The 5 Big Mistakes That Led to Ron Johnson’s Ouster at JC Penney

Brad Tuttle:

But shoppers aren’t purely logical creatures. They’re often drawn to stores not by the promise of fair pricing, but by the lure of hunting for deals via coupons and price markdowns. It’s all a game, and a contrived one at that. But it’s a game that shoppers are accustomed to playing, and that many — consciously or not — like playing, with the “How Much You Saved” line at the bottom of the receipt serving as a score.

This story touches on some of the same ideas as a previous post that I initially started making notes for last week. Synchronicity.

People are sometimes very illogical when it comes to shopping. They'd rather feel like they're gaming the system than pay a fair price; the simplified pricing system Johnson put in place deflated prices by 40% or more across the board for his "Every Day" tier.

I think the main problem was branding. Instead of trying to reform JC Penney, which everyone agreed was difficult-to-impossible, what Johnson probably should have done was to create a spin-off or sub-brand utilizing his strategies. Instead of trying to retrain old customers accustomed to bargain-hunting and coupon-clipping, he should have started recruiting a new core of customers.

With that strategy, he might have been perceived as successful. He was, in fact, garnering some success with his policies. His boutique shops were already outperforming the rest of the store by 20 percent early last fall.

By splitting off a new brand from the rest of JC Penney, he could have highlighted his successes and brought support for using the same strategies at the parent store. It would also have provided publicity for the changes, but at the same time it would have partially insulated the JC Penney brand from any negative reactions. So he would, in effect, have been using the new brand as a testbed and promotional unit for JC Penney's main store.