Why Was Penney's Ron Johnson Fired?

This week, JC Penney -- or jcp, as they are now affectionately known -- ousted CEO Ron Johnson after just 17 months on the job. Yes, THE Ron Johnson. No, not Ron Jeremy. Ron Johnson -- The Dude! The guy they hired from Apple; the guy responsible for Apple retail stores and the Genius Bar.

Turns out not even Johnson could turn around a failing ship in the form of JC Penney. Although some argue it was because of Johnson that sales continue to plummet, consumers continued to migrate to competitors and the stock price continued to fall. Or if not, certainly these downward trends were at the very minimum accelerated or exacerbated by Johnson’s tactics, such as:

-       Eliminating the crack addiction of coupons and discounts that were once “ignored by 99% of everyone” in favor of everyday lower prices (hint: cold turkey is not pretty). JCP ran 590 promotions in 2011, and the idea was to reduce these to just 12 (coincidentally the same number of months in one year).



-       Replacing long-time agency Saatchi & Saatchi (the original purveyors of the brand as a lovemark).

-       Introducing the new logo, which fit somewhere on the Tropicana-through-Gap continuum of “huh?”

-       Arguing with Martha Stewart (she is an ex-con, after all).

The numbers don’t lie:

-       Same store sales were down a whopping and record breaking 32% in Q4 2012.

-       As of February 2013, JCP’s stock price was down 46% on the year

-       And, as of April 2013, it has hit $14.50, down from the $42.68 when Johnson took over.

How did this happen? After all, Johnson was the Apple guy. And before Apple, he worked at Target. And during his reign, he hired Michael Francis, the CMO of Target credited with the tremendous success story that is Targé, or Cheap Chique.

On The, Rocco Pendola writes an interesting take, making the comparison between Johnson and former Yahoo CEO and current pathological liar, Scott Thompson, in terms of misrepresenting credentials. Or, to quote George Costanza: “It’s not a lie…if you believe it.” Pendola's referring to taking credit for the Apple retail miracle, when the alleged reality was that it was just Steve Jobs Pixie Dust transfer. In other words, Johnson was just “executing” Jobs’ vision and strategy.

To be quite honest with you, I’m deeply conflicted. I’m not really sure how to interpret Johnson’s departure, but one thing I know is that it isn’t good -- for anyone.

People will try until the cows come home to analyze this event, and ultimately to point fingers. Mostly, they’ll try and make excuses in order to justify their own biases and misinformed opinions.

Sure, we can blame a logo. Or the firing of an ad agency. But then, wasn’t it the same ad agency that for the past five years had been complicit in setting up a problem that was about to go nuclear? It certainly feels reassuring to be able to pinpoint one single justification for the horror show -- for example, the major pricing shift -- but the reality was a combination of both internal and external factors that, truthfully, are endemic to the entire brick-and-mortar retail space and experience, as much as they are “inside” one particular brand.

And change takes time, damnit. Probably longer than 17 months, but certainly not when hung out to dry with gruesome numbers. This wasn’t a colonic as much as it was a hemorrhage.

Personally, I’m saddened because I believe in people. Leaders. Visionaries. I’m left feeling lonely, cheated and disillusioned by the fact there was only one General Steve Jobs, and all his lieutenants were perhaps no more than emperors with no clothes.

If managers with Apple and Target credentials couldn’t fix Penney, who can?

Or, to quote Warren Buffet from an article written on The Motley Fool: “Good jockeys will do well on good horses, but not on broken-down nags.”

3 comments about "Why Was Penney's Ron Johnson Fired?".
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  1. David Ross from dave ross , April 11, 2013 at 11:18 a.m.

    Apple has a rabid fan base, who isn't deterred by a lack of sales pricing. All they needed was a place to go to spend their money. Bonus is that the physical space was as cool as the products they love. JCP— who? what?

  2. Paula Lynn from Who Else Unlimited, April 11, 2013 at 2:10 p.m.

    Entirely different audience for Penney's that no one seemed to get. Target and Penney's have different audiences totally including, if not especially locations. Penney's also had one of if not the largest drapery purveyor in the country at one time. That whole Martha Stewart fiasco still boiling and bubbling was plain stupid. There are no winners. Macy shoppers are not Penney shoppers and Martha Stewart won't change that. Shoppers are not data induced. And "stars" .....

  3. Ira Kalb from Kalb & Associates, April 11, 2013 at 6:54 p.m.

    Johnson made a huge number of marketing mistakes that a real marketer would not make starting with not asking or even listening to JCP's customer base. Everything he did was out of his own head. He was not at all market driven.

    Lower prices everyday. Isn't that Wal-Mart's playbook and how could JCP compete on price with the much larger Wal-Mart? Also, without luring customers trained to look for deals, what is the incentive to go into a JCP store today if the prices will be low tomorrow. Deals from competitors lured them instead, and they bought what they needed at Target and Wal-Mart without needing to go to JCP tomorrow or next week.

    Lastly, being a CEO is a much different job than running stores under a CEO that is a micro manager. Not to diminish Johnson's previous success, but it is not clear (as you point out in your post) who was responsible for his previous successes.

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