J.C. Penney stores are filled with well designed brands, signage and layouts, but they are missing customers. Two years ago, Bill Ackman of Pershing Square Capital Management used his stake in the company to persuade its board to hire Ron Johnson, creator of the Apple retail stores, as chief executive. So far, Johnson’s strategy to regain market share and customers has led the company nowhere.
The company’s stock has fallen an estimated 30% following their fourth-quarter earnings report and 60% since January 2012. On top of that, a lawsuit with Macy’s over Martha Stewart stores inside of J.C. Penney locations drags on. The result of the Macy’s lawsuit has left unutilized space in hundreds of Penney’s stores nationwide.
Johnson has tried to reinvent the department stores and keep earnings inline during the process. The most notable move he made was to change the way the store handled sales. He eliminated sales in stores by shifting to “fair and square” pricing. The move did reduce the confusion of sales and made it easy for customers to figure out pricing, but it also drove customers away. J.C. Penney customers did not respond to the Apple approach to shopping and new shoppers did not come into the stores with the same enthusiasm as they do for Apple. The past four quarters show a 19% decline in store sales, and a 32% drop was measured for the fourth quarter.
In the wake of business decisions made by company leaders, everyone is losing. Some of the company’s long time employees have been laid off and those employees who bought into the company have been watching their money burn. However, there is a chance of a rebound if the momentum changes for the company. Johnson will have to work hard and figure out how to make customers fill the stores again.