Ron Johnson booted as JC Penney CEO, will Cook re-hire him to lead Apple Stores?

By , Apr 8, 2013

JC Penney store (exterior 001)

Ron Johnson, 54, Apple’s former SVP of Retail and the guy largely attributed with turning the beleaguered computer maker into America’s greatest retailer at the turn of the century, nearly two years ago left Cupertino to take the job as president of the mid-range department store chain J.C. Penney.

He was supposed to apply some of Apple’s secret magic sauce to JC Penney’s outdated retail stores. But alas, the company instead has continued to struggle under his leadership and has experienced its worst sales year in more than two decades. Johnson’s Apple experience obviously didn’t translate well to Penney’s customer base of bargain hunters. Hopefully, Tim Cook still has Johnson on speed dial…

CNBC first broke the news on Twitter and JC Penney confirmed it soon after via a media release.

The Wall Street Journal followed up, writing that the Penney board met Monday and “agreed to replace the former Apple executive after his plan for revamping the chain’s 1,100 department stores produced a disastrous drop in sales.”

The paper educates us on the whys of Johnson’s departure:

Directors had been showing increasing concern about Mr. Johnson, who rolled out an ambitious plan to reinvent Penney’s stores a year ago but didn’t follow the usual retail practice of first testing the changes in a subset of stores.

Penney’s revamped stores and new lines like Joe Fresh won praise from analysts. But shoppers were turned off by Mr. Johnson’s decision to cut back clearance sales and didn’t respond when Penney started to ratchet discounts back up last year.

The changes are effective immediately, Bloomberg added.

The company appointed Myron E. (Mike) Ullman, 66, as the CEO succeeding Johnson, Reuters tweeted.

Belus Capital Advisors analyst Brian Sozzi characterized the move as a “kiss of death wrapped in a smile” for the retailer, which reportedly is mulling going private soon, per Business Insider.

It’s interesting that the newly appointed CEO Ullman served as J.C. Penney’s chairman and CEO for about seven years before Johnson took over.

So, what was Johnson’s biggest sin, besides failing to ignite sales?

Howard Gross, managing director of the retail and fashion practice at executive search firm Boyden in New York, thinks he knows the answer:

He tried to change way too many things at the same time, ranging from management to the pricing structure to the shop-in- shop concept.

All those things, even if done individually, would have been significant, but to hoist all those changes on the organization in one fell swoop was way too many changes at the same time.

Another analyst,

Investor Bill Ackman, who owns about eighteen percent of the company, actually recruited Johnson from Apple and he’s now changing his tune.

Here we see Ackman tellingReuters TV that Ron Johnson’s tenure at JC Penney was “something very close to a disaster.”

JC Penney’s disappointing Q4 2012 earnings did prompt some market watchers to speculate whether Johnson could quite the CEO job.

Johnson is largely credited with coming up with the then, and still to this date revolutionary Genius Bar concept that many observes at the time said was doomed to fail because conventional wisdom was that staffers were supposed to sell products and earn their commission, not provide free assistance.

genius_bar

Johnson joined Apple in 2000, coming from a physical retailer, Target. The then Apple CEO Steve Jobs successfully lured Johnson away from Target at a time when Apple was losing market share and Gateway was closing its own stores.

“People thought I was crazy to go to Apple,” he would later tell Fortune’s Jennifer Reingold.

Ron Johnson and Steve Jobs at Fifth Avenue Store opening
Steve Jobs and Ron Johnson at grand opening of Apple’s Fifth Avenue landmark store.

Johnson successfully sold Jobs on his retail philosophy which boils down to establishing long-lasting relationships with customers.

If you really look at what happens at an Apple store, it’s connections happening. It’s a Genius with a person trying to solve a problem. It’s someone getting personal training. It’s someone getting their products set up before they leave the store. It’s someone learning about something that might change their life.

So there’s these connections that are really necessary in a digital world because you want that offset of the physical world. You want that physical experience.

Under his guidance, Apple Stores went on to become the most productive retail chain in the world, raking in more revenue than Tiffany’s and inspiring a bunch of copycats.

Samsung, for example, is opening so-called Experience Shops at 1,400 Best Buy stores as the company realized that having own places where would-be buyers can come and try out your products, or just seek advice, is paramount.

Here’s a nice internal Apple retail clip that gives us a rare  insight into the company’s retail prowess.

As you know, Apple replaced Johnson by the recently-fired John Browett who proved a rare recruiting misstep for the CEO Tim Cook. Browett, who lasted only nine months on the job, eventually landed the CEO job at a fashion retailer.

