Ron Johnson (businessman)

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Ron Johnson
Alma mater Stanford University (BA), Harvard Business School (MBA)
Occupation Businessman

Ron Johnson (born October 15, 1959) is an American businessman. He was most recently the CEO of J. C. Penney. Prior to that, from January 2000 to November 2011, he was the Senior Vice President of Retail Operations at Apple Inc, where he pioneered the concept of the Apple Retail Stores and the Genius Bar. Before Apple, Johnson was previously vice president of merchandising for Target and he also worked at Mervyns.

Personal life[edit]

Johnson grew up in Edina, Minnesota, the son of an executive at General Mills and a homemaker. He was captain of his high school soccer team and of its baseball team. Johnson received his Master of Business Administration from Harvard Business School and his Bachelor of Arts in Economics from Stanford University. He is a resident of Atherton, California. [1]

Career[edit]

Target[edit]

At Target, Johnson was vice president of merchandising, where he was responsible for launching the Michael Graves line of consumer products that raised Target's image beyond that of just an upscale K-Mart.[2]

Apple[edit]

Johnson joined Apple Inc. as Senior Vice President of Retail Operations in January 2000. At the suggestion of Millard Drexler's (an Apple director and CEO of Gap Inc.), Johnson's retail team and development team headed by Allen Moyer, from The Walt Disney Company then began a series of mock-ups for the Apple store inside a warehouse near the company's headquarters in Cupertino.

Under the leadership of Johnson, the Apple Stores have, according to an article in the New York Times, been responsible for "[turning] the boring computer sales floor into a sleek playroom filled with gadgets".[3]

Under Johnson's direction, Apple's retail stores achieved a record level of growth, exceeding a billion dollars in annual sales within two years of their debut, besting the previous record set by The Gap. Apple today operates over 300 stores, including outlets in Australia, Canada, China, France, Germany, Italy, Switzerland, United Kingdom, United States, Hong Kong and Japan.[4] According to Fortune; "and not just the architecture. Saks, whose flagship store is down the street, generates sales of $362 per square foot a year. Best Buy stores turn $930 - tops for electronics retailers - while Tiffany & Co. takes in $2,666. Audrey Hepburn liked Tiffany's for breakfast, but at $4,032 per square foot, Apple is eating everyone's lunch".[5] In 2011 Apple Stores in the United States had revenue of $473,000 for each employee.[2] According to the research firm RetailSails, the Apple Store chain ranks first among U.S. retailers in terms of sales per unit area in 2011, with sales of US$3,085 per square foot, almost doubling Tiffany & Co., the second retailer on the list.[2]

On October 31, 2007 Johnson exercised 700,000 stock options in Apple stock with a strike price of $23.72, and then sold the stock later that day for $185 to $185.21 apiece netting him a $112m profit. It has been reported that Johnson earned $400 million during his seven and a half years at Apple.[6]

J. C. Penney[edit]

Due to his success at Apple and Target, Johnson was hired by J. C. Penney in November 2011, succeeding Mike Ullman who had served as CEO for the past 7 years. Ullman then served as chairman of the board of directors but was relieved of his duties in January 2013. Bill Ackman, a J. C. Penney board member and head of hedge fund Pershing Square, had strongly supported bringing in Johnson to shake up the store’s stodgy image and attract new customers. Johnson was awarded $52.7 million when he joined J. C. Penney, plus he made a $50 million personal investment in the company. After being hired, Johnson tapped Michael Kramer, an Apple Store veteran, as COO while firing many existing J.C. Penney executives.[7][8][9]

When Johnson announced his transformation vision in late January 2012, J. C. Penney’s stock rose 24 percent to $43.[10] Johnson's actual execution, however, was described "one of the most aggressively unsuccessful tenures in retail history". While his rebranding effort was ambitious, he was said to have "had no idea about allocating and conserving resources and core customers. He made promises neither his stores nor his cash flows would allow him to keep". Similar to what he had done at Apple, Johnson did not consider a staged roll-out, instead he "immediately rejected everything existing customers believed about the chain and stuffed it in their faces" with the first major TV ad campaign under his watch. Johnson defended his strategy saying that "testing would have been impossible because the company needed quick results and that if he hadn’t taken a strong stance against discounting, he would not have been able to get new, stylish brands on board."[11][12]

