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Why Ron Johnson Left Apple To Head JC Penney
By: Covestor.com   Thursday, May 3, 2012 8:53 AM
Symbols: AAPL, CGI, JCG, JCP, NKE
Penney's is at a similar financial postion that Apple was in 2001.

"We want our pricing to be fair and square"

Ron has broke down his plan into the six P's: Price, Personality, Product, Promotion, Place and Presentation.  This will become the very foundation of how the company will reinvent itself.

Price

The bold unique pricing concept will be transformed to three levels:

  • Everyday -  are the competitive, but reasonable prices.
  • Month-Long - are sales on select items that last a month.
  • Best-Price - the first and third Fridays of every month, cutting the price of products they want to move off the floor.

The plans will eliminate the standard fare of sales that have been expected for department stores.

Personality

Ron is going to echo brands like Apple, Target, Nike, Mercedes Benz and Tiffany with an iconic symbol and colors.  Most department stores have stuck to the early 1900s use of word marks like Bloomingdales, Macys, Walmart.  Just like the Target Red circle logo, if used correctly can be instantly identified and tied to a particular image.  Ron predicts that over time, the logo will embody a sense of conscious style and "hipness".

Products

With the new pricing concepts there will be a drive to have more variation in the products, described as "editing the content". For example, Brands that did not perform well the last year will potentially be eliminated.  There will be a drive for J.C. Penney's to motivate suppliers, much like Apple to innovate in every way possible.  The ideas the company creates may be shared as a reward to very responsive partners.

Promotion

For the year 2011 J.C. Penney's ran 590 promotions that only brought a customer in an average of just four times a year. This means that each promotion cost about $2 million. However about 99% of the potential customer base simply would not respond to these offers.
Ron said, "Steve (Jobs) would have thought that was insanity,"  The new model will be just 12 promotions, "They're called months," as Ron puts it. instead of getting people in four times a year, he hopes to draw them in just once a month. If successful, they could triple their business from just promotions.

Place

Ron makes no apologies that he is drawing from the ideas he had at Target and Apple to propel the new company's retail spaces.  He admits that he is "stealing" Apple's floor plans concepts and layouts.  Currently, Apple stores are split in two sections, the "Red Zone" for customer discovery of new products and the "Family Room" where returning customers come to learn something new or fix their products, the Genius Bar.


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