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JCPenney’s Johnson Is Out, Ullman Is Back. Now What?

Written by Frank Hayes
April 9th, 2013

What happens next at JCPenney (NYSE:JCP), after the 1,100-store chain fired CEO Ron Johnson on Monday (April 8) and replaced him with the CEO that Johnson replaced, Mike Ullman? The retailer isn’t saying. But one thing is certain: The chain won’t just be turning the clock back to the day Ullman departed in 2011. Many of the internal changes Johnson instituted at JCPenney are effectively irreversible, including remodeling all the chain’s stores and replacing much of the chain’s IT capability. That money is already spent.

Johnson had already reversed many of his decisions that were the most unpopular with shoppers—including his elimination of sales, discount pricing (including “mark up to mark down”) and coupons. There’s no chance those policies will return under Ullman.

Other Johnson initiatives are more likely to survive under new management. The shops-within-the-store modeled on existing Sephora boutiques? Very likely to survive, especially since Ullman actually created them during his previous tenure as JCPenney CEO.

Remember that? You probably don’t, because from the way Johnson talked about the Sephora in-store shops a year ago, you’d think they were an undiscovered gem that no one at JCPenney had noticed until Johnson realized how much more business they were doing per square foot than anything else in the chain.

In fact, Ullman ran Sephora in the late 1990s and launched that chain’s specialty store and E-Commerce initiatives. Think it’s even slightly likely that he didn’t know exactly how much those Sephora boutiques were making? We don’t either.

Ullman also kept a close watch on IT when he ran JCPenney the first time

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around, green-lighting tests of item-level RFID tagging for inventory control, development of giant kiosks to put the chain’s website inventory in front of in-store customers, and early work on the kind of in-aisle POS that the retailer is rolling out to all stores this month. Much of that work was done skunkworks-style, possibly because internal development is easy to squeeze into a budget than a separate line item for an outside vendor to do the work.

So why is it that, back in 2011, Johnson was viewed as a high-tech retailing whiz kid while Ullman was shown the door to make room for him? Largely, we suspect, it’s because of money—the money that Ullman couldn’t convince JCPenney’s board to spend on the chain, including IT and store improvements.

And Johnson’s reputation as the founding genius of Apple’s retail chain is exactly what opened the corporate wallet for a complete data-center overhaul, chain-wide store remodelings and in-store IT ranging from mobile POS to RFID-based checkout.

Now, of course, Ullman is the beneficiary of all that spending. Or at least he may be, depending on how far along each project is.

In-aisle POS? That’s a done deal. The data-center overhaul? That’s not so certain.


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One Comment | Read JCPenney’s Johnson Is Out, Ullman Is Back. Now What?

  1. Earl Jaforski Says:

    The debaucle here wasn’t that he was canned, it was what took them so long? Johnson’s genius was anything but, his experiences at Target were more relevant to JCP then his work at Apple. Merchandising the relatively simple assortment at an Apple store is one thing, merchandising the assortment at a JCP store is a whole other thing…. it’s a shame how badly he’s damaged this brand…

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