Ron Johnson Hammers Home "First Price, Right Price" Methodology
In an exclusive interview on CNBC, J.C. Penney (NYSE: JCP) CEO Ron Johnson said the company has focused on selling products at the right price, the first time, which he refers to as the "first price, right price" theory. Below are some highlights:
Goals and Reflections:
- Wants to be America's style leader for value.
- Doesn't regret taking a hard line on getting rid of sales, wanted to articulate value in a different way.
The Focus on Value and Move Away From Coupons and Sales:
- Appraises every piece of fine jewelry for insurance purposes, compares it to their price to display the actual value.
- Price helps customer understand they're providing a high quality product, which is what the "manufacturer's suggested price" is used to display.
- Offering a $10 gift if customers spend $10, doing this because customers have said they want additional value, even though this is a coupon.
On the Implementation of the New JCP:
- The company plans to self-fund its transformation, which it will do for 40% of its stores this year
- Transformations will be done with cash on hand, and will not tap into the revolving fund
- Believes company will return to growth this year, and that people will now see the new J.C. Penney.
- Important to get the customer back in the store, and they know who she is.
Biggest Lessons Learned:
- Must state vision clearly
- Be careful, change takes time.
Violation of Bond Covenants Accusation:
- Thinks accusation is totally groundless.
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