He recently confessed he just didn’t fit in at Apple and its demanding culture. “The issue there was that I just didn’t fit within the way they run the business,” Browett apparently told The Independent. “It was one of those things where you’re rejected for fit rather than competency.”

But Apple’s retail woes didn’t end there as VP of Retail Jerry McDougal, who was Ron Johnson’s right hand man, also left Apple and he was apparently being considered as John Browett’s most likely replacement.

Realizing he’s failed to find an executive who could live up to Johnson’s legacy, Cook then decided to lead the retail unit himself until the company finds a suitable replacement to Johnson. That search is still on and now could be the perfect time to talk Johnson into accepting his old job.

The question is: would he accept the offer?

I know Sebastien is doubtful of Apple re-hiring Johnson as that would send a weird message (“You can leave us but we’ll always take you back”), but I still think Cook would hire him back in a snap because it’s not like he messed up and got fired (GigaOm agrees, too).

Besides, Cook over a similar lack of a competent replacement did un-retire Bob Mansfield as the head of a new Technologies division, didn’t he?

Simply put, Apple right now has a huge retail problem on its hands and Ron Johnson is arguably the best person in the world to be the leader of Apple Stores.

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  • Anon

    JCP has terrible clothes, that’s the problem. Should be targeting teens, rather than 45+ adults. Zumiez just proved this theory.

    • http://twitter.com/RyanB823 RyanB

      I really think you’ve overlooked the key point of this article.

      • Anon

        I didn’t read the article. I’m giving my opinion on JCP. They are a crap company. I’d rather shop at Macys or something. JCP Wayyyy outdated. And they have the nerve to charge $79.99 for 1 pair of jeans, when I can get the exact pair at Levi’s for $30. Zumies > JCP. JCP can learn something from Zumies.

      • http://twitter.com/RyanB823 RyanB

        This is a tech blog, go and moan about jeans on fashion weekly.

      • Anon

        Shut up. This article mentions JCP. They are a clothing store. Just because their old CEO was a tech guy in the past doesn’t make this article about tech, it’s still about JCP a CLOTHING store. So, this article is asking for comments, not about tech, but about the fuck*ng article. Meaning, JCP comments are allowed. RyanB, I think you’re just mad because your mom didn’t buy you the latest iPhone. Calm down, if you have a problem with my comment. IGNORE IT. You don’t have to respond to my comment. You’re what we call (A TROLL). You go on the internet looking for trouble. Get a life buddy, go outside once in a while. You’re getting too fat looking at that computer screen all day.

      • Nino

        You insulting people simply because they made a comment on your post isn’t exactly the definition of constructive now…please learn to take an opinion different from the only one you value highly.

      • Anon

        I gave my opinion, and this dick wad thought he could troll me. I sure did show him. :D

      • http://twitter.com/RyanB823 RyanB

        1) Read the article.
        2) Try taking your own advice.
        3) I’m writing this comment on my iPhone, outside.
        4) Last time I checked I was 160lbs.
        5) My comments aren’t angry or offensive.
        6) It seems you have some anger issues, maybe try some retail therapy, at JCP?

      • Anon

        1) I don’t want to read the da*n article.

        2) No, Troll

        3) Who cares?

        4) 160 — you need to eat and work out…

        5) You like to troll, I read your twitter and various other accounts. Classic troll.

        6) JCP sucks. There’s a reason I’m shorting the shit out of their stock. xD Fuck*rs are down. They lost 15% in 2 months. Shitty company, Shitty CEO, Shitty clothes, and shitty prices. They should talk to Zumiez CEO who’s racking in over $400 million. That guy is on FIRE. Showing JCP how it’s done. LOL

        …….. Now stop trolling. Fuck*r, no one asked you to reply to my comment. Damn trolls these days, but this time I caught him trollin’ dirty HAHA

      • http://twitter.com/RyanB823 RyanB

        I think it’s clear to everyone who’s the real troll here. I’ll let your comments speak for themselves. Have a pleasant day ‘Anon’ :) Oh and I don’t have any other accounts, my digital footprint consists of twitter and iDB.

      • Anon

        Dude, you sign up for every account with that same username. LOL. You have more than iDB and Twitter. :X just saying. I caught you TROLLIN’ dirty. :X How does it feel to be caught boss?

  • 4p0c4lyps3

    I thought Ron Johnson was the stereo salesman from fast times at ridgemont high tht broke Jennifer Jason Leigh’s cherry. Nice to see he has moved up in the world.

  • http://www.facebook.com/jamesheckiii James Heck III

    I’m not sure if I agree that Apple “has a huge retail problem on its hands”, but great work on a nice piece!