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Former Apple Retail Head Ron Johnson Fired as CEO of JC Penney
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I'd have to agree here, I'm the claustrophobic type and avoided walking through PCpenney's at all cost, the place was just stuffed to the hilt with merchandise, hanging from the ceilings, narrowing the isles etc. It killed me. Now when I glance in the store I can actually see through and out into the the parking lot, I can for the first time in many years walk through that place without issue. However Old Folks and Hispanics in my area LOVED the sales and swimming through that crowded sea merchandise. So hey I say let them serve the people that love them the old way until they fold like Merven's and Montgomery Wards.
Oh please - only mistake???? Maps, hiring Browett, production issues on iPhone 5 and iMacs, warranty compliance in China, - the list goes on.
Oh, and how about a $2 billion cost overrun on the original $3 billion new campus? Or following SEC regulations on the recent proxy fiasco? The stock buyback strategy is an epic fail.
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You are confused. I think you were thinking of John Browett.
Ron Johnson was head of Apple Retail. He left.
John Browett came in to Apple Retail and did a horrible job and was fired.
Ron Johnson came in to JC Penny as CEO and did a horrible job and was fired.
Now they are speculating that Ron Johnson may come back to Apple.
store in store concept was done by his predecessor Ullman...all Ron did was expand on that concept.....his plan of attrition to right the ship wasn't even praised by analysts...why would the board back him after losing $500mil in value??
Johnson forgot the one rule.
WHen he and Jobs created the Apple stores they had no idea what to do so they asked Nike (if I remember correctly), and Nike's advice was "you know how you beta test the software? Well to do the same for the stores and beta test that too. That logic needed to be taken to JCP. Beta test the store layout. Ask the customers, old and new do they like the changes, would they shop there with the new changes in place. And do the new changes even work. The original Apple store concept sucked. But it was picked up in beta testing. And changed to to a better model.
So that is one of the failings of Johnson. If he comes back to Apple I won't be unhappy.
JCPenney (why they tried renaming a timeless brand to jcp I have no idea) was not doing great before Johnson came, but at least they were treading water. After Johnson started his plan they started posting sales declines of 25-30% each quarter. Those types of declines have never been seen in the history of retail. JCPenney needed some fixing, however instead of taking a careful planned approach Johnson just threw everything out and tried to remake it into the "Apple Department Store" which doesn't work at all with their core customer. He fired long time executives left and right and replaced them with people from Abercrombie and Fitch... Really Ron? He didn't even try his ideas in test markets like every other national retailer does before deploying them nationwide. Why? Well frankly I think he is an arrogant man that just assumed everything he touches turns to gold.
This might sound mean, but arrogance got the best of Ron Johnson and they had no choice, but to replace him. The damage is so great I am not sure if someone else can turn it around after this management catastrophe, but time will tell.
this is just from personal observation, but I think JCPenney's biggest problems are that some people see them as an old not cool and budget friendly clothing store with no big brands, from what I have experienced it seems people (at least some around me) want to buy designer clothing even though they really can't afford it and would be better off shopping at JCP/Kohl's ect rather than buying Penguin/Lacoste/Polo/J.Crew/etc.
Well then Steve obviously didn't have a good sense for who should follow him as CEO. Who should he have recommended instead? Someone outside Apple?
There was an excellent article in The New Yorker (dated March 25th, 2013) by James Surowiecki in which the author of the piece cites Warren Buffet's observation that, "When a manager with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that will remain intact."
The article also acknowledges mistakes made by Ron Johnson during his time at J.C. Penney (the article was published before Johnson moved on), and Surowiecki writes of Johnson's pedigree, and efforts at the company: "Skill is important, but so is context…"
Like I said –*excellent article.
The article also acknowledges mistakes made by Ron Johnson during his time at J.C. Penney (the article was published before Johnson moved on), and Surowiecki writes of Johnson's pedigree, and efforts at the company: "Skill is important, but so is context…"
Like I said –*excellent article.
How stupid could JCP have been to hire this clown. He did nothing but spend a lot of money, piss off a lot of people and then got his a** fired.
JCP thought they were going to pull an Apple Store by selling cheap crap to grandma.
JCP thought they were going to pull an Apple Store by selling cheap crap to grandma.
