“Who are you? Who, who, who, who?”
Apologies to Pete Townshend and The Who, but JC Penney’s customers have probably been asking the same questions since new CEO Ron Johnson took over. The retailer’s supposed savior has made several missteps since taking the reins of Penney’s in November of 2011, and its recently released fourth-quarter results are nothing short of catastrophic—a 31.7 percent same-store sales decline.
Who are you?
After Johnson arrived, without testing his new, no-more-sales strategy, no more coupons, he promptly alienated the majority of Penney’s existing customers. But, the retailer’s new stores within stores concept hadn’t been launched yet, except for a handful of locations, so there wasn't any new reason to shop at the store except to pay higher prices. And because the new concept hadn’t been realized, there was no reason for new customers to go to Penney’s. Isn’t this Consumer Behavior 101?
Now, Johnson’s done an about face and says that the retailer will have regular sales, but in the meantime, the once-loyal customer base Penney’s once had has found new places to shop like Kohl’s, Macy’s, and Target.
I really wanna know. Who are you? Who, who, who, who?
There’s no doubt that Johnson’s initial strategy was innovative, but where do you draw the line between concept and full-scale implementation? As Johnson reportedly said to somebody who questioned why they weren't testing the new concepts first before rolling them out to all stores, “We never did it at Apple.” About the only thing that Apple and JC Penney have in common are the letters “p” and “e.”
Maybe Johnson was desperate to make something big happen right away; maybe no one dared to tell the new Emperor he was making too poor of a wardrobe choice. One thing is clear: Sometimes when you bet the farm on a big idea, you can wind up losing the farm. While that’s not to say you don’t take risks, because anytime you innovate you’re taking a risk, you just need to assess how big a risk you can afford to take. If you’re essentially risking the entire business, doing some testing upfront is a good idea. How’s that for an understatement. And keep in mind that what people tell you in a focus group or online research isn’t necessarily how they’ll behave in real life; sometimes they have to have the actual experience in order to give an accurate read on how they’ll behave. In this case, it would have made a lot more sense for Penney’s to test its new pricing strategy in a few markets before taking it national.