I have never really looked it up before...well, it seems to have been through some hard times since the 1990's...this is a recent post from Forbes:
JC Penney -- Are You Listening?
At a recent dinner I hosted in New York, several senior executives discussed the challenges of pricing in retail. Not surprisingly, the conversation turned towards JC Penney .
We discussed a little of JC Penney’s history. By the 1990s, JC Penney was on the rocks. Customers were leaving the big department stores and spending their money at specialty stores like The Limited and Gap .
Rather than hire financiers and turn-around artists, JC Penney hired Allen Questrom, a seasoned retail veteran from Federated Department Stores. He, along with his successor, Myron Ullman, faced stiff headwinds. Their strategy was to focus on where the customer was shopping; hence they vacated old mall locations, closed underperforming stores and opened new stores with at-the-door parking to compete with Kohl’s, TJ Maxx and Target . Despite these efforts, from 2003 to 2011, JC Penney’s sales dropped 45% from $32.3 billion to $17.8 billion.
With the hiring of Ron Johnson in November 2011 and his ensuing dismissal 17 months later, I like many others, have wondered what went wrong. You don’t have to look hard to find hundreds of negative post-mortem opinions on Johnson’s tenure. Conversely, not much has been written about what Ron Johnson did right. In particular, one success was the introduction of new, exciting brands. One brand, Joe Fresh, has given JC Penney a boost at a time when it desperately needed it. The jury is out on whether or not this launch will be a success, but it was definitely a move in the right direction.
Finding the right 20% to change
As I followed the trials and tribulations associated with Johnson’s tenure, one thought continued to come to mind. Was he trying to do too much too fast?
I had the opportunity to hear Jim Collins, author of the business best-seller Good to Great, speak at a conference two weeks ago. He talked about the fact that truly great companies find, “the right 20% to change.” Companies need to change, they just can’t change too much all at once, and they need to change the right things.
While the Joe Fresh launch was taking place, a multitude of other changes and programs were initiated at the same time: rebranding the company, remodeling the stores, completely changing the pricing model, and throwing out stable brands and adding new brands. Executed individually, with everyone in the company on board, the result may have been a slow yet steady turnaround. Perhaps not as fast as Wall Street wanted, but a turnaround nonetheless.
At the same time Johnson was launching new brands, older, established brands that kept shoppers coming were being discontinued. One customer was quoted as saying, “I do not buy any merchandise in this store since they did away with all the lines I loved, such as St. John’s Bay and Gloria Vanderbilt.” Indeed, St. John’s Bay was a $1 billion brand for JC Penney.
What has become even more evident, and quite surprising for that matter, was the fact that Ron Johnson didn’t listen to the customer as he was making these changes.
Why is this so surprising?
Target vs. Apple
As many of you know, Johnson came from Apple and before that, Target. Although his tenure at Target occurred before the infamous “Pregnancy Prediction,” Target has always invested heavily in consumer data and analytics. They listen to their core customers and build programs around keeping them happy. New concepts are tested thoroughly before rolling them out.
Contrast this approach with Apple’s innovation process. Steve Jobs was famous for trusting his instinct regarding what customers want. Jobs said: “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
Jobs also said, “You‘ve got to start with the customer experience and work back toward the technology – not the other way around.”
Image credit: Getty Images via @daylife
Rather than hire financiers and turn-around artists, JC Penney hired Allen Questrom, a seasoned retail veteran from Federated Department Stores. He, along with his successor, Myron Ullman, faced stiff headwinds. Their strategy was to focus on where the customer was shopping; hence they vacated old mall locations, closed underperforming stores and opened new stores with at-the-door parking to compete with Kohl’s, TJ Maxx and Target . Despite these efforts, from 2003 to 2011, JC Penney’s sales dropped 45% from $32.3 billion to $17.8 billion.
With the hiring of Ron Johnson in November 2011 and his ensuing dismissal 17 months later, I like many others, have wondered what went wrong. You don’t have to look hard to find hundreds of negative post-mortem opinions on Johnson’s tenure. Conversely, not much has been written about what Ron Johnson did right. In particular, one success was the introduction of new, exciting brands. One brand, Joe Fresh, has given JC Penney a boost at a time when it desperately needed it. The jury is out on whether or not this launch will be a success, but it was definitely a move in the right direction.
Finding the right 20% to change
As I followed the trials and tribulations associated with Johnson’s tenure, one thought continued to come to mind. Was he trying to do too much too fast?
I had the opportunity to hear Jim Collins, author of the business best-seller Good to Great, speak at a conference two weeks ago. He talked about the fact that truly great companies find, “the right 20% to change.” Companies need to change, they just can’t change too much all at once, and they need to change the right things.
While the Joe Fresh launch was taking place, a multitude of other changes and programs were initiated at the same time: rebranding the company, remodeling the stores, completely changing the pricing model, and throwing out stable brands and adding new brands. Executed individually, with everyone in the company on board, the result may have been a slow yet steady turnaround. Perhaps not as fast as Wall Street wanted, but a turnaround nonetheless.
At the same time Johnson was launching new brands, older, established brands that kept shoppers coming were being discontinued. One customer was quoted as saying, “I do not buy any merchandise in this store since they did away with all the lines I loved, such as St. John’s Bay and Gloria Vanderbilt.” Indeed, St. John’s Bay was a $1 billion brand for JC Penney.
What has become even more evident, and quite surprising for that matter, was the fact that Ron Johnson didn’t listen to the customer as he was making these changes.
Why is this so surprising?
Target vs. Apple
As many of you know, Johnson came from Apple and before that, Target. Although his tenure at Target occurred before the infamous “Pregnancy Prediction,” Target has always invested heavily in consumer data and analytics. They listen to their core customers and build programs around keeping them happy. New concepts are tested thoroughly before rolling them out.
Contrast this approach with Apple’s innovation process. Steve Jobs was famous for trusting his instinct regarding what customers want. Jobs said: “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
Jobs also said, “You‘ve got to start with the customer experience and work back toward the technology – not the other way around.”
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