My best guess is that Steve's force of personality kept some of the current executives on an acceptable execution trajectory - but absent Steve, they don't have the ability.
Going outside Apple carries huge risks - you can wind up with a Sculley or Amelio = disaster. Going with a Tim Cook may prove to be as bad. I do believe Steve missed it on his replacement big time.
The Board of Directors / Levinson may have deferred too much to Steve on this topic. The solution may lie in Apple reorganizing in some fashion rather than terminating Cook - narrow his job, off load some of the non strategic duties, and light a fire under some people to get back to what propelled Apple to its success.
The idea wasn't to make an Apple store environment for grandma, it was to try to pull in a younger demographic, you know the way Apple Stores pulled in non-Apple fanboys or the way Cadillac started to produce more aggressive looking models to attract youth.
But Johnson's task was infinitely tougher because consumers have to actively go into a department store where as one might casually pass by an Apple Store and glance though the window, plus in both Apple and Caddy's instances, they sell products that are easy to discretely put in the public eye.
However, where Johnson did fail was putting a plan together to demonstrate JCP has quality items. Ultimately, it looks like all he did was put lipstick on the proverbial pig.
I do not quite understand why people are so surprised at his failure. It's not like Apple Stores are something special. Boring rows of wooden tables is probably the worst store design one can find among consumer electronics stores. The success of the stores has nothing to do with the concept of these stores. It has everything to do with the popularity of iStuff. Now, put Coby's merchandise on these tables and see how well the same stores will do.
Here's a link to the article.
THE TURNAROUND TRAP
BY JAMES SUROWIECKI
MARCH 25, 2013
In January of 2012, Ron Johnson, the new C.E.O. of J. C. Penney, gave a speech unveiling his ambitious strategy for reinventing the hoary old retailer. It was a much anticipated event. Penney was directionless and barely profitable, and Johnson was a retail superstar. He had helped make Target hip, pioneering partnerships with big-name designers like Michael Graves, and had then moved to Apple, where he orchestrated the creation of the Apple Store. Johnsons presentation did not disappoint. He made it clear that he wasnt going to just stabilize Penney; he was going to revolutionize it. Coupons and sales, which had become ubiquitous, were going to be replaced by what he called fair and square pricing. The stores themselves would be radically redesigned, becoming curated showcases of mini shops, arranged by brand. J. C. Penney, Johnson said, would become Americas favorite store.
Fourteen months later, J. C. Penney is Americas favorite cautionary tale. Customers have abandoned the store en masse: over the past year, revenues have fallen by twenty-five per cent, and Penney lost almost a billion dollars, half a billion of it in the final quarter alone. The companys stock price, which jumped twenty-four per cent after Johnson announced his plans, has since fallen almost sixty per cent. Twenty-one thousand employees have lost their jobs. And Johnson has become the target of unrelenting criticism. There is nothing good to say about what hes done, Mark Cohen, a former C.E.O. of Sears Canada, who is now a professor at Columbia, told me. Penney had been run into a ditch when he took it over. But, rather than getting it back on the road, hes essentially set it on fire. Johnson is scrapping his pricing strategy but is sticking by the mini-shop concept: last week, Joe Fresh boutiques débuted in stores across the country. Meanwhile, rumors of Johnsons imminent departure are everywhere, and last years pronouncement is starting to look like the business equivalent of George Bushs Mission Accomplished speech.
The biggest problem with Johnsons strategy is simple: he misread what Penneys customers wanted. Doing away with constant markdowns was, on the face of it, sensible: instead of starting with a high price and quickly marking it down, start with a lower price. But Johnson failed to see how attached customers were to markdowns. In most of the retail universe, price is the most powerful motivator, Cohen said. This game of cat and mouse with regular, ever-changing discounts is illogical, but its one that lots of consumers like to play. Johnson just ignored all that.
The way Penney implemented its plan also hurt. For one thing, Johnson didnt test his pricing strategyperhaps because of his experience at Apple, where market research has always been anathema. In addition, he rolled it out before the stores had been remodelled or filled with new merchandise. This drove old customers away without giving new ones a reason to come in. Offering pain and no gain is no way to remake a company. Anytime youre trying to change the way you do things, small wins are important, Michael Roberto, a management professor at Bryant University, told me. Small wins help you build support both internally and externally, and they make it easier for people to buy in.
