There was a ton of hype over Ron Johnson taking on the CEO job at JCPenney a year and a half ago.
Recruited by hedge fund manager Bill Ackman, Johnson bet his turnaround on making JCPenney look more like Apple, using a genius bar concept to influence how the new JC Penney stores will look.
But as JCPenney sales declined and feedback from customers and employees was relentlessly negative, Johnson ran out of time.
We attended Johnson’s big presentation in January 2012, when he officially kicked off his turnaround strategy. He told a packed house that, “We can change a brand overnight. And we’re going to do that starting 2.1.12.”
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
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
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
Introducing new shops will begin this year, and by December 2015, JC Penney plans to have 100 new shops within its department stores
With all these changes in place — partnerships, pricing, presentation — Johnson believes that JC Penney will restore its brand integrity
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
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
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