Exhuming JC Penney’s Failed Marketing Makeover For Leadership Lessons We Can All Use

The iconic, 111-year-old retailer ditched nearly everything former CEO Ron Johnson attempted during his short stint in charge. Good call?

Out with the new, in with the old.

In a sweeping move to right the ship after former CEO Ron Johnson’s failed attempt to reinvent the JC Penney brand and inject new life into the business, the company has adopted a bold new marketing strategy—hire their retired former CEO who Johnson replaced just about two years earlier and quickly return to the deep discounts and door buster deals that originally got them into this mess. Wait. What?

I get it. I really do. After experiencing a deeper than expected loss of $348 million and a drop in same-store sales of 16.6% in the first quarter of 2013, something definitely had to be done. And so far that something has meant completing undoing just about everything Johnson tried to implement during his 17 months in the position. Talk about throwing the baby out with the bathwater.

When you get right down to it, JC Penney's "new" marketing strategy sure does sound a lot like the old one—reconnect with core customers, offer promotions, and bring back some private label brands. But here’s the thing: If that approach had actually been working in the first place why bring Johnson in to shake things up?

Trying to reinvent the image of a 111-year-old retailer

Johnson was obviously on a short leash, and his inability to deliver meaningful results while the company continued to experience mounting losses only made that leash even shorter. Whether or not he would have been able to completely overhaul the brand, appeal to a new customer base, and help guide JC Penney back to a path of consistent profitability, we’ll never know. The company was burning through a lot of money and they didn’t have the luxury to give him more time.

Johnson has taken a ton of flak for creating a mess during his short tenure as CEO. He failed big time trying to reinvent the brand and marketing strategy of a 111-year-old retailer in a hyper-competitive landscape. But just because things didn’t work out doesn’t mean there still weren’t some really good ideas and insights the company could use and build upon as they develop their "new" plan. To completely wash their hands of pretty much everything that was put in place over the past two years seems a bit shortsighted and reactionary.

Putting the "new" in new marketing strategies

With department stores and more and more discounters and online retailers nipping at their heels, one thing is for sure—just staying the course is definitely not an option. If JC Penney is ultimately going to be successful and avoid another failed makeover attempt, at some point they’re going to have to embrace "new" marketing strategies and actually mean it.

[Image: Flickr user Anthony Albright]

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  • microtek1

    I worked selling to the largest retailers in the country for more than 25 years including JC Penney, and I believe they made the right decision in abandoning Johnson and this ill conceived plan. I knew from the start it had failure written all over it. After working with JC Penney for many years, most in the apparel industry will tell you their greatest distinctive may have been their commitment to quality in their private label lines. One company I worked with had been a continual supplier to JCP for more than 100 years, pretty amazing in today's world. Their commitment came long before Target, Kohl's, and Walmart jump into Quality Control,  and they built quite a reputation for great quality at a fair price. I would tell friends if you want a great suit...go to JCP. Dress shirts..yup, JCP. 
    So, ditching the private label emphasis for brands thrust them directly in the pocket between a Macys and Kohls. Even with new investment, the stores didn't come up to the level of the top tier Department Stores. At the lower, promotional department store level, Kohl's, they must have jumped for joy as they ground up JCP into dust. As well, timing being everything, abandoning promotional marketing and coupons with the consumer economy in the tank made no sense. 

    What can they do? Well, get the superior private label product back. The JCP quality department is incredibly tough and this will give you the bones for good stuff. Now layer in excitement. Companies like H&M and Uniglo are exploding in the market. They have girls lined up to get in. Buy talented designers and bypass the brands. Put it out there a competitive prices. It doesn't have to be 100% of your mix, but enough so you establish an reputation for cool stuff. If you have to, brand a shop concept to get away from the stodgy JCP name.  You become distinctive. You have something different than the promotional department stores, and you have your own manufacturing and design platform most department stores don't have.  This is a plan that will work. Hope they get it figured out...they have a great legacy to uphold and it can be done with the right people.

  • Lenkrause

    I used to frequent our J. C. Penney store often.  When Ellen DeGeneres was hired to be a spokesperson for the company and the company supported the homosexual lifestyle (which is against Christian doctrine), I stopped going there.  I did go there once to buy something I didn't know where else I could get it, and I felt guilty even walking into the store.

