JC Penney Has a Sound Strategy Despite Marketing Errors

Ron Johnson Must Focus on Communicating Clearly With Consumers

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Under any circumstances, transformation is hard. But when you're trying to change the direction of an iconic, 110-year-old company that employs 159,000 people, operates more than 1,100 stores and does business with tens of millions of consumers and tens of thousands of vendors, it's a journey of Odyssean proportions. I lived through one of these more than a decade ago at Sears, Roebuck & Co. and have been watching Ron Johnson's moves at JC Penney with a keen, if somewhat pained, eye.

The road has been bumpy, and it's clear that there have been miscalculations. In the wake of significant double-digit same-store and total-sales declines, a decreased gross margin, a slumping stock price, management upheavals and marketing reversals, it would be easy to count Mr. Johnson out and join the chorus of those marking the days until his demise. I, however, will not be among them.

Call me crazy, but this man has a reputation for vision and a track record that prompted members of the JC Penney board to hire him in the first place. They wanted disruption, and they got it -- but disruption is very, very messy and takes time. While patience is not a common virtue or behavior among boards, investors and analysts, it will be required if JC Penney is to again thrive as a brand and Mr. Johnson is to succeed. And I believe that in this case patience will be rewarded.

The beauty of JC Penney's situation is that it controls what happens within the four walls of its stores. It has complete power to create a consumer experience that is compelling, relevant and differentiated. It just needs to tackle the inertia of its organization. Happily, this appears to be exactly where Mr. Johnson is placing his bets. He correctly believes in the future of "physical retail" but recognizes the recent overwhelming lack of imagination in creating retail experiences that are exciting and sustainable.

While he can't change most of his stores' physical location -- a significant issue, as many reside in malls that are not destinations for the shoppers he is trying to recruit -- he can make the experience remarkable, which over time will create believers and eventually demand.

But he also must commit to consumer communication that is as clear and compelling as his merchandising. If I learned anything during my time at Sears, it is that consumers need clarity. Particularly in the world of retail, they pay very close attention to brands and are quite literal in responding to the messages sent. When you have trained generations of consumers to behave in a certain way toward your brand you must be very careful in how you seek to change that behavior.

In the case of Penney, radically shifting to an everyday pricing model from a high-low promotional marketing and merchandising strategy, while introducing a new brand voice, should have required a much more thoughtful and clear set of communications. Consumers should have been told where you were taking them.

Mr. Johnson's recent willingness to concede that his initial radical approach was a miscue is evidence of the humility and flexibility that will be required for him to be successful. Restoring investment in some of the more traditional media vehicles like newspapers, which consumers still rely on to plan their shopping, will help drive the traffic that has eluded JC Penney and will over time allow new and current consumers to experience his fresh store concept.

In the end, I believe Mr. Johnson's transformation will be successful, assuming he is given the opportunity to complete it. And frankly, what other option does JC Penney have?

ABOUT THE AUTHOR
DAVID SELBY is managing partner and president of Schafer Condon Carter.
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