Given Johnsons track record, plenty of people are shocked by whats happened. Yet hiring him was always a huge gamble. As Cohen put it, He had never been a C.E.O., never mounted or managed a turnaround, had limited fashion-apparel experience, and had no experience in the middle-market space. Johnsons champions assumed that, because he had done great work elsewhere, he would do great work at Penney. But the circumstances at Johnsons previous companies were radically different from those at Penney. Target was a thriving company that had already positioned itself as a trend-aware, fashionable store, so Johnson had plenty of support in the effort to make it cooler. And, while the Apple Store is a brilliant retail concept, its success was surely helped by the fact that it has been home to three of the best-selling consumer products ever.
At Target and at Apple, Johnson was running with the wind, not against it. At Penney, hes trying to do something very different: remake a companys DNA. Penneys board no doubt believed that Johnsons record guaranteed that hed succeed. But this perception probably reflects what psychologists call the fundamental attribution errorour tendency to ignore context and attribute an individuals success or failure solely to inherent qualities. (People who watch one basketball player shoot free throws in a poorly lighted gym and another shoot in a well-lighted gym attribute the latters greater success to ability rather than to conditions.) Skill is important, but so is context: being great at selling cheap fashion or cool technology products doesnt mean youll be great at turning around a middle-market retailer.
Of course, this cuts both ways. Right now, Johnson looks like a complete fool. But turnarounds are hard to pull off, especially in retail. One study found that efforts at merely getting a money-losing retailer back to profitability succeed only thirty per cent of the time. Radically remaking a major company, as Johnson is trying to do, is even harder. So, if Johnson isnt as good as he looked at Apple, hes probably not as bad as he looks at Penney. Indeed, his biggest mistake may simply have been taking the job in the first place. Hes become a living example of one of Warren Buffetts keenest observations: When a manager with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact. ♦
BY JAMES SUROWIECKI
MARCH 25, 2013
In January of 2012, Ron Johnson, the new C.E.O. of J. C. Penney, gave a speech unveiling his ambitious strategy for reinventing the hoary old retailer. It was a much anticipated event. Penney was directionless and barely profitable, and Johnson was a retail superstar. He had helped make Target hip, pioneering partnerships with big-name designers like Michael Graves, and had then moved to Apple, where he orchestrated the creation of the Apple Store. Johnsons presentation did not disappoint. He made it clear that he wasnt going to just stabilize Penney; he was going to revolutionize it. Coupons and sales, which had become ubiquitous, were going to be replaced by what he called fair and square pricing. The stores themselves would be radically redesigned, becoming curated showcases of mini shops, arranged by brand. J. C. Penney, Johnson said, would become Americas favorite store.
Fourteen months later, J. C. Penney is Americas favorite cautionary tale. Customers have abandoned the store en masse: over the past year, revenues have fallen by twenty-five per cent, and Penney lost almost a billion dollars, half a billion of it in the final quarter alone. The companys stock price, which jumped twenty-four per cent after Johnson announced his plans, has since fallen almost sixty per cent. Twenty-one thousand employees have lost their jobs. And Johnson has become the target of unrelenting criticism. There is nothing good to say about what hes done, Mark Cohen, a former C.E.O. of Sears Canada, who is now a professor at Columbia, told me. Penney had been run into a ditch when he took it over. But, rather than getting it back on the road, hes essentially set it on fire. Johnson is scrapping his pricing strategy but is sticking by the mini-shop concept: last week, Joe Fresh boutiques débuted in stores across the country. Meanwhile, rumors of Johnsons imminent departure are everywhere, and last years pronouncement is starting to look like the business equivalent of George Bushs Mission Accomplished speech.
The biggest problem with Johnsons strategy is simple: he misread what Penneys customers wanted. Doing away with constant markdowns was, on the face of it, sensible: instead of starting with a high price and quickly marking it down, start with a lower price. But Johnson failed to see how attached customers were to markdowns. In most of the retail universe, price is the most powerful motivator, Cohen said. This game of cat and mouse with regular, ever-changing discounts is illogical, but its one that lots of consumers like to play. Johnson just ignored all that.
