VodkaPundit

Who Killed JC Penney?

The conventional wisdom was that Apple’s former retail chief, Ron Johnson, is to blame for Penney’s recent woes. That’s certainly what I thought. Johnson seemed to be a one-idea guy. Focus on upscale-style customer service and reasonable, and people will come back for that without having to resort to superdoorbuster sales gimmicks. It worked at Target, it worked for Apple Stores, but his One Big Idea just seemed to a bad fit for JCP.

But maybe we got it partly wrong:

JCP’s losses for 2012 totaled $992 million. Tantalizingly close to a perfect billion.

How was that possible? If Ron had such a brilliant plan, the support of the board and the endorsement of Wall Street, why did he fail on such a spectacular scale?

Put simply: he did too much too soon. He scared away the old customers instead of bringing them along for the ride.

It’s a story of “the best of intentions.” Inspired by the retail philosophy of James Cash Penney, Ron believed that respect for the customer was the key to success — and manipulating prices to create a false sense of bargain was not respectful. But he changed the pricing policy before he could change the stores (which would require a 2-3 year effort).

It might have been Ron’s only mistake, but it was a doozy. It sent customers running in the opposite direction, and the mass exodus sent JCP into serious crisis mode.

Johnson’s semi-boutique plan for JCP might have worked, had he not gotten rid of the continuous superdoorbuster sales until after he’d finished upgrading all the stores.

It’s a shame we’ll never know.