Ron Johnson's 5 biggest mistakes at J.C. Penney
The former CEO came into a bad situation and made it worse. He was tone-deaf to customer wishes and too bold with big decisions.
Such was the case with Ron Johnson of J.C. Penney (JCP), who stepped down Monday after his board turned on him. Johnson was only on the job for about 18 months, and the fact that he lost the gig so quickly means that either the board lost patience unusually fast or that Johnson simply went about it all wrong.
It was probably both.
Johnson had a pretty good plan. But it was the way he executed that plan that seemed to imperil him. With the clearer vision that hindsight usually provides, here's a look at Johnson's five biggest mistakes at J.C. Penney:
1. His price strategy was all wrong. Johnson tried a tiered-pricing structure that confused customers. He moved away from the coupons and discount model of the past, pushing "everyday low prices" that didn't seem all that low. Harvard Business Review states the issue eloquently: "A lesson for all businesses is when selling commodity-like products, unless customers believe you have the lowest prices all of the time, you routinely have to offer deep discounts."
2. He was too confident in his vision. Testing, schmesting. Johnson wanted a bold and unique retail presence, with stores filled with mini-shops carrying items you couldn't find anywhere else. He didn't test these new concepts -- or the new pricing -- enough before ordering a large-scale makeover.
3. He didn't respect the customers. Johnson forced new advertising on shoppers that they didn't necessarily like. He didn't respond quickly enough when customers resisted his changes. Penney's once-loyal customer base felt abandoned.
4. He didn't seem committed. Previous CEOs worked hard in the office and lived nearby. But Johnson reportedly had J.C. Penney's private jets fly him in each week from his home in Palo Alto, Calif. He reportedly stayed at the Dallas Ritz-Carlton, which has suites for $3,000 to $5,000 per night. He seemed like a drive-by CEO with little commitment to the job.
5. He didn't seem to like J.C. Penney. Johnson spent all of his time turning J.C. Penney into something it was not. Was there anything about the old J.C. Penney that he even liked or respected?
- J.C. Penney's CEO steps down
He also did not respect his employees. Morale took a huge hit.
I am of the firm belief (after spending 30 + years in management and not at Jcpenney) that employees who are treated with respect and who's ideas are sought out, will do everything to "make the boss look good".
He also lost the concept of service to the customer. Staff has been so drastically cut that there are not enough employees to assist customers in the stores.
As a long time Penneys shopper.....I had a problem with this new CEO...Most of my favorite items were no longer available.....so I haven't shopped there in months.....I will play the waiting game and see if it returns to My Penneys of the past......Loved it ....hopefully it isn't lost forever.....
It's all about people. Top management must realize that their greatest asset are the employees dealing with the money spending public. Circuit City found that out so too has the remaining top management at JC Penney. Do you think they are smart enough to realize and accept this basic fact?
There are a lot of JC Penney clothes hanging in my closet. I've stayed away from them for the past 2 years, but, I'll come back if they get their act together!
Our little town has a JC Penny, a Sears, a Nordstrom and a Kohls. When you go into any of the first three stores, the first thing you note is there are no customers strolling the isles. When you go to Kohls the first thing you note is that it is packed with customers. I don't know about the Kohls stores in other towns but the one in our town sells great merchandise at very reasonable prices, plus they give some pretty hefty discounts.
This situation really befuddles me. Why can't the management of Penny's, Sears, or Nordstorm develop a business plan similar to Kohls???? It seems to be such a simple idea. Hey upper management, take some time out from the golfing to walk the isles of Kohls, see whats going on, go back to your store and modify your current and unsuccessful plan so it parallels that of a succesful plan. Use that business degree you got for something other than a door mat.
I know people who work there and they were made to feel that they were not inportant to the company. They were treated very poor the last year or so. I hope they change and RESPECT there employees. I agree with Old ref's comments
Overall, they changed the concept of their customer, I realize they were targeting the pre-teen to college age consumer, because of the spendable cash available to them, however, this is the most competitve $ in the marketplace. It doesn't mean a business needs to cater exclusively to the adults in society, but face it, we are more likely to have brand loyalty. There is no such thing in the modern instant gratification twitter world. Adults look for quality products to complete their homes, linens, dishware, bedding. window coverings... grownups looking for well made clothing that is a little trendy but classic enough to wear a couple of seasons, young families look for infant and toddler items.
How many t-shirts and jeans can a store survive on ? But the biggest mistake in JCP, is failing to train their associates in the fine art of customer service. RECOGNIZE a good employee and reward accordingly. Place incentives for associates to be better at customer service and for pitys' sake don't make a customer walk all over the damn store to hunt down someone to take they money !
I was appalled when I went into J.C. Penney's in my home town of Texarkana, Texas and found that many of the employees that I had dealt with over the years had been let go. When you have valuable and loyal employees they are an asset to your company and should be treated as such. I know that I am not the only one in our town that feels that way either. When I pass by the parking lot in and around J.C. Penney's it is empty even on the weekends. The new employees hired have definitely not been trained on customer service. They make no eye contact and no effort to help you find a thing. The clothes I have looked at in Penney's are not the same quality that I was use to seeing in there stores either. I could always find something I liked while shopping and now it seems like that is a thing of the past as well. I am also smart enough to know that you cannot blame all of this on one man. You know that he had to answer to someone higher up than him and they are just as accountable for the stores unfortunate mistakes in my book. I use to really love shopping at JCP and I truly hope they can turn it around.
In the end, I think he ended up the winner if he got a big payout to leave. That's why he wasn't committed; he knew if he got the boot that he would get $$$ either way.
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