The way Penney implemented its plan also hurt. For one thing, Johnson didnt test his pricing strategyperhaps because of his experience at Apple, where market research has always been anathema. In addition, he rolled it out before the stores had been remodelled or filled with new merchandise. This drove old customers away without giving new ones a reason to come in. Offering pain and no gain is no way to remake a company. Anytime youre trying to change the way you do things, small wins are important, Michael Roberto, a management professor at Bryant University, told me. Small wins help you build support both internally and externally, and they make it easier for people to buy in.
Given Johnsons track record, plenty of people are shocked by whats happened. Yet hiring him was always a huge gamble. As Cohen put it, He had never been a C.E.O., never mounted or managed a turnaround, had limited fashion-apparel experience, and had no experience in the middle-market space. Johnsons champions assumed that, because he had done great work elsewhere, he would do great work at Penney. But the circumstances at Johnsons previous companies were radically different from those at Penney. Target was a thriving company that had already positioned itself as a trend-aware, fashionable store, so Johnson had plenty of support in the effort to make it cooler. And, while the Apple Store is a brilliant retail concept, its success was surely helped by the fact that it has been home to three of the best-selling consumer products ever.
At Target and at Apple, Johnson was running with the wind, not against it. At Penney, hes trying to do something very different: remake a companys DNA. Penneys board no doubt believed that Johnsons record guaranteed that hed succeed. But this perception probably reflects what psychologists call the fundamental attribution errorour tendency to ignore context and attribute an individuals success or failure solely to inherent qualities. (People who watch one basketball player shoot free throws in a poorly lighted gym and another shoot in a well-lighted gym attribute the latters greater success to ability rather than to conditions.) Skill is important, but so is context: being great at selling cheap fashion or cool technology products doesnt mean youll be great at turning around a middle-market retailer.
Of course, this cuts both ways. Right now, Johnson looks like a complete fool. But turnarounds are hard to pull off, especially in retail. One study found that efforts at merely getting a money-losing retailer back to profitability succeed only thirty per cent of the time. Radically remaking a major company, as Johnson is trying to do, is even harder. So, if Johnson isnt as good as he looked at Apple, hes probably not as bad as he looks at Penney. Indeed, his biggest mistake may simply have been taking the job in the first place. Hes become a living example of one of Warren Buffetts keenest observations: When a manager with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact. ♦
Different Customers OR Better Customers
I think the argument that Apple and Target don't have the same customers as JCP doesn't matter because maybe those customers aren't ever coming back and they weren't bringing a profit anyway.
I know a lot of women who really like the Martha Stewart brand and I feel should would have been pull into the store but it just didn't happen.
Our store has been perpetually under construction for the last year and I think if it were finished only then could I judge it. But being under construction perpetually makes shoppers feel put off I think more then all the free haircuts for your kids, wifi service and other aesthetics can offset. I think the CONSTRUCTION was the thing that hurt stales. Because, if it looked like Target or Kohls minus the construction it would be just fine because they'd start nabbing some of their customers.
Likely another CEO will come along and get all the credit in 2 years when things improve mostly because construction is finished.
I think the argument that Apple and Target don't have the same customers as JCP doesn't matter because maybe those customers aren't ever coming back and they weren't bringing a profit anyway.
I know a lot of women who really like the Martha Stewart brand and I feel should would have been pull into the store but it just didn't happen.
Our store has been perpetually under construction for the last year and I think if it were finished only then could I judge it. But being under construction perpetually makes shoppers feel put off I think more then all the free haircuts for your kids, wifi service and other aesthetics can offset. I think the CONSTRUCTION was the thing that hurt stales. Because, if it looked like Target or Kohls minus the construction it would be just fine because they'd start nabbing some of their customers.
Likely another CEO will come along and get all the credit in 2 years when things improve mostly because construction is finished.
give a CEO an acceptable (not extravagent) salary and then extra bonus compensation on a tiered system in a specific order that leads the company to success.
Tier 1 bonus: # of product innovations that come to market
Tier 2 bonus (must have met Tier 1): product innovations sales numbers
Tier 3 bonus (must have met Tier 1 and 2): profit margin of new product innovations
In order to achieve Tier 3 bonus, you must have met the criteria of Tier 1 and Tier 2. this ensures that you aren't trying to build a castle on quick sand.
