Ron Johnson Termination Watch

How long will it be before the JC Penney board fires Ron Johnson?

I’d say it’s getting close.

First, without evidence to support his decision, last December he overhauled the company’s price strategy. Many people would agree that Johnson’s ‘everyday-low-prices’ change sounded reasonable, except for it would seem, customers.

In the first quarter of Penney’s new pricing strategy, sales tanked. As is typical with such leadership failures, rather than admitting a mistake and reversing course, Johnson entrenched himself with his strategy by saying it will take 3-years to see a difference. Good luck with that.

I’ve seen other leaders make the same claim. They usually weren’t around long enough to see if they were right.

As a true measure, if you believed Johnson made the right call, did you buy more stuff at Penney’s because of its new pricing strategy? Why or why not?

I have a characteristic that most CEOs don’t have. I can admit that I don’t know. Johnson’s strategy may have been a good one. But, if I were running the company, I wouldn’t make a wholesale change unless I had strong evidence that it would help.

JC Penney has enough stores that they could change the price strategy in a few and see if it helps or hurts profits. That’s called a randomized market test or field trial.

I believe shareholders pay managers to put their egos aside and use the resources they have to figure out how to make the best decisions for the company, decisions that please the customers and generate more revenue and earnings for shareholders.

Often, however, boards of directors are attracted to the cowboys who throw caution to the wind and make BOLD changes based on their gut instincts. It’s unfortunate that those board members rarely lose their jobs. So goes the woes of corporate governance.

Johnson now has a new idea. Seems right up his alley, coming from Apple. It’s tech related.That’s a typical move from a failed CEO. Move to your strength after you blow it on something else.

But, it’s a red herring. He hopes his cool new idea will take your mind off his previous rotten idea. He wants to use technology to get rid of cashiers. Kind of neat (unless you like your job as a cashier). But, will that cause you to want to spend more money there? I don’t see the case for it.

But, still, Johnson hasn’t learned the most important lesson. It doesn’t appear that he’s testing his change. The article says this will happen. There’s no talk about this change being explored in market testing. Maybe it’ll work, but we don’t know and if he rolls it out without testing it, he’s just creating more risk for shareholders.

Shareholders can’t afford cowboys.

I’m going to give away a valuable secret to success in retailing. It’s so painfully obvious, but also so elusive for so many ego-driven CEOs. Ready? Here it is. Sell what people want.

Often, cowboy CEOs don’t understand this secret. They try to remake the business into something that meets their own personal preferences not realizing that their preferences do not match that of their customers.

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6 thoughts on “Ron Johnson Termination Watch

  1. Ron Johnson is catering to the non existent young shoppers who he supposedly thinks are the major customer base at JCPenney.The truth of the matter is … most people who shop at JCPenney are in their late 40’s to late 60’s. These people don’t want radical change … they want their sales and coupons! Sears came up with an everyday value concept years ago and it didn’t work for them so, why on earth would it work for JCPenney now? Most successful retail stores cater to their customer’s wants and needs. The majority of customers want a sale and they love coupons so, why not give them what they want???? Now theres talk that Ron Johnson is going to do away with cash registers? Supposedly his plan will have people roaming around the store with Ipads to ring customers up. They can then go home and print out their receipts online. Leaving the store without a receipt for your items? What about if the receipt does not show up in your email? Will you get full price back if you return the item? What happens if you have an armfull of clothing? Are you supposed to hold them while the person scans the items with his/her Ipad? No register, no counter to put them downon, right? What about bags? Where do you get them from to place your clothes in? What about the customers who have no computers or are not computer savy? Remember the customer base at JCPenney is late 40’s to late 60’s and perhaps older. I guess Ron Johnson doesn’t need their business anymore? What gets me is that the JCP Board of Directors hired Mike Ullman (former Macys CEO) prior to Ron Johnson. This guy took JCPenney down a few notches during his realm. When he was CEO at Macys they were in a stagnate stalemate. If he couldn’t do a good job at Macys why on earth would you hire him? This same guy was responsible for forcing longtime JCPenney employees out the door and into retirement. Now, the very same board hires Ron Johnson and the shareholders stocks have plunged with his No Sale/No Coupon strategy. If anything, the shareholders should get rid of their Board of Directors along with their new radical thinking CEO.

    • Thanks for the comment, Alice. I agree. I do wish shareholders could fire their boards of directors easier than they can today. It’d be nice to have more transparency into what each brings to the table in terms of business results and how each of them vote at board meetings. It’d also be nice if there was real-time and open voting for board members.

  2. Since this new CEO took over JCPenney it’s sales have fallen, it’s stocks keep tumbling and the company keeps posting big losses. My local JCPenney is almost empty and void of customers. There are hardly any sales people left as I heard many lost their jobs or had their hours cut. I could not find anyone to wait on me and I had to walk around searching for a register to ring my items out. I guess this is Ron Johnson’s idea of reinventing JCP. He has turned this company into a ghost town. Like many other dismayed customers, I definetly will not be shopping there in the future. As for the comment above, the board of directors should be fired along with their hot shot CEO. If I had stock in Penneys, I would really be upset about my shares losing money every day.

  3. JC Penny has turned into a ghost town. I have been working there for over three years. I like the way the store looks now. But, that is about it. The inventory is low or gone, the customer who has been loyal for many years is hurt and angry that we no longer offer the brands they love. They feel betrayed and it shows in the ghost town store that I now work in. My stomach turns wondering when I will get the pink slip. All customers tell me that self checkout is ludacris. People are overwhelmed with all this technology. When they shop, they want to be pampered and catered to. That means checkout with a clerk who chitchats about pleasantries of the day. You know, JUST BEING HUMAN. You would have to ask the craziest question that used to seem unimaginable, “Is Ron Johnson sabatoging JCP ?” He has lost sight of the customer base that shops at JCP. If he is wanting to attract younger people, I say fine. But, they are not the majority of people shopping these days. At least, not at JCP. Ron Johnson has a vision, but it sucks. Just plain sucks. He should take his wealth and start his OWN BRAND, and let’s see if he takes the chances with his own money, not ours. I bet he would not. There are plenty of boomers out there with money. Hello Johnson, does this ring a bell? Duhhhhhh

  4. Pingback: Longer than I thought | Our Dinner Table

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