Johnson’s Step Down at JCP Not a Surprise

ron-johnson-headshotWhen news broke that J.C. Penney’s Ron Johnson was stepping down from his post of less than two years as CEO, no one was surprised.

“He may very well be known as the guy who put them out of business,” said Robert Pasikoff, founder and president at Brand Keys, Inc.

As soon as Johnson replaced Myron E. Ullman III in late 2011 (Ullman has since regained his old post as CEO), he had trouble finding his footing. The former Apple leader started making major changes to the struggling retailer including a new chain-wide approach to pricing, promotion, merchandising, floor layout, and the customer experience.

Johnson shakes up did very little to attract a new audience, in fact, it seemed to backfire in the eyes of customer engagement. In a nutshell, Pasikoff said, Johnson attempted to change the JCP brand overnight. “That was his first mistake,” he said.

Those changes could be the death for JCP; the retail is now facing sinking sales and plummeting stock.  In fact, the company’s total sales dropped 24.8% and its ecommerce sales decreased 33%, in Johnson’s first year alone.

With a retail institution like JCP, who has always been known for their discounts, store layouts, and coupons, brand loyalty is key. Any drastic changes made suddenly can throw off your client based and that is exactly what happened here, according to Stuart M. Rose, managing director, at Tully & Holland, Inc.

“One thing that multichannel merchants know all too well is that you need to test your decisions first,” Rose said.

Johnson, Rose said, should have tested new pricing strategies and store layouts in different regions before going national in order to see how customers responded, what worked and what failed.

“This is a lesson for everyone about testing,” Rose said.

When asked what it means to have Ullman back as CEO at JCP, Rose said, “I think it’s a sign of desperation.”

“J.C. Penney needed something new and fresh when he was leading it the first time and this time around they need to do more than just bring it back to the old way,” Rose said.

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