Archive for May, 2013

May 22nd, 2013

Shopping on Co-Pilot: The Power of the Deal in Bad Economic Times

By Neale Martin


Ben Johnson’s past successes as head of Apple’s retail operations made him a prize catch for JCPenney when the retailer lured him away as their new CEO in November 2011. The market’s response to this hire was largely positive: the company’s share price gained 17.5% on the news. Johnson’s vision for the struggling department store chain was to replace its long-standing retail approach of ever-present sales, deals, and discounts with “everyday low pricing,” and to focus on an enhanced customer experience by creating “store-in-store boutiques” and shifting some of its floor space to high-end fashion brands.

This aggressive new strategy, to put it lightly, didn’t work.

Johnson was fired just 17 months after taking the helm. His vision for JCP not only failed to improve, or even stabilize, the company’s sales and profits—it made them significantly worse. While it is easy to point out the myriad ways that JCPenney is not Apple (and business talking heads had a field day exhaustively listing those differences), the biggest flaw in Johnson’s thinking was not understanding the psychological power of the deal during times of economic stress. (more…)