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Former Apple retail chief presides over JC Penney's lowest sales in 20 years

post #1 of 49
Thread Starter 
JC Penney Chief Executive Ron Johnson, who formerly ran Apple's retail business, is under fire after overseeing the company's lowest sales in more than two decades.

The department store chain reported this week that its net loss in the quarter ending Feb. 2 was $552 million, up from a loss of $87 million a year ago, according to Bloomberg. JC Penney's annual revenue was $13 billion, its lowest since 1987 and half that of competitor Macy's.

Johnson JCP
Ron Johnson at JC Penney's 'fresh air' event. | Source: JCPenney


Johnson admitted to investors that he had "made some big mistakes" in his tenure as CEO, which began in November of 2011. In particular, Johnson spearheaded a new strategy that replaced coupons and sales with "Every Day" low prices.

In a change of course, customers are now being sent more coupons and discounts to drive traffic, while promotions for holidays and events such as Valentine's Day and back-to-school season have been reimplemented.JC Penney's $13 billion in annual revenue was its lowest since 1987 and half that of competitor Macy's.

StorefrontBacktalk notes that, during the company's quarterly conference call, Johnson said that all JCPenney associates would be getting iPod touches for point-of-sale operations.

"Every employee on the floor of a JCPenney store will carry an iPod and be able to check out customers any time and anywhere in the store," Johnson said. "Last week, 25 percent of all transactions were conducted on a mobile device. And this quarter, we will start to feed product information, training, and all of our employee systems directly to employees through our in-store Wi-Fi networks on these iPods."

Johnson found himself quickly scrutinized once he took over JC Penney, implementing changes such as a new pricing model and store-within-a-store concepts. Johnson's changes were criticized for reducing foot traffic in JC Penney's stores.

Johnson's struggles at JC Penney stand in contrast to his tremendous success at Apple, where he spearheaded the Mac maker's retail initiative. Apple Chief Executive Tim Cook currently views the company's heavily trafficked retail stores as the "face" of the company.

"There's no better place to discover, explore and learn about our products than in retail," Cook said earlier this month at the Goldman Sachs Technology and Internet Conference. "Our team members there are the most amazing, awesome, incredible people on Earth. It's the best retail experience, it's an experience where you walk in and instantly realize it's for the purpose of serving, not selling."
post #2 of 49
Quote:
Originally Posted by AppleInsider View Post


"Every employee on the floor of a JCPenney store will carry an iPod and be able to check out customers any time and anywhere in the store," Johnson said. 

 

 

I think it might have been the double-entendres that did him in. 

post #3 of 49
Good thing he left Apple, otherwise all of those smart stock analysts would be blaming him for the decline in stock price and that Apple is doomed. The JCP thing doesn't appear to have been a smart career move in hindsight. Apple is still looking for his replacement, maybe he can come back home?
post #4 of 49

It's a real shame that Johnson's vision isn't catching on. It says a lot about the rationality, or lack thereof, of consumers. He took all the guesswork out of shopping: no coupons, no worrying that something will go on sale tomorrow, no excessive markups followed by extreme markdowns to give the appearance of "a good deal"... just honest, everyday low prices. I love it.

 

You can get a nice dress shirt from JCP for $20. You go into Kohl's and can find the same shirt marked at $80.... plus 50% markdown... plus an additional 25% markdown... plus $10 in Kohl's cash and you walk out of Kohl's paying $20 for the shirt. It's sad that consumers enjoy this game mark-ups and mark-downs and honestly feel that the shirt from Kohl's is a better bargain than the one from JCP.

 

I refuse to shop at stores like Kohl's and Boston Store where I have hunt down the sales and the coupons and the e-mail clubs. I support stores like JCP because they have no-hassle low prices and EVERY customer enjoys the same prices. But, if consumers would rather cut coupons, browse the weekly ads, and open store credit cards to pay the same price that they would at stores like JCP, what can you do?

post #5 of 49
Quote:
Originally Posted by AZREOSpecialist View Post

Good thing he left Apple, otherwise all of those smart stock analysts would be blaming him for the decline in stock price and that Apple is doomed. The JCP thing doesn't appear to have been a smart career move in hindsight. Apple is still looking for his replacement, maybe he can come back home?


