JC Penney Changing Course?

After only 8 months on the job and in the midst of JC Penney's rebranding/turnaround efforts, Michael Francis, president, responsible for merchandising, marketing, planning and allocation, product development and sourcing has "resigned". Francis who was handpicked by CEO Ron Johnson based on their experience working together at Target had been Target's Chief Marketing officer prior to moving to JC Penney.

As President at JC Penney, Francis was technically responsible for the marketing of a controversial new pricing plan that aims to get rid of hundreds of sales events, as well as, merchandising and product development. However, many outsiders claim it was actually CEO Ron Johnson who was the architect of the new pricing plan. With the turnaround under performing expectations and JCP backtracking on a portion of their strategy, the resignation appears to be a way to buy time with investors - although shares did drop 6% after the news of the resignation became public. In the same press release, Johnson announced he will take direct responsibility and oversight of the company’s marketing and merchandising.

Three things pop to mind with this latest twist in the JCP saga:

(1) Turnarounds/brand restages are never quick and easy, business results usually get worse as a company invests in the future and consumers adjust their habits/practices. Being a public company sometimes creates a barrier to delivering long-term sustainable change because of this short-term pain.  JCP should expect at least 3-4 quarters of pain at minimum assuming they're doing everything right, and a lot longer if they are mis-firing on their strategy.

(2) Turnarounds must be based on significant consumer insights and must pivot off of a solid brand foundation as opposed to try to leap to a totally new brand equity - in other words the best brand restages are evolutionary not revolutionary. Additionally, the relaunch need to be communicated in a manner that consumers understand and in a fashion that's consistent with the consumer insights its based on. It appears to me that JCP is trying to leap too far too quickly and would be better served making a series of pivots.

(3) The CEO is not usually the best person to lead a consumer driven marketing strategy because they are usually the person in the organization farthest removed from the actual consumer.  Here's to hoping that Johnson relies on people closer to the consumer to help guide the strategy and commercialization.

The JCP turnaround efforts will be a fascinating story to continue to follow as its likely to be a long/winding rode for the near future