I've followed J.C Penney's recent corporate soap opera with some amusement. So Ron Johnson, the deposed CEO, was "the wizard of Apple." Did anyone truly think that minimalist-cool Apple stores were a realistic model for middlebrow Penney to emulate? But the bigger disconnect had to do with Johnson's embrace of everyday low pricing (EDLP). No more sales! Yes, and let's also ask Penney shoppers to crawl to the store on their knees. Did Penney's board seriously believe that longtime customers would change their behavior on a dime because the Wizard of Apple wanted them to?
Any corporate history of a retail chain will tell you that the notion of EDLP has popped up for decades. Any corporate historian will tell you that EDLP has consistently failed. When I wrote a history of The Pep Boys--Manny, Moe & Jack, Inc., I interviewed former chairman and CEO Mitch Leibovitz. During his tenure he studied big box giants such as Home Depot and Walmart. So he created Pep Boys' own version in the 1990s, the Automotive Supercenter. At the same time he introduced EDLP. In fact, Pep Boys was the first automotive aftermarketer to do so. (I include the book cover here because it's always just plain fun to look at Manny, Moe, and Jack.)
No surprise: within months, the overexpansion forced The Pep Boys to scale back. And the pendulum swung from EDLP back to sale items. Macy's, which is almost a last-man-standing in American department store business history, went through the same empty yet costly exercise. Most American shoppers are addicted to sales. Indeed, Apple iBuyers may be the only ones who aren't. Meantime, Penney shareholders are the ones who suffer the fallout. When J.C. Penney writes its corporate history, let's hope they're honest about this Lesson Learned.
Stay tuned for a review of J.C. Penney's corporate About Us pages in an upcoming blog post.