Apple doesn't hire losers.  1wink.gif

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post #6 of 49
Johnson's mistakes have been fascinating, especially the failure of pricing simplification. Apparently customers want to be manipulated by "sales" instead of knowing the price will be a fair deal no matter when they go.
post #7 of 49
The problem is customers expect JCP to be a "always on-sale" discount type of store, but he's applying the Apple store premium retail mentality to it. That's going to be tough, if not impossible.
post #8 of 49
It's an interesting case study for sure.

We may never know, but is it really a failure? Or did he pull JCP out of an even worse nose dive and nobody else could have done better? Maybe the changes will catch on in time? I for one like his simple pricing plan, but at best, it hasn't been successfully marketed. It never hit you in the face in their ads or in their stores, and maybe it needed to. At worst, the market will just never accept that system!

All I can say is that my local JCP is awful. Clueless staff, nowhere to be found. Sometimes I've been unable to find an attended cash register! Reminds me of like Circuit City.
post #9 of 49
I used to always buy all of my underwear at JCPenney. However, after his changes the price was more than it used to be under their "sales", which in fact were going on 98% of the time.

Then they went ahead and discontinued all of the store brand styles that I used to buy, replacing them with Fruit of the Loom. If I want to buy Fruit of the Loom, I can just buy it online and find the cheapest price. I don't need to go to JCPenney. So, Ron Johnson has lost my purchases and I no longer go to his stores, where I would often make other impulse purchases while I happened to be there.
post #10 of 49

Apple didn't like John Browett. 

 

JCP isn't a good fit for Ron Johnson.

 

Apple needs a retail SVP.

 

Everybody swallow their pride and restore balance to the Force! 

post #11 of 49

JC Penny is just a bad name. Tough rebuilding a brand when the name sounds like it is stuck in the 1900s. The new modern minimalist approach is completely lost on the typical low budget bargain hunter. Even though the logo looks better now, the brand just doesn't have the panache of Macy's or Nordstrom.

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post #12 of 49
Quote:
Originally Posted by BrianCPA View Post

It's a real shame that Johnson's vision isn't catching on. It says a lot about the rationality, or lack thereof, of consumers. He took all the guesswork out of shopping: no coupons, no worrying that something will go on sale tomorrow, no excessive markups followed by extreme markdowns to give the appearance of "a good deal"... just honest, everyday low prices. I love it.

 

You can get a nice dress shirt from JCP for $20. You go into Kohl's and can find the same shirt marked at $80.... plus 50% markdown... plus an additional 25% markdown... plus $10 in Kohl's cash and you walk out of Kohl's paying $20 for the shirt. It's sad that consumers enjoy this game mark-ups and mark-downs and honestly feel that the shirt from Kohl's is a better bargain than the one from JCP.

 

I refuse to shop at stores like Kohl's and Boston Store where I have hunt down the sales and the coupons and the e-mail clubs. I support stores like JCP because they have no-hassle low prices and EVERY customer enjoys the same prices. But, if consumers would rather cut coupons, browse the weekly ads, and open store credit cards to pay the same price that they would at stores like JCP, what can you do?

I admire his vision but he's finding out people aren't willing to give up their coupons.  And the store transformation is taking too long.  I was in a JCP a few weeks ago and the store was complete garbage.  Only one shop completed - Levi's.  Everything else was the old JCP - racks and racks of ugly clothes.

post #13 of 49
Great article. This is proof positive why Apple is losing to Samsung if Apple's ex employee can't turn JCP around. I can really appreciate how insightful this news is and how relevant it is to Apple rumors. Can we infer that there will be an Apple branded Fruit of the Loom underwear soon made with touchscreen glass?
post #14 of 49
Ron Johnson was able to build the retail stores from scratch at Apple. At JCP he's trying to convert hundreds of dilapidated stores all at once while alienating almost his entire customer base.

