
How An Apple Star Lost His Luster At JC Penney - physcab
http://www.nytimes.com/2013/04/10/business/how-an-apple-star-lost-his-luster-at-penneys.html?hp
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akeck
Obligatory Warren Buffet quote: "I've said many times that when a management
with a reputation for brilliance tackles a business with a reputation for bad
economics, it is the reputation of the business that remains intact."

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Aloha
I love that quote.

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Spooky23
I'm one of the weirdos who always shopped at JC Penney.

They were always good at stocking good quality stuff at decent prices. I
happen to be big & tall guy and have a terrible time finding clothes -- I
can't shop at most mall retailers at all.

The problem with the transformation is that they did too much, too fast, and
didn't understand the business. Johnson didn't just stay away from HQ, he
never went to a store. THe shining halo of Apple conceals a lot of problems at
the Apple store as well... The place is packed, but people have no idea how to
actually check out. I usually see one or two frustrated shoppers give up
whenever I am at the apple store.

They did things that were great ideas, like not stuffing racks into the aisles
and getting rid of the cheap gizmos and merchandising. But they did everything
overnight and didn't replace the dingy old carpets that were concealed by the
racks. Good ideas implemented in a vacuum don't always work out well.

And, since tall guys aren't cool enough, they slashed the inventory of clothes
that fit me.

I felt bad when I bought a bunch of shirts for $10 on,ine that are priced at
$40 elsewhere in the big fire sale last week.

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Aloha
Me too. It was fat (tall) people clothing that was more conservatively styled,
which far better suits my personal wants than the chain fat peoples store.

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danso
> _By early fall 2011, Mr. Johnson was tackling Penney’s pricing, which he
> thought used too many discounts. He ignored a study Penney had just
> completed on customer preferences, and gave merchants a one-sheet grid
> explaining what prices they could use._

> _“Ron’s response at the time was, just like at Apple, customers don’t always
> know what they want,” said an executive who advocated testing. “We’re not
> going to test it — we’re going to roll it out.”_

Uh, OK...as others have pointed out, it's a far different game selling top of
the line future-thinking tech products and selling affordable clothing...and
this difference would be especially pronounced in the context of this
"customer doesn't know best" philosophy.

I mean, that's partially true no matter what the price point of the product
is...but the difference is that when you're selling expensive products with
high profit margins, you have much more runway to deliver that special
thing/innovation that customers don't yet know they want. How was that not
obvious to Johnson?

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mgkimsal
IIRC, he did have a stint at Target, revamping a lot of their merchandising,
so it's not like he had no experience with commodity/dept-store stuff.

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SurfScore
Before Jobs agreed to go back to Apple, he made sure he could pretty much do
anything he wanted and never get fired. A lot of the changes he made were just
as disruptive, if not more so, than the ones Johnson made.

Johnson tried to do that, and ran into two problems.

1 - He's not Steve Jobs, nobody is. He simply didn't have that 6th sense to
make business decisions blindly and almost always be right.

2 - He didn't have that much freedom. Jobs would have stayed in power until
Apple went bankrupt. They were that desperate and he had that much power.

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QuantumGood
Jobs refined one thing at a time over many, many iterations to an incredibly
well thought-out polish of design and functionality. His marketing was also
incredibly well thought out, carefully iterated, over a long time.

Johnson just seemed to think he could change stuff he didn't like with no
iterations and no need to think it through. Plus he had no special focus,
unlike Jobs with one key product at a time.

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Uhhrrr
“Martha is the key,” he wrote in an October 2011 e-mail to himself.

How did this make it into the article? Was it a company-wide mail headed,
"Open Letter To Me"? Is this his personal note-taking strategy, and he let the
Times read it?

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BobbyH
This email was likely unearthed during pre-trial discovery
(<http://en.wikipedia.org/wiki/Discovery_(law)>) when Macy's sued Martha
Stewart Living Omnimedia (MSLO) for breach of contract when MSLO decided to
start selling its formerly-exclusive-to-Macy's products to JCPenney. It was
probably found by searching for the keyword "Martha" in the emails of certain
top JCPenney executives. That trial has already revealed many important emails
about the Martha/JCPenney deal.

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uladzislau
While Apple Stores was a brand new project, turnover at JCPanny required
completely different strategy and most importantly managing expectations of
both internal and external stakeholders i.e. customers.

This story again proves that flexibility and desire to learn matters much more
than hard skills and experience. Apple approach only works for Apple.

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account_taken
How do these CEOs make the noobest mistake? Know your customer base! JC Penney
was never an upscale department store. Did he all of the sudden think it would
become one with a stagnant economy? Common sense. I think this guy lucky with
Apple. He was just at the right place, at the right time.

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8ig8
Apologies in advance. You may have a lot of domain knowledge that I don't know
about, but...

