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Ron Johnson’s JCP Chapter Still Being Written

Monday April 29th, 2013 - 1:03PM

Dissecting what Ron Johnson got wrong during his brief, calamitous term at the helm of J.C. Penney is sure to be the focal point of retail strategy and tactics lessons for years to come.

They will talk of colossal failure— of so many blatant errors from an accomplished merchant whose vision became blurred, some believe, by rushed hubris and un-tested presumption.

They will slam Johnson’s cold-turkey abolishment of promotional pricing at a time when the most reliable currency in a slumbering retail economy was the percent-off coupon.

Thin Line

They will pick apart his advertising of a trendy, new JCP before a trendy, new JCP was even remotely evident inside the stores.

They will condemn his lack of an acceptable testing model and reckless spending on such a radical reversal of course that all but abandoned Penney’s core customer.

And, of course, they will blame him for any presumption that acquiring a 16.6% stake in Martha Stewart’s company would give Penney a trump card to overcome Stewart’s licensing agreement with Macy’s.

The line between surprising and shocking can be quite thin. Speeding to the wrong side of that line cost Johnson his job and quite possibly his reputation. It might cost J.C. Penney even more.

Ron Johnson’s Penney saga is certain to provide a what-not-to-do template upon which merchandising case studies will be examined for years. 

Pure Vision

The J.C. Penney case study is hardly complete, though. Mike Ullman and his successors will provide plenty of fodder for that. Will it also include a chapter on what Johnson might have gotten absolutely right?

The pure merchandising component of Johnson’s vision finally is beginning to take shape, despite all the problems. He may be out, but there seems to be no stopping the rollout in some 500 stores of Penney’s new home department of trend-forward brand shops.

Management Shuffle

Vendors participating in the new home department say the sets look great. And Penney is telling them the retailer is committed to the brands and shops, despite a buyer and merchandising management shuffle that has already begun.

One reason is J.C. Penney is so deeply vested in the rollout that it can’t just pull the plug on the brands and shops overnight. The other is the brands and shops just might work to help reinvent J.C. Penney as a viable contender for a new consumer generation.

Vendors should be prepared for the return of high-low pricing. The shops might not spread to every J.C. Penney store, and they quite possibly might stick in far fewer than those slated for next month’s launch.

That doesn’t preclude the opportunity for successful products from the new brands to be rolled into more stores, taking a prominent place perhaps alongside requisite promotional items and a refreshed private-label program.

Ullman might push for the restoration of more traditional department store traffic and margin builders. But to go all the way back to the J.C. Penney of two years ago could be no less perilous than the instant elimination of coupons. 

If J.C. Penney survives this mess, perhaps retail history won’t just record everything Ron Johnson got wrong. Penney’s future could still hinge to some extent on what he got right.

—peter Giannetti