Lessons from the JC Penney fiasco


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You’ve probably read that former Apple retail executive Ron Johnson is out as JC Penney’s CEO after 17 tumultuous months. You can’t say he wasn’t ambitious. Johnson made major changes to JCP’s pricing, merchandising, marketing, store design and technologies.

I’m not sure his ideas for reinventing the department store were wrong, but his approach certainly did him in. Here a few things any of us can learn from his experience.

* Test major changes to your business before racing forward. Ron Johnson never tested, or even considered testing, his new pricing model. His detractors would say his arrogance kept him from testing his new pricing approach. He would probably say he couldn’t test it because the company was bleeding cash. Well, now it is hemoraging and the damage could be fatal. I believe if had tested the pricing concept he would have learned that customers were confused and still looking for the sales they are accustomed to.

Whether you’re an executive, storeowner, or a manager, you can test both small and big changes. You absolutely have to test something that fundamentally changes what you sell or how you sell it. If not, you could lose your customers just as JCP has.

* If you’re in retail, you have to invest in your people. I like how Johnson was redesigning the stores to create more branded spaces and shops. I like how he was using technology for RFID, and iPad use by associates.

But along the way he almost seemed to make the frontline staff expendable. There were fewer people on the floor, and it appears that many of them were either new or unhappy long-term employees. It’s strange that Apple invested so heavily in people, but at JCP Johnson seemed to go in almost the opposite direction.

* It’s difficult to put the sale genie back into the bottle. Johnson tried to go with every day low pricing, but his customers were used to sales and they wanted sales! And when JCP no longer had sales, shoppers left for Kohl’s, Macy’s, and other stores. I don’t know if Johnson could have weaned the JCP customer off sales, but even if he could his change was way too radical. A slow shift might have worked.

It’s a lot easier to run big sales than to build a brand or business on relationships, events, unique products, and a great customer experience. But once you cross that line, there’s no turning back. JCP tried and failed. My advice is this: don’t even be tempted to take that sale genie out of the bottle.

* You can do too much too fast. Few retailers are guilty of this. If anything, most retailers aren’t changing fast enough or trying enough new things. In this case, though, Johnson tried to change too much too fast. Eventually it cost JCP a lot of customers and shareholders a lot of money. It also cost Ron Johnson his job.

So let me ask, which of these lessons offer you the most opportunity to learn and develop from?

Republished with author's permission from original post.

Doug Fleener
As the former director of retail for Bose Corporation and an independent retailer himself, Doug has the unique experience and ability to help companies of all sizes. Doug is a retail and customer experience consultant, keynote speaker and a recognized expert worldwide.


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