Big Surprise: J.C. Penney Isn't Apple
Apple upended the conventional wisdom with its glass-encased stores, which became the most profitable retail outlets in the world at a time when many shoppers were abandoning chains for online shopping.
[READ: Why Apple, Amazon Win and Best Buy, J.C. Penney Lose at Retail]
So it made sense for struggling retailer J.C. Penney to hire Ron Johnson, the man who executed Apple's retail strategy, as the CEO to lead the turnaround at Penney's.
Obviously it didn't work. Penney's just fired Johnson after a rocky 17-month tenure characterized by falling sales, fleeing customers and a plunging stock price. Johnson tried to take Penney's upscale by introducing more prestigious merchandise, offering shoppers a more refined experience and discounting less. As rational as it may have sounded, shoppers apparently didn't like the new strategy.
It's obvious to say that Penney's isn't Apple, but it's worth exploring why a strategy that's wildly successful at one retailer could be such a miserable failure at another. Apple has succeeded by offering devices and services that do things more simply and elegantly than the competition. It has cultivated customers who expect to be delighted by Apple products. They show up at an Apple store ready to be impressed, and the results suggest they are.
[PHOTOS: Customers Swarm Apple Stores for iPhone 5]
Penney's customers, by and large, don't expect to be delighted. They expect decent merchandise, cheap. They're also willing to make tradeoffs, such as pawing through a disorganized pile of sweaters to find a good deal. Not everybody requires a "genius" to help them figure out what to buy or how much to spend.
Johnson got credit for improving the look and feel of Penney's stores and creating a more interesting shopping environment. His plan to open a variety of brand "shops" within Penney's itself may yet succeed. Focusing on a narrower set of strong brands and reducing inventory helped the chain shave costs, vital for any retailer in a weak economy.
But Penney's customers, accustomed to hunting for discounts and deals, backed away from "everyday low pricing" and other elements of the revival. Johnson famously said there was no need to test his new concepts before rolling them out--because they never did that at Apple--an assertion he may now regret. And while a measured return to discounting may lure back some Penney's customers, the chain still has a muddled image among shoppers who don't know what it stands for anymore.
Apple actually had a similar problem in the 1990s, when it made too many types of computers and seemed to have lost its way. That changed when the company's co-founder, Steve Jobs, returned to Apple, streamlined the product lineup and focused the company on a narrow range of computing, communication and entertainment devices. Shared design elements and a unified branding theme gave those "i" devices powerful marketplace cache. The stores that followed merely rode that wave.
At Apple, Johnson had one of the best brands in the world to work with. At Penney, he started with a damaged brand and may have made it worse. Sustaining a winner and creating one, it turns out, are two very different challenges.
Rick Newman's latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.
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