During his disastrous tenure as JCPenney CEO, Ron Johnson ditched coupons, brought in fancy designers, and started to build boutique-style shop-in-shops.
His goal was to make the old-school department store into a millennial destination, like his former employers Target and Apple.
Johnson’s ambitious turnaround strategy was considered revolutionary by many.
But his plan failed miserably. Sales fell 32 per cent, and now analysts are speculating on whether new interim CEO Mike Ullman can salvage any parts of Johnson’s turnaround plan.
The biggest reason Johnson’s plan failed?
His strategy to target urban-dwelling millennials alienated many of JCPenney’s current shoppers.
“Middle Americans, across the country, simply like their sales,” writes Dale Buss at Forbes. “Kohl’s mushroomed from a tiny regional apparel retailer based in Milwaukee to a nationwide mega force by applying this basic understanding of consumer psychology.”
Johnson believed that he was smarter than his shoppers, and dismissed discounts as false psychology, Buss writes. By doing this, he downplayed the power that sales have on shoppers.
A former JCPenney shopper, an Ohio woman in her 20’s, told us that she hadn’t visited a store since Johnson announced he was abolishing sales.
“I used to really love shopping there, but haven’t been back because there are no deals,” the woman told us. “It’s like, what’s the point of going into stores?”
Johnson’s alma mater, Apple, almost never has sales, but that approach doesn’t work for JCPenney shoppers, Buss writes.
“(Johnson should have) got to know J.C. Penney shoppers a bit before he decided to treat them all like eager iPhone buyers who are so enamoured of the merchandise that they don’t pay any attention to price,” according to Buss.
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