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Ron Johnson Ousted as J.C. Penney CEO

By Robert Passikoff, president, Brand Keys

In 2000, the average tenure of a CEO was 10 years. In 2008, it was down to eight and half, signaling a slightly higher degree of corporate and brand accountability by boards and shareholders. Ron Johnson, the now former-CEO of J.C. Penney, only lasted 17 months.

We can’t imagine that anyone is surprised. The results of his efforts were dismal and grim. jcp (Johnson “modernized” the name and logo) lost $552 million in the fourth quarter, nearly a billion dollars for the year, and sales fell nearly 29% versus a year ago. And Penney share lost half their value during Johnson’s tenure.

Nobody would deny that retailing has gotten tougher in the past few years. But equally so, brands have learned that if they can create some degree of emotional engagement (in additional to doing the rational stuff, such as merchandise range, fair pricing strategies, and customer service), they are bound to see positive behavior toward the brand.

And yes, it’s gotten harder for retailers to provide meaningful and engaging differentiation as regards their brands. But it’s axiomatic that if customers behave more positively towards you, you ought to see positive results to your bottom line. To do that, however, you need to have something that customers can engage with. We won’t go into all the reasons consumers engage with Apple as that would be preaching to the choir. Johnson apparently thought Penney and Apple were on equal planes when it came to emotional engagement. Boy, was he wrong!

According to our 2013 Customer Loyalty Engagement Index, when it came to department stores, overall engagement levels (versus a category ideal, calculated to be 100%) were pretty close:

  • Kohl’s: 84%
  • Macy’s: 82%
  • Marshall’s: 81%
  • T.J. Maxx: 80%
  • Dillard’s/Sears: 79%

But not for J.C. Penney. The company’s engagement rating — according to their own customers — was 70%. That’s low in any category, but particularly so in department store retailing.

Penney has announced that Myron Ullman, who had been CEO until Johnson was brought in, is coming back. In a seven year period when Ullman was in charge at Penney, the company’s shares were down 15%, so about 2% a year, which is still a lot better than 50%.

Talk about cutting your losses!


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