He should have started off with a dozen stores in Texas and then built it out several at a time.
post #15 of 49

I think that the worlds retail system is a complete mess and sadly Mr Johnson cannot fix a broken market with one retail chain.

 

I work for a well known insurance company, the insurance industry is in many way broken in a similar fashion. Large discounts are given to new customers to entice them in whereas existing customers foot the bill of new customers' low premiums, loyal customers with good low claim history should have preferred rates, but this is not what happens.

 

No Insurance company can afford to change the way that business is done because all of their competitors will still offer cheap new business.

 

It's the same as JC Penny, the new pricing model makes sense, it's not confusing and benefits the customer. Sadly all of their competitors are still doing things the wrong way by throwing vouchers and non genuine offers at their customers.

 

Retail is broken and no one is going to be able to fix it, well unless the governments step in around the world which is not going to happen.

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post #16 of 49
Originally Posted by 512ke View Post
This is proof positive why Apple is losing to Samsung if Apple's ex employee can't turn JCP around.

 

I'd ask you to explain how this makes any sense or contains any truth, but I know you can't.

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post #17 of 49
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Originally Posted by island hermit View Post


Apple doesn't hire losers.  1wink.gif

 

BS.

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post #18 of 49
Ron's vision & transformation isn't complete yet. Check out Ken Segall's blog entry on this at http://kensegall.com/2013/02/meanwhile-over-at-ron-johnsons-place/

However, having said that, Ron has a VERY TOUGH ROAD ahead of him, because JCP customers are a combination of both the cheapest people & the poorest citizens in America. This is completely the opposite of the demographic for Apple.

I'm not sure if applying the mindset of "high quality products & high quality experience" will ever resonate with people who can't afford -- or won't pay for -- such quality.
post #19 of 49
Quote:
Originally Posted by Rogifan View Post

I admire his vision but he's finding out people aren't willing to give up their coupons.  And the store transformation is taking too long.  I was in a JCP a few weeks ago and the store was complete garbage.  Only one shop completed - Levi's.  Everything else was the old JCP - racks and racks of ugly clothes.

 

I can partially agree with you here. There are some real dumps out there. The store in my college town was disgusting. 

 

The store by me now is a new build and I really like it. I feel like I'm walking into a top-notch store and then I see $10-$20 articles of clothing. Maybe that's the problem here: too many old, out-dated stores.

post #20 of 49
Quote:
Originally Posted by scotty321 View Post

Ron's vision & transformation isn't complete yet. Check out Ken Segall's blog entry on this at http://kensegall.com/2013/02/meanwhile-over-at-ron-johnsons-place/

However, having said that, Ron has a VERY TOUGH ROAD ahead of him, because JCP customers are a combination of both the cheapest people & the poorest citizens in America. This is completely the opposite of the demographic for Apple.

I'm not sure if applying the mindset of "high quality products & high quality experience" will ever resonate with people who can't afford -- or won't pay for -- such quality.

 

 

That's for sure, he took on an incredible task. He's staring in the opposite direction than he was at Apple. At Apple it was top looking down, at JCP it's from down below looking up. The guy doesn't shirk from a challenge. People forget that creating a revolutionary store for Apple was not a slam dunk but any means and he often had to fight Steve Jobs to get his way. Being saddled with a lot of large, tired store spaces with cheap, non-distinctive merchandise sounds like a job from hell to me.

 

I recall when I heard of Rons move to Pennys - I didn't know that they were still in business!

post #21 of 49
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Originally Posted by godrifle View Post

 

BS.


Is that code for Sergey Brin...

