Many expressed relief when, after 17 fascinating and turbulent months, the axe finally fell on Ron Johnson and his reign at J.C. Penney. And yet, the market hasn’t exactly danced a jig over his replacement: Myron “Mike” Ullman, the CEO who Johnson replaced a year and a half ago. (There is even talk that Ullman is basically an “interim” CEO, even if he’s not officially called that.) Penney has gone from an ultra-risky choice to an ultra-safe one.
Clearly, the optimal path lies somewhere in the middle, and, to his credit, Ullman seemed to acknowledge this. “I wouldn’t recommend that we go back to the way J.C. Penney was when I left,” he told The Wall Street Journal. “Things change.” Of course, he left only a year and a half ago, which shows how fast things do change today.
Much has been said about how Johnson tried—unsuccessfully—to modernize Penney, but in many ways, for all his hip Apple patina, Johnson could be considered a throwback. We are living in the Moneyball era, where data rules everything from baseball teams to presidential campaigns. In his presentations, Johnson rarely talked about demographics or anything empirical; his ideas came from his gut, like an old-time exec. And that became a problem when he turned out to have so little feel for his company’s core customer.
One question is now: Will any of Johnson’s ideas be kept?
“Fair and square” pricing is dead dead dead; it was well on its way out before Johnson left. I understand why he had such an aversion to phony deals and coupons, but it’s difficult for a mass merchant in a tough economy to pull off a no-discount strategy without either 1) great product (see Apple), 2) great prices (see Trader Joe’s), or 3) great service (see many companies in our industry).
Analysts think Johnson’s store-within-a-store concept will likely go ahead to some extent, if only because the company has invested a lot of money in it. But those plans could be considerably scaled down. J.C. Penney’s house brands have substantial followings; see this message board filled with complaints from people who miss them. I wouldn’t be surprised if the new-old regime refocuses on them.
Johnson’s “square” concept—where the store’s center would be turned over to big events, everything from yoga classes to kid’s haircuts to Santa Claus —is intriguing and, I would argue, worth trying. Mind you, trying something is not the same as foisting it on hundreds of stores at once.
Finally, I hope the plans to remodel the stores go ahead; many badly need it.
By the way, while Ullman may be considered a safer choice than Johnson, that doesn’t mean we won’t see dramatic changes at Penney soon, at least regarding its corporate structure. The company is now in such sorry financial shape that many think it will eventually be privatized, sold, or even go bankrupt. This story’s not over.
All in all, without Johnson, J.C. Penney looks like it will be a far less interesting company. But we also hope, a less troubled one.