A recent MediaPost “Online Spin” commentary by Joseph Jaffe addressed one of the biggest corner office dismissals of the year (so far) in the retail world. J.C. Penney’s innovative CEO, Ron Johnson, was shown the door last week. And with his departure, Jaffe raised a myriad of questions about the implications of this big move.
Here’s the backstory…
J.C. Penney had been struggling, like a number of other department store chains not named Target. So they went out and did the BIG HIRE. They brought in the innovative Johnson from Apple, the guy who invented the Genius Bar and much of the retail brilliance that is the Apple Store. And before that, Johnson was credited with a large part of the success of Target.
But things didn’t go so well in his new gig, and if you saw JCP’s numbers, you would have fired Johnson, too. Maybe 17 months isn’t enough time to apply his magic to this retail Rubik’s Cube, but it’s hard to argue with facts and figures like same-store sales going down 32% during the all-important-for-retailers Q4.
So how could a guy with this kind of resume fail in re-energizing the Penney brand – and what does this say about the ability to turn around an old-line, damaged business like JCP? Of course, many are pointing the finger at Johnson and some of his moves.
But is it that simple? Was it Johnson’s big changes to the JCP shopping experience flying in the face of exciting shoppers? Was it the brand? Or was it something else altogether?
If you’ve been through a few format changes in radio – or several dozen like I have – maybe it’s not such a mystery.
That’s because we have the Radio Rules, and believe me when I tell you that radio people know a lot more about this stuff than people think:
Rule #1: If you’re going to make wholesale changes to a brand, blow it up. In radio, we know that when you make major programming moves to a well-established – albeit failing brand – it’s a heckuva lot harder to communicate those changes and sell them through. Sometimes, it’s smarter to just eat the sales revenue on the books, and just rebrand the thing. When it came to attracting new cume….or shoppers…isn’t the J.C. Penney brand a turnoff to many upscale consumers?
Rule #2: Take care of the core. When it comes to existing customers (or listeners), if you change the experience too much, they’ll leave the store. Certain brands – in radio and in retail – can only accommodate so much change and so much innovation before they simply implode. So often, radio undervalues the audience that it still has, assuming that existing listeners will simply go along with the change. It’s rarely that simple, and too often, incumbent listeners get caught up in changes they never asked for and don’t like. Traditional JCP shoppers must have looked at all those in-store changes and freaked.
Rule #3: Don’t forget what got you to the dance. In JCP’s case, it was ongoing sales promotions. CEO Johnson cut those way back on the premise that great brands don’t require regular “sales steroids.” But constant sales and deals were the foundations of JCP’s sales. And for many radio brands, it’s gimmicks like contests and direct mail promotions that are simply part of their DNA. You can’t just stop this activity cold turkey and expect everything to simply fall into place.
Rule #4: Test market your concept. Johnson was so under the gun to pull off a quick turnaround that he eschewed data and in-store research, and simply rolled out his concepts system-wide. The idea was that testing was “impossible” because of the pressure to gain quick results. Sometimes that’s just not possible. Research can be a great tool in trying out new concepts, but it requires time in order to effectively launch some trial balloons. We’ve heard that story before in radio, too, and the results are pretty predictable. If you rush a product on the air – without any research – the result is often a failed debut.
Rule #5: It may not work everywhere. We see this happen in radio all the time, too – a station shows great success, and the lemmings jump in, trying to replicate it in other markets. In Johnson’s case, the glow of the Genius Bar and the Apple Store concept was his shining example. But just because it worked for that Apple doesn’t mean it will work for JCP. As we know from the radio experience, every market is truly different – culturally, competitively, and socially.
I’m a believer that one way you learn is from observing the experiences – and yes, the mistakes – of others. In this case, Ron Johnson and J.C. Penney provide a great teaching moment.
Brands matter.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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My takeaway is a bit different than yours. In radio terms, if a PD is told to change a format with no research and just implement it on the fly and it fails, is the the fault of the PD or whoever insisted on those terms?
It seems that Ron Johnson’s big mistake was accepting the position given the time frame and restrictions that came with it. If you set someone up to fail and they do, well, it was set up. Yes, he should have known better, but Penny’s board should have too.
Being a public company brings pressures and conditions that often don’t serve its long term health and interests. There is certainly a lesson for radio here too as the pressure (for public radio companies) to show unrealistic year after year increases never dovetailed well with a limited inventory medium. Even if demand is there, its not like radio can just build another plant in China to manufacture avails, which meant that demand had to drive 15% rate increases (to satisfy Wall Street) and that was just as unrealistic as that Chinese avail plant.
Set something up to fail and it will. What is radio’s 3, 5 and 10 year plan for success?
Bob, thanks for bringing a different side to this. I think you’re right about the idea of taking a job where you’re set up to fail. Sometimes programmers (sales managers, too) come off past successes and are convinced they can do it anywhere. Not every brand can be saved. And as you suggest, conditions (time pressures, Wall St., lack of budget) conspire to make it fail faster. It’s a great textbook case in many of the things that can go wrong with any brand makeover. Thanks for taking the time to weigh in.
Plus the marketing campaign was a misfire. To get their new concept across they simply needed to be clear rather than clever.
Thanks, Marty, and it reminds me that when you hired a AAA programmer who tries to lay those values on a Country or AC audience, it just might not translate. Perhaps Johnson’s Apple sensibilities can’t possibly connect with the JCP “cume.” Appreciate you pointing out the marketing aspect of this mess.
wow – this one hits really close, Fred.
I agree with all your bullet point “lessons”.
On the cause of JCP debacle itself, I tend to agree more with what this Harvard Business Review blog piece calls the Hour-Glass economy: Markets for High End, Markets for Low End, but the hollowing out of the American Middle Class has decimated the once vaunted “Middle” market – where JCP had targeted.
https://blogs.hbr.org/cs/2013/04/jc_penneys_real_problem.html
It’s a view from the macro-level, and I wonder what the “hourglass economy” means for radio broadcasters?
Great points in this blog post, Jeff. I think she nails the larger problem. While Johnson may in fact have made a number of miscalculations, the bigger issue may be that there simply aren’t enough consumers in their target model to make this work. Add that onto the branding issues and other misfires, and it’s not hard to see why this JCP makeover couldn’t possibly work.
I think that part of the issue also focuses on the seeming invincibility of the strategist – in this case Johnson. If you believe you can turn around any brand, you may be kidding yourself. St. Jude, the patron saint of lost causes, is probably nodding in agreement. Some brands just can’t be turned.
Thanks for your contributions.