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post #22 of 49

Ron is a wealthy guy who could have chosen to not work and instead sip margaritas in the Bahamas. Good for him for taking on this challenge, even if it fails.

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post #23 of 49
Oh Ron Johnson. Oooooh Rooon Jooooohnson.

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post #24 of 49

The mothership is calling you back, Ron.

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post #25 of 49
Quote:
Originally Posted by Magic_Al View Post

Johnson's mistakes have been fascinating, especially the failure of pricing simplification. Apparently customers want to be manipulated by "sales" instead of knowing the price will be a fair deal no matter when they go.

 

I don't think his ideas were a failure, just the timing. He tried to do too much too fast. Had he trimmed down the flyers or at least the promos in them, the coupons etc a little at a time over 2-3 years folks wouldn't have noticed things were different and rebelled as much. Not really the Apple way, which doesn't fear radical change but he's not at Apple. In fact I'd say he might have committed the same sin as Browett -- trying to conform the company to his ideas, particularly on day one, rather than conforming his ideas to the company and working from there.

 

That said, this has nothing to do with Apple and should be backpage on even a subsection of the forum with no 'blog' entry at best. This is APPLEinsider and not WHERERETHEYTHATUSEDTOBEATAPPLEinsider after all

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post #26 of 49

This just shows, it's not all about the individual. The success to a business/vision depends on so many interrelated things, like the leadership, the business itself, market, timing, etc. Johnson can be brilliant, but that doesn't guarantee success, especially at an outlet such as JC Pennys. Maybe it just goes to show that he gave shoppers there too much credit- they preferred all the bullshit coupons, etc instead of the pricing clarity and simplicity he presented. 

post #27 of 49
Quote:
Originally Posted by Tallest Skil View Post

I'd ask you to explain how this makes any sense or contains any truth, but I know you can't.

Why ask if you wouldn't believe it anyway?
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #28 of 49
Quote:
Originally Posted by island hermit View Post


Is that code for Sergey Brin...

Apple hired Brin? Makes sense. They have something in common - glass, albeit for different applications.
post #29 of 49
Quote:
Originally Posted by Slurpy View Post

This just shows, it's not all about the individual. The success to a business/vision depends on so many interrelated things, like the leadership, the business itself, market, timing, etc. Johnson can be brilliant, but that doesn't guarantee success, especially at an outlet such as JC Pennys. Maybe it just goes to show that he gave shoppers there too much credit- they preferred all the bullshit coupons, etc instead of the pricing clarity and simplicity he presented. 

This actually makes sense. Sometimes brand makes the man and sometimes the other way. Johnson thought he made Apple Stores a retail brand to contend with. But he's learning it was the other way around.
post #30 of 49
Quote:
Originally Posted by battiato1981 View Post


That's for sure, he took on an incredible task. He's staring in the opposite direction than he was at Apple. At Apple it was top looking down, at JCP it's from down below looking up. The guy doesn't shirk from a challenge. People forget that creating a revolutionary store for Apple was not a slam dunk but any means and he often had to fight Steve Jobs to get his way. Being saddled with a lot of large, tired store spaces with cheap, non-distinctive merchandise sounds like a job from hell to me.

I recall when I heard of Rons move to Pennys - I didn't know that they were still in business!

So, your point is? That you are totally out of the loop?
post #31 of 49

In some ways what he appears to be doing is what Banana Republic did a couple of decades ago.  Some of you won't know this, but Banana Republic stores once were huge sprawling mall spaces filled with piles and piles of cheaply made safari themed clothing.  They had catalogues like J. Peterman filled with fake stories of clothing adventures.  The store I went to at the Houston Galleria was a maze of a place.  Then the GAP bought the chain and BR underwent a sort of minimalist change of life and all that junk was gone.  Enter sleek stores with sparsely stocked shelves and lots of simple, upscale garments for skinny people.

