In the fall of 2011, J.C. Penney hired a retail superstar to run it. Ron Johnson was credited with making Target hip and with turning the Apple Store into a monster success. Penney’s shoppers were about to meet his ideas.
The biggest one was about price. Penney would stop running most of its sales and stop sending most of its coupons. Instead, everything would carry an everyday low price.
When Johnson floated the plan, he was asked whether the new pricing could be tried first on a limited basis. The Wall Street Journal reported that a colleague had suggested a few stores, before rolling it out to all 1,100.
Johnson reportedly shot the idea down: “We didn’t test at Apple.”
The new pricing, billed as “fair and square,” went out across the chain early in 2012. Sales collapsed. By the end of the fiscal year, Penney’s revenue had fallen 24.8 percent, to $12.98 billion, and the company had lost $985 million. At Wharton, the marketing professor Barbara Kahn said that Johnson “didn’t test any of his ideas to see customers’ response and understanding.”
When the year’s results came out, Johnson described what the company had learned about its customer: “we learned she prefers a sale. At times, she loves a coupon.” And he added a line about himself: “Experience is making mistakes and learning from them, and I have learned a lot.”
Penney had already started backing away from the plan. In one Presidents’ Day weekend brochure from Johnson’s time, TIME counted the word “sale” 37 times in 24 pages.
In April 2013, seventeen months after Johnson arrived, the board replaced him with the company’s former chief executive, Myron Ullman.