  • Guest

    I started in my first business in my very early twenties and since have been in management
    all my life. Having said this I really cannot understand the thinking that todays businesses like
    Pennys seem to think and target only the under twenty or thirty age consumer, do these people
    not look at the figures that show more people over these age groups by far than under and even
    taking into account that they may spend a little more why blow off such a large number by
    leaving them completly out of your advertising I have spoken to many men and women who
    purchased  from Penny's all their life and have not been in there store for up to a year feeling
    that they are only interested in the younger consumer and now have nothing to offer the adult
    consumer. Can you enlighten us on this thinking.

  • Shawn

    Thanks for the comment. It's definitely a challenge--how do you attract a new demographic without alienating your existing customers. There's been a lot of talk about the customers they lost, but if everything was going swimmingly before Ron Johnson, I'm guessing they wouldn't have decided to go in such a bold direction?  

  • Erik

    Great to see a neutral article that doesn’t completely tag Johnson as the ultimate retail failure who was completely out of touch with reality.  He did have many great ideas (everyday pricing, revamped home department) and a few silly ones (mobile checkout).  He was putting 110% into was asked of him – effecting radical change in a short period of time.
    Over the past few months, JCP has won me over.  The ideal demo: educated, young professional who previously thought of JCP as a no-frills, vanilla store with nothing that really appealed to me.  Now the (remodeled) stores are absolutely gorgeous and a true pleasure to shop in. 
    Ullman has inherited a construction site of a company and is in a unique position: if he leads the company to success, he’ll be heralded as the one who saved JCP.  If he doesn’t, all reports will hang the blame on Johnson and say Ullman did his best with what he was given.  Not a bad boat for Ullman to be in; his legacy isn’t tied to the success or failure of JCP.  As a stakeholder, I’d ask: Is he really the best man for the job?

  • Shawn

    Thanks, Erik. That was my first thought when I heard talk of their new marketing plan--which pretty much involved going back to the old marketing plan with a former employee. 

    If nothing else the refresh of the stores was likely long overdue and a huge upgrade.

  • Jessica Leppanen

    I'll tell you the truth.  I want to buy some new clothes for summer.  I can't bear the thought of walking back into the old "bargain basement" Penneys.  (Already the website is back to looking cheap and dull.) Can't do it.   I liked the respect Ron Johnson showed customers--style, color, fun, for a reasonable price, everyday.     I liked what Ron Johnson was STARTING to do.  I am a small, Sharebuilder shareholder in Penney's, and as Johnson proceeded and as I saw the upbeat changes taking place in the stores, I knew that we were going to have to spend money to make money.  I was willing to hang in there--I saw the positive changes.  Just because Business Insider and coupon shoppers had it in for Johnson, why should the rest of us be punished?  He obviously offended the "bargain shoppers" who don't care that stores have to raise prices so that cheapsters can chip away on posted prices with their beloved coupons.  The waste that goes with all those faux sales! I just want to pay an honest price for honest value in a pleasant, welcoming environmet. Penney's should bring back Ron Johnson as a consultant, to help envision a future! Or maybe he should start his own brand of retail experience.  I'd be happy to visit the Johnson Penney's again, but I'm afraid to go back to the bargain basement slum. I also want to say that the "old Penney's" new apologetic ads are disrespectful to those shoppers who did buy in to the new and vibrant shopping experience that Johnson envisioned. Why would they turn their backs on a more modern clientele, who believe in fair price, value, and fair wage? If they step backwards to please the coupon clippers, then count me out.

  • Kurtkomaromi

    It's easy to criticize Ron Johnson and his strategies in retrospect. There's no question that the financial results under his leadership were grim to say the least. I don't know enough about this case to identify where he went wrong. Perhaps, he tried to do too much too soon. Let me say this though - Ron Johnson is a great merchandiser. Have you been in one of his remade JCP stores? I visited one last weekend and was really impressed. The in-store boutiques featured Sephora, Martha Stewart, Gordon Ramsey and other brands. The signage, colors, and displays were fresh and hip. The store had been transformed from the doughty experience I recall from several years ago. It's too bad that he had to deal with all the baggage of the tired JCP brand and didn't have the time to build a new base of customers. Repositioning a brand is the hardest thing for marketers to do in my opinion. 

