Johnson's resounding failure at JC Penney proves he got lucky at Apple

JC Penney chief sacked.


It’s back to business as usual at JC Penney this week with the departure of Apple golden boy Ron Johnson and the re-instalment of its previous CEO Mike Ullman.

Sadly for this US national institution business as usual means sliding profits and sacking employees as they continue down the long road to insolvency and obscurity.  

The markets reacted comically to the decision, sending up a cheer as the news of the ex-retail VP of Apple was relieved of his post, with shares growing by 10 per cent, and then dropping back down when it was announced who was to replace him.

Johnson joined JC Penney fresh from helping to turn Apple into the most profitable company in the world but he failed to bring this same Apple magic to the department store.

It’s almost as if people bought Apple products because everyone thought they were cool to have, not because of the store locations and opening hours. 

Indeed, people would still have bought Apple stuff even if they could only get it from the top of some mountain in the middle of nowhere on the night of a full moon. In fact, the launch day queues might have been even longer.

As he has proved from his resounding failure at JC Penney, Johnson got lucky at Apple. If his strategy at Apple as VP of retail operations would have been to lock the doors on all the outlets and turned out the lights.

I’m not trying to deny Johnson did a good job while he was at Apple, the Apple Stores around the world are a landmark in any city that’s lucky enough to have them. The point is that a child could have held the position and still sold a bazillion iPods and Macbooks since the turn of the century.

Johnson got the JC Penney job because of his successful stint at Apple. Just because someone held a job at Apple in the time of the second coming of Jobs doesn’t automatically mean they’ll be able to sell anything to anybody.

JC Penney (like a lot of other companies) needs to stop trying to emulate Apple as a way to success and try something of their own. Admittedly, for a business model as out-dated as a department store this is far easier said than done.

JP Penney. Photograph: Getty Images

Billy Bambrough writes for Retail Banker International at VRL financial news.

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.