Why The Tumult of Johnson and J.C. Penney Is Less About Innovation, More About Commoditization

This story by Abram Brown a Forbes staff writer on the continuing woes of J.C. Penney is remarkable. A few months ago one of the top stories on Forbes was of former Apple store innovator Johnson would wave his magic to transform competitors to little more than usurpers. The article was dead wrong. One can't disdain Johnson of dispassionate innovation. A lesson for the proliferation of innovation aficionados forgetting that in a world of intense competition there is innovation and there is effective innovation. However, the money isn’t in the innovations it is in salivating customers who remind their friends hw great you are. 

Hence, J.C. Penney chief Ron Johnson's problems aren't innovation. I repeat. It’s commoditization stupid. The most feared enemy of business. I'd appreciate your comments. Jim W

J.C. Penney’s decision to return to gimmicky promotions—a sale for friends and family, 2o% off!—reflects how mightily that company is struggling under the direction of new CEO Ron Johnson.

Starting this week, the 110-year-old department store chain will bring back some of the sales that it swore off last year, the Associated Press reports. Meanwhile, J.C. Penney will feature new price tags next to merchandise that shows how much customers save by shopping there.

It’s exactly what Johnson said he wouldn’t do. He pledged to give up promotions, part of an grand scheme that would change nearly every aspect of the company. The reversal shows he misunderstood J.C. Penney’s customers at the start and that his ambitious plan isn’t taking hold.

What else has gone wrong? By scrapping sales—coupons too—J.C. Penney alienated its core customer base. The middle income shoppers who went to J.C. Penney no longer feel comfortable there. Nor will they recognize the place soon. Johnson plans to dramatically renovate J.C. Penney’s 1,110 stores, widening aisles and adding flashy technology. Coffee bars will, perhaps, make it a hang-0ut spot. Yoga classes and hair salons, too.

All this hasn’t gotten J.C. Penney far. It probably just booked its fourth consecutive quarter of losses. Sales have fallen, too, likely off more than 20% in the past year. Shareholders wiped away half the company’s value in a year, the debt downgraded to junk status.

Continue the article via forbes.com

 

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