Johnson's Downfall At JCP: 'Misunderstood Advertising'

JCPenney put an end to the tumultuous reign of CEO Ron Johnson, ousting the former Apple exec after what industry observers have described as a 17-month train wreck of misguided marketing and advertising.

And while dumping Johnson may not be all that surprising, given that its sales sank 28% in the most recent quarter, news of his replacement was a bit of a shocker: The Plano, Tex.-based retailer is bringing back former CEO Myron E. Ullman to snap it out of its slump.

Johnson joined Penney from Apple in November 2011, and embarked on an ambitious rebranding effort, renaming the company JCP. That included a shift away from its promotional pricing strategy to something he called “fair and square pricing”--no more sales, no more coupons. Despite a charming ad campaign starring comedian Ellen DeGeneres, shoppers stayed away in droves.

“Johnson misunderstood the role of advertising in retail,” says Ellis Verdi, president of DeVito/Verdi and a former board member of the National Retail Federation. “He tried to use advertising to change a behavior that had been ingrained for years. You can’t reeducate consumers that way.  Consumers control their perception of value, not retailers. They need to feel like they are getting a deal, and they’re not just going to take the store’s word for it. Consumers just aren’t that loyal.”



The store’s subsequent backtracking, including re-instituting sales and promotional events, just gave consumers more to hate. “In a century where consumers are more marketer than fool, speak to each other before they speak to the brand, and have access to more digital information each day,” writes Robert Passikoff, president and founder of Brand Keys, in an email to Marketing Daily, the shift came across as a “strategy hoax” and an attempt to bamboozle its most devoted shoppers.

It didn’t help that Johnson fired Michael Francis, the former Target CMO he had brought in as president, after just eight months on the job.

And while its most recent ads are pretty, promising a brighter, fresher JCP, “pretty is not enough to move traffic,” Verdi tells Marketing Daily.

Ullman’s return is intriguing, since the retailer languished and struggled under his leadership. Penney bought Johnson in to spark a turnaround for the struggling chain, largely due to the demands of the disgruntled Bill Ackman, the hedge fund manager whose Pershing Square Capital Management is a major shareholder. While he had been a primary Johnson backer, he is said to have lost faith, too, and reportedly referred to Johnson’s strategy as a “disaster” at an investor conference last weekend.

And many of the execs who worked for Ullman left during Johnson’s tenure. “While JCPenney has faced a difficult period, its legacy as a leader in American retailing is an asset that can be built upon and leveraged,” Ullman says in the Plano, Tex.-based retailer’s release. “To that end, my plan is to immediately engage with the company's customers, team members, vendors and shareholders, to understand their needs, views and insights.”

1 comment about "Johnson's Downfall At JCP: 'Misunderstood Advertising'".
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  1. Tom Denari from Young & Laramore, April 10, 2013 at 3:41 p.m.

    It's not that Johnson misunderstood advertising, he misunderstood consumers, thinking that we're rational beings. Read more about it here:

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