In 2011, Ron Johnson was brought in to run J. C. Penney, having previously led Apple Stores to great retail success. One of his first, and (as it quickly turned out) most damaging, actions to resurrect the Penney brand name was to institute a ‘fair and square’ everyday low price concept to replace the company’s frequent sales and couponing which had been prevalent for years. Just as a pricing-dominant strategy couldn’t save retailers like department store chains Bradlee’s, Caldor, Filene’s Basement (sold to Syms, which also closed), Loehmann’s, and Jamesway, it likewise didn’t work for J.C. Penney. There were several reasons for this, all largely driven by Johnson’s leadership and strategy.
Combined with a) failing to first test his concept on a pilot store basis, b) alienating the company’s core customers by removing the sales on which they had come to rely, c) alienating, through non-communication, the store employees who are core to Penney’s cultural DNA, and d) misreading the Penney brand promise by trying to make it a destination retail experience, Johnson was out of a job within 18 months of his arrival. The J.C. Penney stock, which traded at about $40 per share when Johnson started his tenure, now trades at less than $6.
One key lesson to be learned from the plight of J.C. Penney is that, for multiple reasons, we are now in what some analysts have described as a ‘retail apocalypse’ for brands, retailer employees and customers. Rather than labeling the changing retail experience in such negative terms, what we are observing in customer marketplace behavior feels like more of a rapid transformation. To stay competitive, retailers need to be aware of the interconnected and omnichannel experience ecosystem which customers have come to expect, and how it will evolve over the next few years.
Accenture and Salesforce recently completed a study among sector executives in which questions about retailing services and customer experience were the focus. Principal research findings identified major operational deficiencies, namely that current retail organization structures and capabilities are insufficient to move from traditional sales-centricity and product-centricity to customer-centricity and stakeholder-centricity. Six key themes characterizing retail and brand trends were identified:
Vision – Everyone, especially employees (from the CEO to the store associate), must understand, internalize, and act on the distinctive customer, product, and service retail delivery position of the enterprise. For employees, and from my perspective, this is ambassadorship in practice.
Culture – The infrastructure and architecture of the enterprise must be designed to enhance, and hopefully optimize, the experience and lifetime value of the customer. This requires a) practicing a philosophy of process testing, measurement and insight development, and improvement, and b) collaborating within the organization, not just cross-functionally, but enterprise-wide.
Market Insight – Retailers need a constant pulse of what is driving the customers’ emotional and functional value needs. This includes monitoring technology changes, service innovations, and competitive activity. As part of their role as partners, employee ambassadors can be instrumental in gathering and sharing actionable customer feedback.
Data Intelligence – Core to having a single, integrated view of the customer across the enterprise is the gathering, management and sharing of data and focused intelligence with all stakeholders. If culture, processes, and employees are the skeleton and circulatory system of the effective retail organization, then data, and the insights they help create, are the life blood.
Innovation – New ideas, whether they are directed at in-store or electronic experience and process, or messaging, communication, and channel, must be both encouraged and nurtured. The principal criterion for incubation is company, employee, and/or customer value.
Agility – The speed with which organizational and marketplace changes are, and will continue to be, taking place can’t be overstated. Accordingly, processes, systems, decision-making, and people need to be flexible and readily adaptable to multiple possibilities and eventualities.
The Accenture/Salesforce study report concludes that, to become customer-centric, or to sustain this focus, retailers of the future will need to be adaptive, collaborative, and intelligent. The goal is to leverage purchasing, decision-making, and market insights, be proactive, and drive personalized experiences for each customer.