What Retailers Can Learn From Ron Johnson’s Tenure At J.C. Penney

By Debbie Hauss, Editor-in-Chief

I feel sorry for any company that had big news to announce yesterday or today. The industry is abuzz with talk and speculation about Ron Johnson’s demise at J. C. Penney. Of course all the experts who predicted this wouldn’t work from the beginning are now patting themselves on the back. But aside from them, I think most people in the industry would like to figure out what they can learn from this decision-gone-wrong.

Just like every other media group focused on retail, Retail TouchPoints covered Johnson’s activities during his brief 17-month reign as J. C. Penney CEO:

• In July 2012, an article titled: Keeping Up With J. C. Penneytalked about the fact that, in the first half of 2012 alone the company made no less than 22 press announcements, running the gamut from new leadership to the elimination of all traditional POS units.

• In October 2012, we covered Johnson’s somewhat defensive remarks, supporting his decisions and indicating the desire to make J. C. Penney “America’s favorite store.”

• Among setbacks, the company has had some wins during the past year. In September 2012, J. C. Penney was named one of the most effective back-to-school advertisers by Ace Metrix. Additionally, the company was mentioned in a Retail TouchPoints article covering inventory strategies, noting the company’s transition to RFID. 

But in the end, the Apple-executive-turned-department-store-leader could not succeed in breathing long-term life into the J. C. Penney brand, and he was reportedly let go.

In the scheme of things, it is significant to note that it’s not uncommon to see great upheaval at the helm of many retail companies, particularly during difficult economic times. In an article titled: Retail CEOs In The Hot Seat, Kim Zimmermann of Retail TouchPoints pointed to a recent survey that revealed 59% of 81 multichannel retail companies had changed CEOs between 2006 and 2011.

So, considering the fact that shares of J. C. Penney dropped 53% in one year during Johnson’s tenure, maybe he was lucky not to get the boot sooner. He’s also probably leaving the company with a sizeable going-away check.

So what can the rest of the industry learn about this story? Some of it seems obvious in this case: it just didn’t seem likely that Ron Johnson could do for J. C. Penney what he did for Apple. Loyal J. C. Penney shoppers were not on board. So maybe there is something to the idea of “customer-centricity.”

And now industry experts can start to debate the over/under of J. C. Penney returning Mike Ullman to the post. Ullman served as the CEO from 2004-2011. According to an article from latimes.com, “The company (J. C. Penney) was known at the time for its drab image and uninspiring stock performance, but sales were stable and the company was not viewed as particularly troubled.” Yet shares dropped 6% after the announcement was made.

Personally, I thought J. C. Penney would have been better off embracing their long-time brand image and improving upon it, rather than trying to become something it’s not. I’m sure we’ll all be watching as Ullman and the board figure out what’s next for the 110-year-old department store chain.

Follow Debbie on Twitter: @DHauss