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Ron Johnson Out as JC Penney CEO

Ron Johnson

by John Sealander  

After Destroying a Venerable 110-year-old Retailer
In a Single Year, Ron Johnson Gets the Sack

JC PenneyWhat was Ron Johnson thinking? Given his impressive resume, many thought that “the wizard from Apple” was the perfect man to turn around 110-year-old retailer JC Penny and take the store into the 21st Century. Prior to assuming the CEO role at JC Penny, Johnson had certainly enjoyed his share of success. He presided over the highly successful Design Initiative at Target, featuring a reasonably priced home collection from well-known architect Michael Graves. Johnson’s success at Target led to an even more high profile position at Apple, where he oversaw a network of over 300 retail stores and pioneered innovations like the Apple Genius Bar, where customers could go to get hands-on technical support.

Where Johnsohn Failed

When Johnson became CEO of JC Penny in November of 2011, he began a bold initiative to apply his trademark retail magic to the faltering retail giant. Unfortunately, Ron Johnson made a fatal mistake. He didn’t understand the JC Penny customer. The 50-something female customers who regularly came to JC Penny to shop for sales and use their coupons were a far cry from the 25 to 34 year olds who flocked to Apple stores to buy electronic gear with some of the highest profit margins in the industry.

In an effort to reinvent JC Penny and attract this young, hip audience to the venerable mid-line department store, Johnson ended up disenfranchising his existing customer base in the process. He discontinued the long-standing J.C. Penney’s practice of holding frequent sales, which was the main reason his core audience shopped there in the first place. He tried to replace the retailer’s frequent promotional campaigns with a new “everyday low-price” strategy designed to simplify store operations.

All this might have worked if Johnson had been able to attract the younger audience that eagerly bought Michael Graves housewares at Target and iPhones at the Apple stores. These new customers never came, while loyal existing JC Penny customers continued to abandon the store in favor of other alternatives.

The Turnaround

Now it’s up to new CEO Mike Ullman to clean up the mess. Ullman spent seven years as JC Penny’s chairman and CEO until Ron Johnson replaced him. Is Ullman, who was unable to turn the retail giant around before, the right man for the job? Right now, he may be the only option available. “Unless the company acts now, it will soon hit a large cash problem, says industry analyst Paula Rosenblum. “Ullman can, at least, hit the ground running. Bottom line, he has to stop the bleeding.”

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers.

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