Many initiatives that made the Apple Store successful, for instance the "thought that people would show up in stores because they were fun places to hang out, and that they would buy things listed at full-but-fair price" did not work for the J.C. Penney brand and ended up alienating its aging customers who were used to heavy discounting. By eliminating the thrill of pursuing markdowns, the “fair and square every day” pricing strategy disenfranchised JC Penney’s traditional customer base.[13] Johnson himself was said "to have a disdain for JC Penney’s traditional customer base. When shoppers weren’t reacting positively to the disappearance of coupons and sales, Johnson didn’t blame the new policies. Instead, he offered the assessment that customers needed to be “educated” as to how the new pricing strategy worked. He also likened the coupons beloved by so many core shoppers as drugs that customers needed to be weaned off."[7][14][9]

While head of J. C. Penney, Johnson continued to live in California and commuted to work in Plano, Texas by private jet several days a week.[15]

On April 8, 2013 he was fired as the CEO of J. C. Penney and replaced by his predecessor, Mike Ullman.[16] Johnson was dismissed after his "bold new pricing strategies clearly failed, but before being able to bring his “shop-in-shop” strategy to fruition", as was reportedly Johnson's costly ambitious turnaround plan. The “mini-shops” in Penney stores featuring hot brands, that just opened last year, were doing better than the rest of the store.[17]

References[edit]

  1. ^ Reingold, Jennifer (March 19, 2012). "Retail's New Radical". Fortune 165 (4): 124–131. 
  2. ^ a b c David Segal (June 23, 2012). "Apple’s Retail Army, Long on Loyalty but Short on Pay". The New York Times. Retrieved June 23, 2012. 
  3. ^ Clifford, Stephanie; Helft, Miguel (June 14, 2011). "Ron Johnson, Apple Stores Chief, to Lead J.C. Penney". The New York Times. 
  4. ^ "Apple Retail Store - Store List". Apple.com. Retrieved 2012-08-15. 
  5. ^ The Roots of Apple's Retail Stores
  6. ^ Jay Yarow (2011-06-14). "Ron Johnson Made $400+ Million At Apple In 7.5 Years - Business Insider". Articles.businessinsider.com. Retrieved 2012-08-15. 
  7. ^ a b Macke, Jeff. (2013-04-09) Ron Johnson’s JCPenney: Anatomy of a Retail Failure | Breakout - Yahoo! Finance. Finance.yahoo.com. Retrieved on 2013-07-26.
  8. ^ Tag: Ron Johnson | Business & Money | TIME.com. Business.time.com. Retrieved on 2013-07-26.
  9. ^ a b Eight Lessons from Ron Johnson's Ouster. Forbes. Retrieved on 2013-07-26.
  10. ^ How Apple store wiz kid Ron Johnson became J.C. Penney’s problem child. Vancouversun.com (2013-04-09). Retrieved on 2013-07-26.
  11. ^ How Apple store wiz kid Ron Johnson became J.C. Penney’s problem child. Vancouversun.com (2013-04-09). Retrieved on 2013-07-26.
  12. ^ Tag: Ron Johnson | Business & Money | TIME.com. Business.time.com. Retrieved on 2013-07-26.
  13. ^ Three Leadership Lessons from Ron Johnson’s Debacle at J.C. Penney. Retrieved on 2013-08-21.
  14. ^ Tag: Ron Johnson | Business & Money | TIME.com. Business.time.com. Retrieved on 2013-07-26.
  15. ^ Ritz crackpot: CEO stays in luxe hotel while Penney flounders, by James S Covert, New York Post, 11 February 2013
  16. ^ "Ron Johnson Is Out at JC Penney: CNBC Exclusive". 
  17. ^ Did J.C. Penney Pick The Exact Wrong Time To Fire Ron Johnson?. Forbes. Retrieved on 2013-07-26.

External links[edit]