How J.C. Penney Predicted Trump's Win
By now you must have heard that yet another all-American brand is circling the drain. Yes, it's true: Sears has declared bankruptcy. This comes as absolutely no surprise to those of us who watched how, since the late 1980s, Sears' CEO, Ed Lampert -- a financial guy, not a retail guy -- abandoned Sears' retail efforts in favor of "unlocking shareholder value." Like so many corporate raiders of his time, that meant plundering assets and selling them off for cash. In Sears' case, that meant selling/developing/inflating real estate parcels that were valued on the books at 1920s prices, and spinning off solid gold brands like Craftsman and DieHard.
A sad story, but a predictable one. With Lampert at the helm, there was never any doubt that Sears was headed for the meat grinder. But if you'd been watching retail over the years, a far more subtle-yet-telling story was developing across the street at Sears' still-breathing-but-just-barely competitor, J.C. Penney.
Unlike Sears, the board at J.C. Penney has always been about retail. As a staunch all-American brand, its presence has been ubiquitous around the United States for as long as any other, outliving most of them due to its unwavering allegiance to its core retail brand values.
At least until 2011. That's the year things got very interesting for J.C. Penney -- and those who watch it.
If you'd been paying attention in 2011, you'd have seen that the name on everyone's lips at the time was Apple. Despite Steve Jobs' death, the company was roaring ahead, turning everything it touched into gold. The country was in the midst of the Great Recession, but Apple was thriving. "If only we could get an Apple guy aboard," dreamed most corporate directors, "....maybe we could be the Apple of low tech retail."
And so it happened that (according to Wikipedia) "in June, 2011, J.C. Penney announced that Ron Johnson, who had led Apple retail stores in a period of high growth, became the company's new CEO." J.C. Penney's board of directors fastened their seat belts as Johnson, fresh in from the coast, dive-bombed the midwest with his magic wand in hand, and instantly began to change everything about J.C. Penney: its merchandising, its layouts, its operations, its stores, its people, its culture -- you name it.
Everything happened with lightning speed, which unfortunately, included this:
That's right. JCP stock dropped like a rock, from the high 20s to about $4 a share and stayed there, mainly on the disastrous losses suffered by Johnson and his Apple-flavored nightmare. After huge layoffs and losses, Johnson was forcefully invited to leave J.C. Penney -- forever. As of October, 2018, JCP stock shares are keeping their noses just above delisting at $1.52.
Not pretty.
But look deeper into that chart and you'll see something that only true branding guys seem to be able to discern. In this case, it was J.C. Penney customers voicing their dislike for all the Johnsonian New Age/Millennial changes being forced on them. They didn't like their old brand being taken from them, and they let J.C. Penney know it, the best way they could: With their wallets.
It wasn't the rejection of the brand that hit me as much as how sustained it was. This was no blip on the radar. This was not an anomaly. Something was up with Middle America. They were angry. They were fed up. And their entire story added chapter after chapter on one simple stock chart. To them, J.C. Penney's abandonment of its American heritage and tradition was one last betrayal they were no longer willing to tolerate.
They didn't yell. They didn't protest. They simply -- and very quietly -- took their business elsewhere.
They did the same with their politics. Which is why in 2015, it was not terribly difficult to imagine that the next President of the United States would not -- and could not -- be the Ron Johnson of politics. It was going to be someone who was true to the traditional American brand.
And that's exactly how it turned out.
Customers are voters. Voters are customers. Every once in a while, you have to stop selling them what you've got and start listening to what they want. You've always got to watch them -- especially as they're headed out the door.
A sad story, but a predictable one. With Lampert at the helm, there was never any doubt that Sears was headed for the meat grinder. But if you'd been watching retail over the years, a far more subtle-yet-telling story was developing across the street at Sears' still-breathing-but-just-barely competitor, J.C. Penney.
Unlike Sears, the board at J.C. Penney has always been about retail. As a staunch all-American brand, its presence has been ubiquitous around the United States for as long as any other, outliving most of them due to its unwavering allegiance to its core retail brand values.
At least until 2011. That's the year things got very interesting for J.C. Penney -- and those who watch it.
If you'd been paying attention in 2011, you'd have seen that the name on everyone's lips at the time was Apple. Despite Steve Jobs' death, the company was roaring ahead, turning everything it touched into gold. The country was in the midst of the Great Recession, but Apple was thriving. "If only we could get an Apple guy aboard," dreamed most corporate directors, "....maybe we could be the Apple of low tech retail."
And so it happened that (according to Wikipedia) "in June, 2011, J.C. Penney announced that Ron Johnson, who had led Apple retail stores in a period of high growth, became the company's new CEO." J.C. Penney's board of directors fastened their seat belts as Johnson, fresh in from the coast, dive-bombed the midwest with his magic wand in hand, and instantly began to change everything about J.C. Penney: its merchandising, its layouts, its operations, its stores, its people, its culture -- you name it.
Everything happened with lightning speed, which unfortunately, included this:
That's right. JCP stock dropped like a rock, from the high 20s to about $4 a share and stayed there, mainly on the disastrous losses suffered by Johnson and his Apple-flavored nightmare. After huge layoffs and losses, Johnson was forcefully invited to leave J.C. Penney -- forever. As of October, 2018, JCP stock shares are keeping their noses just above delisting at $1.52.
Not pretty.
But look deeper into that chart and you'll see something that only true branding guys seem to be able to discern. In this case, it was J.C. Penney customers voicing their dislike for all the Johnsonian New Age/Millennial changes being forced on them. They didn't like their old brand being taken from them, and they let J.C. Penney know it, the best way they could: With their wallets.
It wasn't the rejection of the brand that hit me as much as how sustained it was. This was no blip on the radar. This was not an anomaly. Something was up with Middle America. They were angry. They were fed up. And their entire story added chapter after chapter on one simple stock chart. To them, J.C. Penney's abandonment of its American heritage and tradition was one last betrayal they were no longer willing to tolerate.
They didn't yell. They didn't protest. They simply -- and very quietly -- took their business elsewhere.
They did the same with their politics. Which is why in 2015, it was not terribly difficult to imagine that the next President of the United States would not -- and could not -- be the Ron Johnson of politics. It was going to be someone who was true to the traditional American brand.
And that's exactly how it turned out.
Customers are voters. Voters are customers. Every once in a while, you have to stop selling them what you've got and start listening to what they want. You've always got to watch them -- especially as they're headed out the door.
posted by Rob Frankel at 4:48 PM
0 Comments:
Post a Comment
<< Home