired Ellen DeGeneres as spokeswoman, and jettisoned the company’s coupon strategy, which apparently was to shower the world in coupons and offer “sales” 24/7.
“Steve would have called this insanity,” Mr. Johnson said of the sheer volume of promotions. “At some point you, as a brand, just look desperate. JC Penney spent over $1 billion and the customer didn’t even pay attention.”
Well… maybe they did. Because sales at JCP fell 25% last year and the stock, which was trading at 43 in early Feb 2012 has lost over half its value.
How did Johnson screw this up?
- He jumped into the pool head-first without checking to see if there was any water in it. Staged roll-outs? Limited testing? That’s for chumps
- He assumed JCP’s customer base were sick of clipping coupons and would look at actual cost and quality when making their purchasing decisions instead of buying anything because of a Pavlovian response to “75% off” signs.
He assumed wrong. Middlebrows are coupon-clipping legion.
- He abandoned the existing customer base (old people) and tried to replace them with a new, “savvier” base (young people). He signed up hip lines like Joe Fresh and Jonathan Adler without promoting them to their target audience, so of course nobody got the message. (Maybe he forgot to text message them?)
- He didn’t fix the stupid website (which actually redirects to an internal path called “dotcom”), despite cranking out the fourth-highest spending of all Google AdWords customers (per SpyFu). Seriously?
- He never even bothered to move from California, just taking a private jet to Plano a few days a week. “Oh, I’m CEO? Do I really need to come in? Can’t I just work from home?”
So Johnson is out and – what do ya know – Ullman is back (probably nobody else wanted the job). And now he’ll have to try to put the pieces of J.C. Penney back together. This will include settling the court battle with Macy’s over the Martha Stewart fiasco and figuring out how much of Johnson’s changes to keep. With even Forbes making suggestions like “Revitalize Liz Claiborne merchandise,” we’re expecting everything old to be new again, to see if the middlebrows who have trekked off to Kohl’s can be lured back to JCP. A lot of contracts with the newer, hipper shops are already in place so it may not be possible for that new merchandise to be removed from the floor so quickly, but one thing’s for sure – we bet coupons will be back.