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Shoulberg PUBLISHER/EDITORIAL DIRECTOR

Plano-Gram

Warren Sgoulberg Publisher/Editorial DirectorWarren Sgoulberg Publisher/Editorial Director
So the situation in beautiful downtown plano, texas continues to get ever more interesting, the recent departure of mike francis being only the latest chapter in the soap opera that j.c. Penney has very quickly become.
     Penney patron Ron Johnson, in only subtlely throwing his former president under the number 42 Plano crosstown bus, told the press that Penney's marketing efforts were not resonating with its customers and that he wanted to be more hands-on, thereby making Francis the head of the Department of Redundancy Department.
     OK, fair enough. The guy at the top of the food chain gets to call the shots and also gets to take the heat when those shots miss. I'm not sure Ron Jon quite did a mea culpa, but that's really beside the point.
     Here are the points:
     1. Give this guy some time. He is trying to change decades of bad habits on the part of both the company's employees and its customers. This is going to take some time ... lots of time. Setting up Francis as the fallguy four months into the process is really not fair, certainly not to Francis but really not to Johnson either. Having lead investor Bill Ackman say the worst is over and the company would start putting up some positive results soon didn't help. It also clearly proves the next point.
     2. Bill Ackman is calling the shots at this thing. Ron Jon is the front man and it's his baby to make work, but Ackman - a short-term private equity-mindset kind of guy if there ever was one - is the one who got Mike Ullman to bring Johnson in, and he's the one looking to make a fast buck on Penney. He's already decided one quarter into the repositioning that things are on the rebound. That's just absurd. Retail history shows that this big a transformation takes years and there's still no guarantee it will ultimately work. The Mike Francis departure is proof that Johnson does not have years.
     3. The power of the coupon is without question overwhelming. Going from a zillion coupons to none is a pretty drastic step, the boys in Plano have quickly learned. It's a lesson that Macy's learned when it tried to scale back - not even eliminate - coupons during the early Terry years. It's a lesson that Bed Bath & Beyond has gotten an A-plus on as the very cornerstone of its marketing and merchandising program. Don't be at all surprised to see some Penney coupons again before the end of the year. They may not call it a coupon, but a coupon by any other name is...
     4. Penney vendors are getting creamed. There are enough anecdotal reports of individual sku comps being off by 40% or more to know that the store's suppliers are taking some pretty massive hits during this period. You have to wonder if we're going to see a round of vendor bankruptcies or at least severe trauma while Penney sorts out its game plan.
     5. Market share is in play perhaps as never before. With Penney trying to get grounded, Kohl's stumbling around a bit and Sears and Kmart rapidly becoming irrelevant, there's a giant swath in the middle of the market up for grabs. Macy's, Target and Bed Bath have no doubt already taken note.
     Like any good soap opera, the twists in this story will be downright fascinating to watch.

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