JCP Learns the Hard Way That Apple's Culture Isn't for Everyone

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JCP Learns the Hard Way That Apple's Culture Isn't for Everyone

02/27/2013
A clash in cultures seems to be at least somewhat responsible for J. C. Penney CEO Ron Johnson's troubles at the beleaguered retail chain, according to a Wall Street Journal report.

The article cites Johnson as brushing off colleagues who recommended piloting the CEO's radical new sale- and coupon-free strategy at select stores before implementing it throughout the chain. "We didn't test at Apple," one JCP executive recalled Johnson, a former Apple employee, saying.

The retailer has suffered a steep drop in sales — by as much as 30 percent — since the changes went into effect last year. But some of Johnson's ideas may be working. His move to freshen up store footprints by creating a collection of brand-driven boutiques a la Sephora and Mango seems to be enticing consumers. Sales per square foot in areas converted to the new store format are so far outperforming the old Penney, Johnson told the Wall Street Journal, and the CEO has landed deals with popular brands such as Joe Fresh and Jonathan Adler.

Still, the chain has reversed course and brought back some sales, some coupons — and the clearance racks are once again visible in stores, according to the WSJ.

One of Johnson's first initiatives at JCP was to trim corporate's bloated payroll. Roughly 1,600 employees of headquarters' 4,800 staff were laid off, says the WSJ. Johnson also cut the number of meetings his managers scheduled to review data and other metrics — but has added some of these meetings back amid falling sales and other woes.

The CEO took a page from his Apple playbook in establishing secret innovation teams or "iTeams," the WSJ reports. Team members were instructed to search internationally for leading retail concepts and to gather data from JCP's various departments but couldn't say if asked why they needed the information.

JCP's misfortune has been a boon for competitors. From 2011 through 2012, Penney's market share dropped from 12 percent to 9.1 percent, according to Euromonitor International, while Macy's, Kohl's, Dillard's and Belk all gained market share over the same period.

Despite the change of course and the reversal of some policies, Johnson insists on keeping the word "sale" out of the JCP vocabulary. If the price falls on a particular item, it's "an in-season markdown" or "new lower price," the WSJ reports Johnson as saying.

"This is the year we will find out if the vision we articulated is right or wrong," he told the WSJ. Johnson hopes the company returns to growth by the end of 2013.

Last month JCP told suppliers that its plans for fully RFID-enabled stores were moving ahead, although off its original ambitious schedule.