With the ongoing poor results reported by JC Penney over the past several months, it came as no surprise to me as I arrived in France a couple weeks ago to learn that he had been fired. No matter how good your resume is, non-stop double-digit declines in revenues and profits-and the resultant plummeting of the stock price-Johnson couldn’t expect to survive the uproar from the board, Wall Street and long-time customers. I’ve written about the branding makeover at JCP a couple times this past year, but I felt it necessary to give one more opinion on why the guy who was so successful at Apple just couldn’t make it happen at a conventional department store.
First, let’s look at what Johnson had at Apple. First, Apple is a brand that was truly differentiated from the competition. Cutting-edge design. Breakthrough technology. Futuristic apps and products. These were all in place before he was so successful at Apple. Taking the brand principles that were in place and applying them (very well I must admit) to the retail operations for Apple truly set the stores up as a model for a consumer centric experience and one where the people, the design and the operations lived up to the brand promise everyday.
Second, Johnson had a strong, brand evangelist as a leader in Steve Jobs. While he was demanding and relentless, Jobs set a standard that people half as smart as Johnson would have succeeded by following. No such leadership existed at JCP. Johnson’s predecessors were traditional department store veterans who chose more to emulate and copy stores like Kohl’s and Macy’s and really never stood out as anything special. Business was built on ongoing promotions and awareness and while that generated volume, it didn’t develop a hallmark brand that the board wanted when it hired the new regime last year.
Third, JCP had built its growth in recent years on these promotions and coupons but failed to develop a loyalty to the stores and the people that quickly evaporated as soon as Johnson’s team adopted a new, everyday (somewhat) low price strategy. As I have written in this blog before, the mistake was to go to the extreme. JCP should have maintained a consistent (reduced) promotional plan to maintain it’s loyal sale shoppers while it developed the look and messaging that would have differentiated it from the other department stores.
Apple didn’t have to have sales because it built its brand on the products and the service that were so far above the competition. JCP had to gradually climb out of the hole it had dug for itself over the years with me-too advertising.
Ron Johnson, Michael Francis and the others in this new regime didn’t suddenly get dumb when they got to Plano. No they just tried to apply the principles of a strong brand to one that needed a lot more repair than they bargained for.