Tier 1 ensures that you are innovating
Tier 2 ensures that your innovative products are selling
Tier 3 ensures that you are achieving an acceptable profit margin
unfortunately it's too late to undue much of the outsourcing, job cuts, and benefits restructuring. manufacturing of high tech small electronics will never come back to the US mainland (Mexico maybe, yes...as the Chinese labor rate is now higher for the first time in history), the pension system as we used to know it is a dead horse, and manufacturing technological advancements means fewer people are needed to product goods.
it's never too late to put an end to the executive compensation nonsense.
Tier 1 bonus: # of product innovations that come to market
Tier 2 bonus (must have met Tier 1): product innovations sales numbers
Tier 3 bonus (must have met Tier 1 and 2): profit margin of new product innovations
In order to achieve Tier 3 bonus, you must have met the criteria of Tier 1 and Tier 2. this ensures that you aren't trying to build a castle on quick sand.
Tier 1 ensures that you are innovating
Tier 2 ensures that your innovative products are selling
Tier 3 ensures that you are achieving an acceptable profit margin
unfortunately it's too late to undue much of the outsourcing, job cuts, and benefits restructuring. manufacturing of high tech small electronics will never come back to the US mainland (Mexico maybe, yes...as the Chinese labor rate is now higher for the first time in history), the pension system as we used to know it is a dead horse, and manufacturing technological advancements means fewer people are needed to product goods.
it's never too late to put an end to the executive compensation nonsense.
Apple did just reorganize last year. Now they've got a head of services, software, hardware and design. What other reorg do they need? And if Cook should go back to COO (which is basically what you're suggesting) then who should be responsible for the strategic vision? One of the current SVPs? Someone from outside Apple?
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I can't believe two people up voted this.
first things first
APHEX TWIN YEAH!
second since it says you live in Seoul best luck tomorrow. avoid explosions and severe radiation.
APHEX TWIN YEAH!
second since it says you live in Seoul best luck tomorrow. avoid explosions and severe radiation.
Huh?
I'm sorry...say WHAT? Apple's retail operation had dozens of competitors, as have their various hardware lines.
I say "had", because Apple effectively wiped many of them out.
On the retail side, they competed with everything from Circuit City and CompUSA to Amazon and Newegg, not to mention BestBuy, Staples, etc.
Their hardware lines have competed with the likes of Dell, HP, Lenovo, Sony, Samsung, HTC, Microsoft, RIM, Motorola, Creative, etc. etc. etc.
Ron Johnson did a great job at Target, but Target wasn't a basket case when he took over. Likewise, Apple's stores had polish and focus. JC Penny has been circling the drain for decades - the only thing saving them has been the implosion of even weaker competitors, like Montgomery Wards, Mervyns and Sears/K-Mart.
I think Johnson had the right ideas, but executed them poorly. He drove off their dying customer base before he could successfully attract enough new customers to replace them. The company is likely to continue its slide into the abyss now.
Honestly though, who needs these awful department stores? Dedicated retailers have offered better product now for decades, apart from a few of the very largest players in the mid-to-high end, where economies of scale and buying power can help bring prices down a bit on quality merchandise (Macy's and Bloomingdales, at least sometimes, and Nordstrom which is pricey but can be a good value if you've got the money).
I'm sorry...say WHAT? Apple's retail operation had dozens of competitors, as have their various hardware lines.
I say "had", because Apple effectively wiped many of them out.
On the retail side, they competed with everything from Circuit City and CompUSA to Amazon and Newegg, not to mention BestBuy, Staples, etc.
Their hardware lines have competed with the likes of Dell, HP, Lenovo, Sony, Samsung, HTC, Microsoft, RIM, Motorola, Creative, etc. etc. etc.
Ron Johnson did a great job at Target, but Target wasn't a basket case when he took over. Likewise, Apple's stores had polish and focus. JC Penny has been circling the drain for decades - the only thing saving them has been the implosion of even weaker competitors, like Montgomery Wards, Mervyns and Sears/K-Mart.
I think Johnson had the right ideas, but executed them poorly. He drove off their dying customer base before he could successfully attract enough new customers to replace them. The company is likely to continue its slide into the abyss now.
Honestly though, who needs these awful department stores? Dedicated retailers have offered better product now for decades, apart from a few of the very largest players in the mid-to-high end, where economies of scale and buying power can help bring prices down a bit on quality merchandise (Macy's and Bloomingdales, at least sometimes, and Nordstrom which is pricey but can be a good value if you've got the money).