Getting It Wrong—And Right—At JCPenney

Not long before JCPenney's biggest investor, Bill Ackman, was booted from the retailer's board of directors this week, I came across a profile of Penney's CEO Mike Ullman from the September 2011 issue of Dallas's D Magazine. Back when the piece was written, Ullman knew he was going to be replaced by Ron Johnson, and that was OK with him. For one thing, he had already retired once from Macy's because of a back problem that limits his ability to walk distances and required him to zip around Penney's headquarters in Plano, Texas, on a Segway. For another, he had tried to recruit Johnson himself in 2008.

Two things from the end of that profile struck me. One was Ullman's own comment: "I'm at an age in my career where I don't think of this all as life or death," he said. "There are some serious things in the world that are worth worrying about. Business is something you work at, but it is not something that's life-threatening. There are more important things." This from the man whose side job is as chairman of Mercy Ships, a charity that sends doctors and nurses to help people in the third world.

The other is a quote from Rob Wilson, founder of Tiburon Research Group in San Francisco, about Ullman's soon-to-arrive high-tech successor, Ron Johnson: "Johnson will have a honeymoon period for about a year. But after that, investors will really start holding him accountable."

Well, wrong. Johnson's honeymoon didn't last a year. It lasted about three weeks after his first big announcement: the plan to eliminate JCPenney's sales, coupons, discounts and promotions and to reinvent each store as a village of upscale shops. After that, the stock began to fall, and neither Johnson nor Penney's recovered.

The irony is that Ullman, the improbable old guy on the Segway, had already created those in-store shops featuring Sephora. Ullman had also pushed Penney to become the leading brick-and-mortar chain in e-commerce and the first to sell directly through Facebook.

But Ullman had a five-year plan. That wasn't fast enough for Johnson's biggest sponsor, now-departed hedge fund manager Ackman. He got rid of Ullman in a hurry. He told Johnson to reinvent Penney's in a hurry. And he got results in a hurry: A year and a half after Johnson arrived he was gone, and two and a half years after Ackman joined the board he was gone too.

How could these sharp finance guys and their high-tech retail guru have gotten it so wrong? Maybe it was just because they were in too much of a hurry. Maybe they believed customers couldn't possibly be as impatient as they were. Maybe they were too impressed with shiny iPods or too out-of-touch with JCPenney's customers.

Or maybe they simply thought it was going to be easy. But retail isn't. It's not life and death, certainly, but it is something you have to work at, think through, sweat the details, nail down the corners—and that's just to make the plan. After that, you have to execute.

What did go wrong? Nobody knows. Will Ullman, once again zipping improbably through the halls at Penney's, be able to right the business? Nobody knows that either. In retail, nobody ever knows for sure what the right answers will be for a chain with the problems that JCPenney has.

But at the start of that D Magazine profile, there's a sort of imaginary epitaph for Ullman: When he goes, his tenure will be reduced to a few words in some corporate history tome somewhere. It will read: "Myron 'Mike' Ullman, the ninth CEO of J.C. Penney Co. Inc., served between Allen Questrom, who rescued the company from certain bankruptcy, and Ron Johnson, who came from Apple Inc. and..." The rest of those words have yet to be written.

That one, we can all get right.

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