Ron Johnson, fired as chief executive officer of J.C. Penney this week, failed not because his vision was necessarily wrong, but because in executing it he forgot the first rule of retailing: To sell people things, you first have to get them into the store.
The frequent sales and coupons Penney’s used before Johnson arrived are just one possible way to do that.
Wal-Mart, after all, built its business by offering branded merchandise at everyday low prices. Although it runs sales, it doesn’t depend on them. Instead, Wal-Mart consistently offers low prices on consumer packaged goods that require frequent replenishment. Customers come in for toothpaste, Tide and toilet paper and walk out with T-shirts, candy and discounted DVDs as well. The impulse items make the company hyper-productive, but the staples drive traffic. And for all the headlines Target attracts with its designer collaborations, that chain, where Johnson first made his mark, pulls in regular customers much the same way.
Penney’s, however, doesn’t sell consumables. It’s strongest in home goods – -linens, pillows, window treatments — that often last for years. So Johnson’s strategy of simplifying pricing and cutting back on sales required offering customers some other reason to come into the store. The usual alternative is fresh new merchandise. By quickly turning over their inventories, fast-fashion retailers like Zara or Forever 21 and discounters like TJX’s Marshalls and T.J. Maxx give customers a reason to check in frequently.