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JCPenney No. 2 Exec Takes Fall for Failed Turnaround Strategy

Posted by Shirley Brady on June 18, 2012 06:35 PM

J. C. Penney Company, Inc. today ousted its JCPenney brand president, Michael Francis, who oversaw the retailer's merchandising and marketing operations, with a terse statement that "We thank Michael for his hard work at jcpenney and wish him the best in his future endeavors."

Francis, who was hired last October "at great expense" (as the New York Times retail reporter tweeted, in light of his whopping $12 million signing bonus) from Target is seen as taking the fall for his boss, company CEO Ron Johnson, the former Apple top retailer who oversaw JCP's new brand strategy in January. Now, of course, the heat is on Johnson to clean up a mess that was arguably of his own making.

For an executive whose goal is to "simplify" matters internally and externally, it was Johnson who championed the idea of killing coupons and sales in favor of "fair and square pricing" (a reference to its logo), so-called "monthlong value" and "everyday low" pricing and twice-monthly clearance events on every first and third Friday (aka "payday" in America). The brand recently scrapped that strategy and is re-embracing the dreaded s-word — "sale."

The mid-price retailer also angered conservatives by showing real-life gay dads and lesbian moms in its Father's Day and Mother's Day catalogs. Now that Francis is out, his former boss — whose hiring was announced a year ago although he didn't assume the top job (and his multi-million dollar signing bonus) until Nov. 1st — "will assume direct responsibility and oversight of the company's marketing and merchandising functions."

Comments

Dan T. United States says:

JC Penney seemed to rebrand itself simply for the sake of rebranding. Hopefully, after this harsh lesson, the company will step back and determine what its core offering is and what truly appeals to its customers. There is a big difference between  a purposeful rebrand and a "vanity" rebrand, maybe this time JC Penney will choose the former.

June 19, 2012 09:11 AM #

Ken Smith United States says:

Too bad. The "fair and square" pricing strategy was a way of generating sales surges and differentiating JC Penney in the market while the Company made more substantive changes.

What is really needed is process to identify, create and deliver greater incremental value to their customers faster than their competition. To do this will require substantial organizational change, not just a new logo and slogan.

Just like any other successful Brand, consistent delivery of incremental value will create more customers and higher margins.

Apple was not reborn overnight, nor will JC Penney be reborn overnight. It took a "Sculley" to create a "Jobs". I guess we'll have to wait to see if JCP has a "Sculley" or a "Jobs".

June 19, 2012 10:47 AM #

IM Retail United States says:

Francis didn't get whacked for the pricing strategy.  He was dismissed for poor communication.  Plus, based upon the terse tone of the press release, he got sideways with his fellow brand stewards: operators and merchants.

Retail brands are managed by three key execs: store operators, merchants/buyers and marketing.  The first two own a P&L.  Francis' job was to communicate the brand experience.  But even with lousy ads, shoppers will shop and buy.  (Think Dollar Stores) That didn't happen at JCP.

No tears for Francis.  He got $10+ million.

Let's watch and see if Johnson earns his $40+ million.

June 19, 2012 11:24 AM #

Greg United States says:

Sacking seems like a "knee-jerk" reaction. Long over-due changes were made and these always bring dips in bottom line results - those short-term thinkers couldn't accept even one quarter without growth and it takes more than a quarter to re-train those addicted to sales.
Sad result as I expected JCP to be better than that!

June 19, 2012 12:37 PM #

Pedro Leandro Rodriguez United States says:

Inserting that they had also "angered conservatives by showing real-life gay dads and lesbian moms in its Father's Day and Mother's Day catalogs" is too easy an out for what's happened, and gives conservatives too much credit for something that was rooted in the company's failure to overcome consumer's perception of the company at"not being as good as Macy's" among other issues (e.g. increased competition from mid-level retailers).

June 19, 2012 12:49 PM #

Dixie United States says:

Pedro that's exactly what happened.  Conservatives like the million moms complained that JCP had Ellen as spokesperson for a store that was family oriented.  The Million Mom's boycotted JCP.  After that JCP said they would stand by Ellen and brought in homosexual advertising, kicking their customer base in the teeth.  These people aren't so stupid that they cannot understand pricing and sales.  it was a homosexual agenda that JCP decided to sell to a Conservative Customer Base.

Plain and simple.

June 19, 2012 10:58 PM #

Brent United States says:

Dixie, think u r giving urself too much credit for the ouster of MF.  "homosexual agenda"...good god, what planet do u live on?  

The majority of Americans want cheap stuff / discounts and they will continue to buy made in china goods.

Million moms had very little to nothing to do with it.  

June 21, 2012 03:57 AM #

Akbar United States says:

Bigger problem: Have you been to a JCP lately?  They're like those stores in Russia after Communism fell. Disheveled, chaotic, a mess. The one at a local mall makes its announcements in Spanish now. Lost cause.

June 20, 2012 11:10 AM #

Melissa United States says:

JCPenney did not advertise what they were doing.  The marketing department has and is dropping the ball on this one. Instead they wanted to rely on the lowly, underpaid sales associates to "talk up" these transformations to the few customers that happen to come into the store and penalize them if they do not make their goal of talking EXCITEDLY about the new changes.  And, incidentally, more changes of coming and the sales associates don't when or what.  They should of had a more media presence to focus on this new pricing strategy.  They would have reached more people. Instead they did these commerials that did not focus on what was actually happening, trying to tell a little story that you did not get, followed by a JCP logo at the end, leaving people to wonder, "What was that?"

June 21, 2012 04:37 PM #

MZStitch United States says:

I predicted this concept would be a flop from the start.  It's the economy that was JCPenny's downfall.  They tried this concept at the wrong time.  The days of customers roaming the malls for hours at a time are over.  Customers plan at home and they are going to go to the store that has sales and is giving them a coupon on top of the sales.  It's that simple.  I was in Penny's yesterday, and it was a ghost town.  It's obvious they are having big budget cuts because it was very difficult finding a sales associate on the sales floor.  I got to the register, was second in line, another customer came behind me and the one cashier kept scanning the floor with her eyes just hoping another sales associate would see she was in trouble.  
Michael Francis failed to bring some of the best parts of shopping Target to JCPenny.  First, I get five percent off my total purchase just by using my red card.  On the sales floor, every associate has a walkie on them, they greet you constantly, and if they can't answer your question they get the answer for you immediately off thier walkie right there and then.  At the registers a salaried manager monitors the sales lines all day long.  Yes, a manager.  
It's simple, give me a great deal that I feel I got a deal, and give me excellent customer service, that's all I ask.  JCPenny now looks cleaner, but I don't feel like I'm getting a bargain.

June 21, 2012 09:10 PM #

Comments are closed

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