Did Poor Customer Experience Ultimately Cost JC Penney’s CEO His Job?

CMO EXCLUSIVES | April 09, 2013

by Michael Hinshaw ,
Managing Director

MCorp Consulting


Last week, SEC filings revealed that Ron Johnson, now former chief executive officer of JC Penney, saw his 2012 compensation fall 97 percent—from $53.3 million in 2011 to $1.89 million last year. This set off another mediafrenzy focused on the struggling retailer’s poor performance and probably hastened Johnson’s firing as head of JC Penney. How did Johnson get so off course? Look no further than poor customer experience.


  • Johnson has missed the customer experience mark by a mile.
  • JC Penney did all the right things to earn a second chance—then completely blew it.
  • For JC Penney to thrive, it needs to get back to basics

Johnson, former Apple retail chief and the person credited with forever changing the way computers are sold, was brought in with much hype and a great deal of hope. I’m guessing they thought, “If he can innovate so successfully in computers, just imagine what he can do in a traditional retail business!” But he was anything but successful, with the retailer posting an operating loss of more than $1 billion in 2012. So what went wrong? And how can JC Penney turn it around now?

We’ll never have the complete answers to those questions, of course. But it seems that for all of Johnson’s willingness to reinvent the JC Penney customer experience, he didn’t focus nearly enough on that first part—the customer.

No doubt, Johnson got parts of the transformation right. He oversaw well-received updates to the JCP logo and physical layout of the stores. He also introduced the “store-within-a-store” concept. Innovation was certainly needed at JC Penney, and they got it.

The question is, were these the right things to do for JC Penney’s customers? Or for Apple’s?

What Customer Was JC Penney Trying To Serve? (Did They Know?)
For the many, many JC Penney customers who’ve taken their business to Macy’s (whose profits were up 38 percent in Q1 2012), Johnson missed the customer experience mark by a mile. Apparently, these customers really looked forward to the 590 or so promotions that JC Penney ran in 2011 and bought only when they thought they were getting a deal.

These customers may even have liked the old logo and fondly reminisced about the way the stores used to be laid out. Who knows? Obviously not Johnson because it appears he didn’t understand his customers’ wants and needs, or their expectations of the brand—the answers to which are the foundation of all customer experience improvements.

Maybe he didn’t want the old “JCPenney” shopper and was focused on the possibilities of new “JCP” shoppers—you know, the ones who mill about in Apple stores by the hundreds and spend lots of money on hip, digital devices that make their lives easier.

I don’t think so. Because, according to my wife, he has missed the mark on that one too.

The High Cost Of A Cross-Channel Customer Experience Gone Wrong
A few weeks ago, my wife received a JC Penney catalog in the mail. In the past, she hasn’t been a JC Penney shopper (especially since the nearest store is 60 minutes roundtrip and a $6 bridge toll). But the catalog was well-designed and had a good message, so this one didn’t end up in recycling like all the others. Chalk it up to the “new JCP.”

Thumbing through, she was impressed with a couple of dresses she thought stylish, nicely presented, and (most important—she’s keen on getting value, and proud of it) well-priced. She even turned down some pages to show our teenage daughter.

But then, instead of tucking the catalog in her purse and heading to the not-so-close JC Penney store, she did what virtually all catalog shoppers do these days: She went online.

Pretty quickly, she noticed that the catalog wasn’t integrated with the Web site. With no obvious coding or digital marker, she turned to site search and started typing in names. No results. By color, category, dress size, and designer, she searched in vain. Finally, frustrated with what she saw as JC Penney wasting her time, she tossed the catalog into the recycling bin with the others.

Like so many companies trying to improve customer experience, JC Penney did all the right things to earn a second chance—then completely blew it. And, typically, that chance is the only one you get. (Good luck getting someone to read another JC Penney catalog in our house.) So let this be a lesson: When it comes to improving customer experience, half measures are often whole failures.

JCPenney’s Troubles From TheJohnson Experiment Aren’t Over Yet
Today, customers of all types—business, retail, luxury, high-end, or bargain hunters—have pretty high expectations when it comes to interacting with the companies that wish to serve them.

They (“we,” actually, since everyone reading this article falls into this category) are digitally enabled, smart customers. That means we don’t just expect that cross-channel, cross-platform experiences and interactions are seamless, error-free, and consistent—we demand it.

You’d think a member of the Digerati such as Johnson would have understood this. And perhaps he did, but lacking the hands-on eye for detail of his former boss, he missed the fact that his print catalogs and online channel weren’t integrated.

Regardless, for JC Penney to recover under its new CEO (who actually is its old CEO), it needs to get back to basics. This means starting with a crystal-clear understanding of its target customers’ expectations for the brand and ensuring that it consistently delivers on those expectations at every touchpoint, across every channel.

Good luck, Mr. Ullman. You’re going to need it.


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