JC Penney Introduction & Ron Johnson at Essay

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JC Penney

Introduction & Ron Johnson

At this point it is hard to judge if JC Penney is a well-run company because it just got a new CEO but in recent years it definitely has not been well-run. The recently-fired CEO Ron Johnson made a few strategic moves to transition the company's store to the modern era (Heller, 2013). Among the moves made were to upgrade the clothing lines, eliminating the deep discounting and reducing the workforce, as well as technology upgrades (Ibid). The problem was that these moves alienated staff and customers, without bringing in any new ones. JC Penney went from $17.2 billion in income in the 2012 fiscal year to $12.95 in the 2013 fiscal year and it lost money both years (MSN Moneycentral, 2013). The decline in net income for 2013 was actually not as great as the decline in revenue would imply, indicating that must of the lost revenue was indeed from deeply-discounted items, and that the internal cost-cutting was largely successful. Furthermore, eliminating the deep discounting is something that in the long run would have made the company more attractive to new brands, which it needs. Some argue that this strategic move to drop Johnson was done at entirely the wrong time, since all the tough moves had been made but the new brands were not in place, leaving the company starting over with no brand identity (Stone, 2013).

Celebrities

An earlier move that JC Penney made was to embrace celebrities to appeal to a wider customer base. The appeal of celebrities in marketing is to create aspirational branding (Till, 1998). Studies have shown that two approaches are often used, a celebrity for likeability and a celebrity for fit (Fleck, Korchia & Roy, 2012).

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JC Penney worked with several celebrities who had branded retail lines in order to enhance the appeal of the stores. In some cases, these moves ended badly when the appeal of the celebrity declined -- as happened with Paula Deen -- and in other cases such as with Ellen DeGeneres there was controversy that swirled around the company. Celebrities can be sometimes polarizing figures, which is a consideration the company must account for when it is trying to market to a broad base. In another incident, the company ended up going to court over its deal with Martha Stewart, both companies sued by Macy's for violating an exclusivity agreement (Chen, 2006).

Online

Very few large retailers can survive without an online channel, since that channel has experienced strong and steady growth of late. While Penney still relies on its bricks-and-mortar stores, it has enjoyed some success with its online site, leveraging the power of its brand to attract consumers (Cheng, 2013). This growth is encouraging, but online sales are negligible compared with in-store sales. Furthermore, these gains are not so spectacular that they make up for declines in bricks-and-mortar sales (Oursler, 2013). The company needs to work to build this channel, but it is in absolutely no position to transition to being an online company. If Penney is aiming to do this, it probably should do so with great caution, when sales justify such a move. This is a small intrapreneurial venture, not a massive organizational overhaul at this point. From a management perspective, it would be a near impossible shift given that online sales in no way justify it.

Innovation

One of the things that JC Penney needs the most is innovation......

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