J.C. Penney CEO gets the boot, but were his ideas really that bad?

David Weinberg Apr 9, 2013
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J.C. Penney CEO gets the boot, but were his ideas really that bad?

David Weinberg Apr 9, 2013
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J.C. Penney CEO Ron Johnson has been given the boot after just 17 months as head of the struggling department store chain. Johnson’s full-scale overhaul of J.C. Penney has been a complete disaster, but that doesn’t necessarily mean that all his ideas were bad.

Johnson came up with a three-year plan to turn things around. Step one was to solve the problem of the deep discount. J.C. Penney customers had come to expect big markdowns. Analysts said that wasn’t sustainable. So Johnson introduced the square deal, low prices all the time, and a new logo.

Debra Kaye, a retail analyst with Lucule, says the plan and accompanying logo weren’t innovative enough. 

“Can you think of a symbol more antiquated?” Kaye says.

The square deal didn’t convince J.C. Penney’s loyal customers to stick around after the sales stopped. Another key problem was a shortage of younger customers. Johnson’s solution was to create the Martha Stewart pop-up store.

“I think the idea of pop-up stores are good for any store because it’s a way of bringing news in,” says Kaye.

But the news it brought in wasn’t good. It sparked a costly legal battle with Macy’s which had signed an exclusive deal with Martha Stewart.

Even though Johnson addressed many of the problems facing J.C. Penney, his solutions failed to attract new customers. According to retail consultant Burt Flickinger, it may have been a case of too much too fast.

“Consumers got confused, confirmed by 25 percent decline in same store sales, which is unprecedented in U.S. retail today,” says Flickinger.

With Johnson’s departure, the board of J.C. Penney has decided not to see whether the rest of  the three-year plan will pay off.

2012 was a bumpy, transitional year for J.C. Penney, click through the timeline below to track the company’s history and Ron Johnson’s turnaround efforts.

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