Follow-up on JC Penney: Will their mea culpa commercial work?

By Annie Burnham

Last month, I posted a blog on the firing of former JC Penney CEO, Ron Johnson, due to his failure to turn around the company’s plummeting sales. Johnson created problems by pushing away loyal customers and ignoring their needs. JC Penney has existed for 111 years and has a large customer base. Johnson treated JC Penney customers like he treated Apple’s customers, despite the differences between the companies and their customers. The failure to recognize those differences coupled with the sudden and vast number of changes helped lead to Johnsons failures as CEO.

Mike Ullman, the old JC Penney CEO reinstated as interim leader, wasted no time in sending out a plea to former JC Penney shoppers. The struggling retailer released a 30–second commercial asking customers for forgiveness:

It’s no secret. Recently, JC Penney changed. Some changes you liked, and some you didn’t. But what matters with mistakes is what we learn. We learned a very simple thing: to listen to you. To hear what you need to make your life more beautiful. Come back to JC Penney. We heard you. Now, we’d love to see you.” The spot ends with the full JC Penney name, and the lines “Come back to see us” and “We’re listening on Facebook.”

While the commercial has garnered some attention for JC Penney, experts have differing opinions about what its outcome might be. Daniel Gross, writer for The Daily Beast, said that the firing of a CEO in such a short amount of time is an emerging trend. The speed at which changes in technology, social media, the market, and investing take place contributes to shorter tenures for CEOs.

“Over the past five years, an average of nearly 1,300 CEOs have resigned, retired, or been fired each year,” said John Challenger, CEO of Challenger, Gray, & Christmas, a Chicago-based executive coaching firm. “Patient money is nonexistent in the age of immediacy in which we live. JC Penney provides a case study of what happens when impatient money meets a turnaround that is likely to take time.”

Some critics say that there is no hope for JC Penney. According to Douglas A. McIntyre, a writer for the blog 24/7 Wall St, “JC Penney would not only have to reach millions of them with its new message. It also would have to compel these consumers to come back to an experience they abandoned because they did not like it.”

Whether customers return or not doesn’t seem to have deterred Goldman Sachs from approving a $1.75 billion loan for JC Penney this past week. One problem JC Penney now faces with the broadcast of this commercial is to live up to what it has promised. Gaining back its consumers and developing brand loyalty isn’t going to happen just because of an apology in the form of a 30- second TV commercial. Shoppers need to see changes that they like. So, what does the future hold for retailers —particularly JC Penney? Only time will tell.

How have you responded to JC Penney’s recent changes? Is the apology enough to bring customers back? Be sure to leave comments below.

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Ron Johnson’s Mistake: The Importance of Market Research

By Annie Burnham

On Monday, April 8, JC Penney fired its CEO, Ron Johnson, and rehired previous CEO, Mike Ullman. Johnson was hired in an effort to improve the corporation’s profits after the 2008 recession; unfortunately, Johnson tried to make too many changes too quickly. Now, with 700 stores in the middle of a costly remodel, the (once again) new CEO Ullman has his work cut out for him.

The news that JC Penney was letting go of Ron Johnson came as no surprise to many. According to one source, the industry had started taking bets on when he would be ousted. “His Q4 2012 was probably the worst quarterly performance ever in the history of major retail,” wrote Business Insider, Jim Edwards.

“One of the big mistakes was perhaps too much change too quickly without adequate testing on what the impact would be,” Ackman said at a Reuters conference last week.

Mark Ellwood, a retail expert and author of the upcoming book “Bargain Fever”, compared Johnson to Marie Antoinette. “He always seemed slightly embarrassed that he was dealing in middle market product,” Ellwood said. “His attitude when he gave a rare interview was very much along the lines of ‘let me tell them what’s good for them,’ rather than ‘tell me what you want as a customer and let me see how I can achieve that.”

Business 2 Community stated that market research should underpin everything your business does, something the College of Business prides itself on. The research skills that are taught in the classroom compliment the outstanding work done for organizations by our faculty and graduates.

If Johnson had used the same types of research techniques and strategies that CSU COB students are taught, he would have been able to make better-informed decisions. Johnson may have avoided financial loss and disdain for his leadership by testing the market to see if the idea works with JC Penney’s consumer base.

Johnson created one of his problems by pushing away loyal customers and ignoring their needs. JC Penney has been around for 111 years and has a large customer base. Johnson treated JC Penney customers like he treated Apple’s customers, despite the differences between the companies and their customers. The failure to recognize those differences coupled with the sudden and vast number of changes helped lead to Johnsons failures as CEO.

Had Johnson spent more time getting to know the customer base, testing his plan to remodel stores, and not doing away with the coupon sales that drove much of JC Penney’s revenue, he might still be CEO of JC Penney, slowly transforming another retailer into a Wall Street superpower. Let this be a lesson to you readers – doing your homework pays off in the long run.