  • Shawn

    Thanks for the comment. That's where I think JC Penney is really missing the mark. Just because he wasn't able to deliver the results that they were looking for doesn't mean that they need to throw the baby out with the bathwater just so they can appease what was already a shrinking customer base. With so much saturation in the big box retail space, he might have actually been onto something with the boutiques. But it looks like we'll never know.

  • Al

    I was a casualty 30 years ago.  Was phased out of the auto centers when Penneys closed them in May of 83. Penneys also discontinued hardware, paint, computers (commodore 64) furniture and other hard lines to concentrate on soft lines.
    I still know people who work in the stores.
    The above are my bonafides .
    Recently, first part of April, Penney fired all of the cashiers/reservationist in the salons, replacing them with "just out of school" cosmetologists to do the same job, then those new-hires could take walk-in business.  Also, corporate took all the commission away from the cosmetologists and put them on salary still requiring them to keep up productivity. Penneys lost THOUSANDS of cosmetologists due to this.  They left and stated their own salons.  And took customers with them. Penneys stabbed them in the back.  Just recently Penneys gave the cosmetologist back their commission, but at a lower percentage.  The stores fired all the sign people, so no one knew how to produce signs.  Those that were done were were mis-priced and often in error, leading to confusion with the few shoppers in the store.  

    I tried to buy a white short-sleeved dress shirt 16 1/2 in color, non-button down Stafford brand.  Not only did the stores not have it, I could not buy it through the website.  Penneys did not have it available in the country.  Some thing I heard about the increase in the price of cotton world wide and Ron Johnson had not allowed for the price increases in the budget for merchandise. This I would expect from Sears. 

    Sad, truly sad.  Tragic. Uncalled for in the world of retail.

    Ron Johnson lives on the cutting edge of retail.  His vision of "each store a mall" to hang out in with a Starbucks was not going to fruition. Young people grow up and older ones are not going to hang out for hours.  Disconnect.................

  • Shawn

    Thanks, Al. First--it sounds like we wear the same shirt size so I'll have to keep that in mind if I'm shopping at Penney's. Unfortunately, the biggest casualty in retail over the past 1-2 decades has been a lack of focus on customer service. Instead of paying for and rewarding employees with product knowledge, staffing became just another area to cut costs and--in most cases--quality. 

  • Dave

     It appears they should have been studying their customer demographics and tailoring products to their wants and needs. I do not recall ever getting a call or receiving a survey in store or in the mail. I will say I liked the new direction and vision, however without the buy-in of employees and managers, the vision would never come to fruition. This, in my opinion, is the reason they scrapped the plan. If they brought someone in who could communicate the vision, emphasize the mission, then there would be a turnaround. Without employee participation, customers sense the apathy, and generally will not shop there.

    Just my .02 worth

  • Shawn

    Thanks, Dave. You raise a great point. Understanding your customer (both current and desired) are INCREDIBLY important. In some cases, companies settle for guessing what they think their customers want instead of asking--and they miss a real opportunity to get actionable insights and build good will. 

    Employee and management buy-in is definitely a must! 

  • Erin Rasmussen

    I liked the new marketing, it got me into the store, but when I got there, the fabric the clothes were made of was of such poor quality that the clothes that I bought at JC Penny in that time period literally fell apart on me. The store did a great job of processing the return, and I bought more, but those clothes fell apart also. The clothes I bought before the old CEO retired are fine, but I'm not really sure I want to try again.

  • Shawn

    Thanks, Erin. It sounds like a somewhat frustrating experience from a customer service perspective. Now that the former CEO is in place, you'll have to let me know if 1) you give them another chance and 2) if you notice any differences in terms of quality. 

  • Lgariepy6983

    Jcpenney needs to change their name! Like Hudson's did and Parisian did!

  • Shawn

    Now that would a bold move! They tried to go in that direction a little bit with the new, hipper JCP. Given their long history, do you think that's something they would consider?

  • Interactive Edge

    It's unfortunate the new CEO didn't have more time to develop what I'm sure were great ideas.  But that's usually the case when companies are in turmoil: have no time but need huge results.  It's definitely a rock and a hard place... 

  • Shawn

    Yes. If everything was going swimmingly, the last 24 months would have likely looked a lot different. Definitely an incredibly difficult spot to be in--fix a huge problem and do it immediately. Oh, and continue to make money. Rock and a hard place indeed.