Penney's Executive Summary

J.C. Penney was attempting to sharpen their competitive edge by hiring Former Apple Inc. retail executive, Ron Johnson, as their chief executive (Kinicki, 2013). Mr. Johnson had been successful with Apple, and J.C. Penney hoped that he could revamp J. C. Penney’s stores to update their appeal and lure customer’s back. J.C. Penney’s current strategy of frequent sales only equated to approximately four customer purchases per year despite 75% of J. C. Penney’s prices being cut 50% or more. Johnson’s plan included turning the larger store into a collection of specialty shops, reducing sales and creating lower every day prices, and creating a “Town Square” for entertainment and socialization. His plan was based on making the store more inviting with …show more content…
Johnson stated “In an Internet age where you can have exactly what you want with one keyword, people won’t tolerate big stores. You have to break it down for them” (Kinicki, 2013, p. 184). To start, Johnson planned to lower initial prices by 40% and to sharply reduce the number of promotions (Kinicki, 2013). Johnson’s plan was anticipated to cost $80 million per month; but their old strategy of shedding its catalog business and investing in more excusive brands and partnerships under former chief executive Myron Ullman’s leadership, wasn’t working. In addition to the lower prices and reduced promotions, Johnson planned to build a massive “Town Square” to replace the current display of cosmetics, accessories and impulse buys. His “Town Square” would be a minimum of 10,000 square feet and would house monthly attractions and services. His idea was that you would have to walk through the specialty store areas to get to the town square, thus increasing the potential for impulse purchases. Finally, Johnson planned to cut a number of private label lines in lieu of a few strong ones. In the end, Johnson knows that this modification will require an investment, but he feels that the changes will pay for themselves in