JC Penney ousts CEO Ron Johnson | Hacker News Reader

JC Penney ousts CEO Ron Johnson

news.yahoo.com

38 pointsvelodrome9 comments

After spending 2 years of my life in a retail turnaround backed by an activist investor (Eddie Lampert at SHLD), I can't say i'm that surprised.

This game of retail is much harder than it looks from afar. Certainly much harder than working at places like Google or Apple - mainly because the market forces are against you. You're working with low margins, high capex, deteriorating infrastructure, deflated brands, legacy technology and a legacy customer base. To top it off, the shear momentum of companies this large (at SHLD we had 300,000 employees) is alone hard to grapple with even if you didn't have market forces against you. It's a daunting task.

If non-linear equity growth was easy, everyone would be doing it. Turnarounds are not for the weak of heart. Turnarounds in that sense, are actually similar to startups.

For others who are curious: SHLD: Sears Holding Company.

Turnarounds are like startups, but with legacy: customers, employees, vendors, systems. Much harder in many ways.

Was Eddie Lampert ever serious about turning it around though, from a retail perspective? From what I recall his actions showed that he simply wanted to bleed Sears and KMart dry. He slashed capex and refused to make any tangible improvements to the retail experience, his whole focus seemingly on liquidating assets and reallocating capital away from the stores.

Earlier submitted article + discussion here --> https://news.ycombinator.com/item?id=5514971

This article has some background:

http://www.slate.com/articles/business/moneybox/2013/03/jcpe...

From a strictly consumer point of view, I loved what he did. I loved the one low price concept, with an occasional sale. I hated "do you have the coupons? walk over to the door and. . ." or "you would have saved an extra 15% if you had been here at 0-dark-thirty". I know I'm in the minority among shoppers and retail would did if everyone were like me, but just give me a price I like and I'll either buy it or not.

"I know I'm in the minority among shoppers"

Vast minority among people who count shopping as a hobby, yet vast majority of the population. This is like the TV narrowcasting phenomena where a "success" is 2% of the population being rabid hyper fans and 98% of the population not even willing to watch for free, or to a lesser extent FPS video games. Hyperoptimization to a small group guarantees lack of large group/total population success.

Locally a regional competitor Kohls and national player JCP fight pretty hard for literally generations over who wins the "my hobby is shopping for womens clothes" crowd. The other 95% of the population, like us, go to Target, walmart, pretty much any place else. Dropping the hobby shoppers means they lose whatever fraction of the 5% they used to have, plus the 95% have been marketed for generations not to shop there. I certainly have not set foot in a JCP over the past 14 months. Given a couple years I might have been convinced to try it, but...

You can't turn around a business model that has been marketed for over a generation. If Pepsi decided to skip all this HFCS cola stuff and ship canned apple cider, its going to take a lot longer than 14 months or whatever this guy had. The startup lesson is its much easier to pivot into something entirely new, like a desktop/laptop computer company going into portable music players and then pivoting again into phones, or a search engine giant going into webmail and then into phones.

For some tech examples of rough pivots that are just too close to home to succeed, think of ebay trying to turn themselves into a poor copy of amazon by driving away all the small/individual sellers, or craigslist trying to turn themselves into a poor copy of ebay instead of being the wild west of classified ads.

Closer to home "hacker news" could probably pivot into a daily tech video newscast feed, but it would be hopeless to try to pivot into a poor clone of digg/reddit. (LOL have some "hacker news gold" for your post, or maybe we'd use BTC LOL)

Could Walmart pivot into an upscale bespoke merchant of $2500 mens suits? Not a chance, too close. Could they pivot into being car dealers or check cashing bankers? Sure! In fact that's probably a good idea.

You're so right. In fact, Walmart actually already does cash checks.

http://www.walmart.com/cp/Check-Cashing/632047

Selling clothing at a retail store isn't the same thing as selling Apple devices at an Apple store? Huh. I thought profession was more important than understanding an industry.

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