This sounds like armchair quarterbacking. It's easy on the surface to
criticize, but we don't really know all the factors that lead to Johnson's
decisions. I don't think it's fair to try to boil it down so much.

It's like someone criticizing a development project without knowing the
budgetary or time constraints. Yeah, it would have been better to do it _this_
way, but _that_ way assumed an infinite budget and time.

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Aloha
Really?

Have you been in a Pennys? It's about as upscale as Dennys, and as hip as the
dentist. On the other hand, it did offer consistent value and a consistent
shopping experience. He tried to do in a year, what needed ten years or more
to do, and failed. His failure is not unsurprising to any of us who have been
in the store. Pennys, was so un-hip it almost became hip, but it rightly so
had a image of dowdy women wearing housecoats shopping on a Tuesday.

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8ig8
I have been to Penny's many times. I don't necessarily disagree with your
observation of the store, the point I was trying to make is that judging the
dude on the visual data we have is unfair.

I don't know the guy, but I assume he's not stupid, so if what you believe is
so obvious, it must have been obvious to him too. But, for some reason he
chose a certain strategy and we don't know exactly why. We don't have all the
data.

All I'm trying to say is that it is easy to criticize, but I don't feel
comfortable criticizing someone who knows a lot more than me in a certain
area.

It's fucking hard to be CEO and I don't feel comfortable being an armchair
CEO.

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reddit_clone
What is your point? Only CEOs can criticize CEOs now?

It didn't seem like he knew what he was doing. Most people knew that he was
going to land on his ass. He duly did. Criticism fully warranted, armchair or
not.

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dankoss
Interesting personal take, but my impression is that JCP is in a slowly dying
industry. Does anyone under 30 shop at department stores anymore?

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felideon
Yes, specially when you have kids. And a lot kidless men and women buy
shirts/suits and outfits/dresses at department stores like Macy's.

As far as I can tell, at least.

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hkmurakami
Yup Macy's is a pretty good option for decently priced suits, socks, etc.

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kyllo
_By early fall 2011, Mr. Johnson was tackling Penney’s pricing, which he
thought used too many discounts. He ignored a study Penney had just completed
on customer preferences, and gave merchants a one-sheet grid explaining what
prices they could use._

I think that in JC Penney's case, excessive discounting may not have been a
merchandising strategy but rather a symptom of allocation mismatches in their
supply chain, leaving them with excess inventory (and associated costs). Their
mistake was hiring a merchandising guy who didn't get this and tried to
eliminate the discounts without fixing the underlying allocation problems.

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johnvschmitt
Ouch! It's a bad sign when you starve your team of useful data!

"He revoked access to Penney’s sales data for all but the top executives. But
that took away valuable information: the buyer for, say, men’s big and tall
could not see how women’s plus size was performing."

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mindcrime
Yeah, that one really stuck out to me as well. Maybe it's just a matter of
perspective, but if I were runny JCP, I'd make sure everybody down to the
janitor had access to that stuff. And everybody, including the janitor, would
have a channel to make sure their ideas could make it all the way to the top
and get heard, if they had merit.

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rurounijones
Apple is probably one of the most locked-down-as-a-matter-of-course companies
on the planet. I guess he took that philosophy with him.

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johnvschmitt
I bet that's it. And/or, "hey the sales are falling! Better hide that bad
news" Both are bad ideas, blinding them just when they need the data.

I'd rather risk having my competitors occasionally get some of my data, than
risk not sharing data freely within my own team.

The competition is likely already getting those signals anyway, and the larger
your organization, the more likely that you've got many internal blind spots
that you really need to address.

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jmspring
"But his Silicon Valley ways — evident from a showy party in early 2012 that
he threw to celebrate himself and his plans, replete with a light show, fake
snow and flowing liquor — jangled from the start."

SV is all about show and lights? The article is sensationalizing. Most SV
companies I know are about knuckling down and delivering. Parties about a CEO?
Maybe circa 2000.

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OGinparadise
There's only only place where you can (or could) get the greatest phone,
laptops, tablets etc: the Apple store. They had huge margins and great demand
so they acted as they didn't want to nickle and dime their customers.

Now let me see where else I can buy some decent clothes, dishes and sheets...

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rdtsc
> Now let me see where else I can buy some decent clothes, dishes and
> sheets...

Actually an interesting question. I remember going to department stores, and
malls more often. But thinking about it, I haven't been doing that lately. So
where to do people get their clothes, dishes and sheets?

I pick stuff up on Amazon often. That would be tough with clothes having to
send them back many times when they don't fit. Maybe I just reached a point
when I could afford to get more quality stuff that doesn't need replaced so I
just don't shop for it as much.

Is there a website for example that if I send my measurements, they can show
me a couple of models dressed in a few styles, and I would pick which ones I
like (like Netflix does with movies). It would figure out my style, then the
would just filter or sort clothes I would like and would fit me. I would pay
for that. It would save me time for example.

