Wednesday, June 25, 2014

Holy Shit, J. C. Penney


Ron Johnson was on the roll to end all roles in 2011. He was the man behind the Apple Store. He transformed computer sales from the darkly-lit fringe outfits of the '90s to the bright, minimalist, inviting atmosphere of today. In many ways, he made technology cool, and as a result he saw his bank account grow by some $400 million.

J. C. Penney, hungry for a hip new image, saw an enormous opportunity in Johnson. They brought him on as CEO in November of 2011 and tasked him with turning their tired old retail outfit into a hipster paradise of Apple proportions. So Johnson set to work.
Ron Johnson, JCP
"My ideas are big, you guys."

Step one: he hired a fellow Apple veteran as COO and fired a number of the stuffy old suits at JCP. He was taking the company in a new direction, and their input would be outdated.

Step two: he started courting hip brands, with the goal of redefining the type of person who shops at J. C. Penney.
Ron Johnson, JCP 2
"Seriously, though. Really big."

Step three: he took a jackhammer to the dishonest pricing policies of the old retail market. This was the big one. Standard practice in retail is to price everything on the high end, then have special discounts literally all the time to bring the price down to something that isn't exciting, but fair. Johnson wanted that to change. He repriced everything JCP carried to a lower, fairer price, then did away with constant coupons and specials.

It was a refreshing way for a CEO to look at business. He was keeping the actual, long-term interests of customers in mind. He was treating them like mature adults. Not children. Not sheep to be easily led astray by bright, flashy colors and big red lines through high dollar values and sunbursts with percentages in them. His ideas were truly visionary.
Ron Johnson, JCP 3
"Like, this big!"

And they failed harder than any ideas in the history of retail. I mean, they nearly ran J. C. Penney, a century-old institution, into the ground. As it turns out, people like instant gratification. They respond to it. They almost demand it. It makes them feel clever. When Johnson took that away from his customers, they took their business away from him.

J. C. Penney's stock price was cut in half during Johnson's tenure. Feedback from employees and customers alike was almost universally disdainful. After just over a year, he was removed from his position as CEO.
Ron Johnson, JCP 4
"Oh. Well, shit."

There are two lessons to be learned from this epic failure to market properly. The first is that retailers scam the shit out of you. Their sales practices are deceitful, and are based on the idea that you'll pay full price if you have a coupon pretending that "full price" is a discount. The second is that, if they didn't do these things all of these companies would die. Because we secretly like it.

Holy shit.

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