Ron Johnson Reveals How He's Going To Make JC Penney Look More Like Apple

JC Penney Fresh Air Event

Photo: Aimee Groth, Business Insider

The new CEO of JC Penney is taking some huge risks. Ron Johnson plans to completely transform the company by 2015. And a lot of this is inspired by his former boss, Steve Jobs.At yesterday’s presentation with JC Penney President Michael Francis at Pier 57 in New York, he spoke about how his time at Apple — specifically rolling out the Genius Bar concept — is influencing how the new JC Penney stores will look.

But that’s just one element of his bold strategy, which involves new pricing and big-name partnerships. His main goal is to restore the integrity of the brand, which has been badly beaten in recent years.

“All it takes is courage,” he told several hundred media, fashion and financial industry professionals. “We can change a brand overnight. And we’re going to do that starting 2.1.12.” 

Walking into the event reminded us of walking into an Apple store

A view of the stage before the presentation — which felt inspired by an Apple keynote event

The scene also felt somewhat like New York Fashion Week. We sat in front of a JC Penney designer, left, and two women who work in merchandising for Liz Claiborne

Everyone was eagerly waiting for Johnson to take the stage

A view of the new JC Penney logo

Johnson compares an image of Steve Jobs with an 1980s-era JC Penney catalogue — and jokes that they didn't look that different

He makes some comparisons between Apple and JC Penney: when he started working at Apple in 2001, the company also had a 3% market share. In fact, Apple was in a much tougher place: it was $25 million in the red

He talks about his history with department stores. After graduating from Harvard Business School, Johnson declined a job with Goldman Sachs to work in the retail industry

Department stores have lost 25% market share in the past two decades. Specialty and mass discount stores now make up nearly 70% of all retail stores in America

Johnson's vision is to reclaim that market share

The problem is, retail prices have been rising over the years, while the retail value of products has remained stagnant

Which means companies like JC Penney have just been discounting products a lot more — now averaging around 60%, which destroys brand integrity

His plan to restore the brand involves working on 6 P's: product, place, presentation, price, promotion and personality

In 2011, JC Penney offered 590 promotions — but a shocking 99% of consumers were ignoring them. So he's cutting the number down to 12, and spending $80 million a month on each (versus $1 billion a year)

The advertisements already look a lot more like those of Target or Nordstrom. Evoking a new image is a huge part of JC Penney's transformation

Johnson talked about how it took a while for Apple's Genius Bar concept to catch on. He wants JC Penney workers to have the same level of engagement with customers as Apple store workers

Johnson talks about how the Apple Store is arranged: with services at the front of the store and then products at the back

JC Penney is going to do something similar, but its service station will be located at the centre of the store

The entire layout of the store is going to change. Brands will be confined to smaller spaces — so essentially, giving the feel of specialty shops within the department store

Liz Claiborne is one of the company's big brand partners — and this is a glimpse of how the stores will look

Nanette Lepore, who has previously worked with high-end companies like Neiman Marcus, will also be a partner

As will Izod. Johnson says these partnerships are a huge opportunity for vendors

One of the company's biggest deals is with Martha Stewart

Introducing new shops will begin this year, and by December 2015, JC Penney plans to have 100 new shops within its department stores

Francis talks about other partnerships in the works

With all these changes in place — partnerships, pricing, presentation — Johnson believes that JC Penney will restore its brand integrity

An overhaul of JC Penney's website is also part of the change

The company will start rolling out its plans next month with its new pricing strategy. By fall, JC Penney will start introducing shops. By 2015, the company plans to have completed changing all store layouts

Johnson did an excellent job selling the new vision — everyone we spoke with, including some investors, were cautiously optimistic

Francis and Johnson walked down to the floor to talk to attendees

Afterward, Johnson spoke with a group of people about how Kohl's and Macy's are not JC Penney's main competitors — it's specialty shops and other retailers, because the department store model is changing

A view of the Izod station as we walked out of the event

And Nanette Lepore

People will be watching Johnson, and JC Penney, closely in 2012

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