 

Johnson seems to be attempting a version of this with JCP.  It seems like a good idea, but it surely will take a long time to accomplish.  Patience is not something typically possessed by shareholders.

post #32 of 49
Quote:
Originally Posted by acslater017 View Post

Apple didn't like John Browett. 

JCP isn't a good fit for Ron Johnson.

Apple needs a retail SVP.

Everybody swallow their pride and restore balance to the Force! 

That was my first thought too. I'd suggest blindfolds and an exchange at midnight in the middle of a bridge somewhere.
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post #33 of 49
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Originally Posted by ankleskater View Post


Apple hired Brin? Makes sense. They have something in common - glass, albeit for different applications.


Naw... I just had to reply with something just as stupid as the comment given.

 

If someone is going to reply with a serious "BS" to a comment that was made in jest then one would hope they would at least give a few examples of the losers Apple (II)* has hired over the last few years.

 

* Apple I - 1977 - 1996

 

  Apple II - 1997 - present

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post #34 of 49
Quote:
Originally Posted by island hermit View Post


Naw... I just had to reply with something just as stupid as the comment given.

If someone is going to reply with a serious "BS" to a comment that was made in jest then one would hope they would at least give a few examples of the losers Apple (II) has hired over the last few years.

Some people seem to be unable to spot humor when it smacks them in the eye! Perhaps we need a /h tag for them?
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Been using Apple since Apple ][ - Long on AAPL so biased
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post #35 of 49
He had the WORST commercials ever. The one where people are screaming!
post #36 of 49
Bottom line was that Ron Johnson was not a retail guru. He was the beneficiary of the enormous tailwind of a company that needed nothing more than order takers because everyone wanted one. You could have put a monkey in and done what johnson did at apple.

Now the tide has gone out and you see who is swimming naked. Ron Johnson is not such a genius after all. With Apple he was lucky to be in the right place at the right time, period. For that he has made millions there and many more milking JCP. Good for him!
post #37 of 49

He made me stop shopping at my local JCP. They use to have my town's best selection of odd sized men's clothing - big and tall, just tall, ect. That all went away when the store was redone. Now I'm lucky to find a XT t-shirt. So they lost my business. They tell me to catalog order, but if I do that, why not shop online? I liked I could go actually see the items. Now if I need a shirt I gotta trek 30 miles to the nearest b-n-t store and get a much more limited selection.

post #38 of 49
Was JCP supposedly already in recovery mode before he showed up or did the momentum have them heading to the bottom?

JCP has never sold to a clientel seeking premium quality. They want good prices at a reasonable price. Anybody else remember back in the late 70's when fancy jeans were all the craze -- JCP intro'd "plain pockets" jeans for about $14 or less a pair and they were good jeans. Not fancy to go out showing of in, but they did have a hell of a warranty (the crotch seam would wear faster than the rest but even after 6 months and no receipt they replaced they replaced them no question ask. Levi's were more than $50 and the designer brands were $85 to $150 or more.

I think they just need to let everybody know they are about quality and taking care of you after the sales.
post #39 of 49

Amazon.com utilizes all of the above. They have everyday low prices mixed with a plethora of sales gimmicks that are always changing and adapting. Friday sales, Amazon Prime, 4 for 3 promotions, contests, and more. Why can't JCP do the same?

 

Ron must not shop around women or maybe he hasn't ventured into that famous swap meet for spinsters, TJ Maxx. It's all about markdowns, sales, red tags, clearance, etc.

 

The only words more powerful than SALES and CLEARANCE to a woman are HAVE YOU LOST WEIGHT?

post #40 of 49
I used to work at Penney's, during college. Used to look forward to buying there and continued to for years. During the last few years or decade, they have less and less of anything that appeals to me. My wife and I walk thru the store and literally cannot find anything we are interested in, except an occasional polo shirt or the like.

My harsh reaction would be to recommend that Penney's fire the clothing buyers (or at least get them to change their mindset) and stock clothing that I would want to wear.

Bottom line is: You must offer a product or service that consumers want.
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