J.C. Penney's Pricing Makeover: Can Ron Johnson's Strategy Work?
This paper examines J.C. Penney's 2012 brand and pricing overhaul under CEO Ron Johnson, situating it within the broader history of the American department store. Beginning with the democratic and social contributions of department stores in the nineteenth century and the founding of J.C. Penney by James Cash Penney in 1902, the paper then analyzes Johnson's three-tiered "Everyday" pricing strategy, his plan to convert stores into town-square-style boutique malls, and his use of celebrity spokespersons. The paper argues that Johnson's track record at Apple and Target, combined with an improving economy and a refreshed store concept, gives the new strategy a strong chance of success.
- The American Department Store: Historical Background: Social and economic role of early American department stores
- J.C. Penney: Origins and Brand History: Founding story and early growth of J.C. Penney
- Ron Johnson's New Pricing Strategy: Johnson's rationale and overall retail vision for Penney's
- Pricing Tactics: The Six-Point Plan: Six specific pricing changes Johnson implemented in 2012
- Complementing Pricing with Merchandising and Promotion: How boutique concept and celebrity endorsements support pricing
- Conclusion: Assessment of Johnson's strategy and predicted success
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What makes this paper effective
- Grounds the contemporary business analysis in a substantive historical overview, giving context that strengthens the argument rather than jumping straight into the case study.
- Uses a clear thesis stated early — that Johnson's strategy will succeed — and returns to it consistently in each section, creating a coherent argumentative thread.
- Draws on a variety of credible sources (Wall Street Journal, CNN Money, Harvard Business School, Associated Press) to support claims about both strategy and market performance.
Key academic technique demonstrated
The paper demonstrates effective use of source synthesis: rather than summarizing one article at a time, it weaves together multiple journalistic and academic sources to build a layered argument. The six-point breakdown of Johnson's pricing plan is a particularly strong example of organizing complex source material into a numbered, digestible analytical structure.
Structure breakdown
The paper opens with two historical sections establishing the social role of department stores and J.C. Penney's founding story. It then moves into the core analysis across three sections: the rationale for the pricing overhaul, the specific six-point tactical plan, and how pricing integrates with merchandising and promotion. A brief conclusion ties the argument together by connecting Johnson's retail vision to his proven track record at Apple and Target.
The American Department Store: Historical Background
Marketing professor Dr. Robert Tamilia explains that the department store in America not only "revolutionized the retail store" and the shopping experience, and the availability of products and promotional techniques, but also contributed in a major way to the evolution of "hiring practices and inventory control procedures" (Tamilia, 2002, p. 3). Moreover, Tamilia writes that the department store was one of society's more "democratic institutions" and, besides offering customer services that had previously been unheard of — restaurants, restrooms, and reading rooms — the American department store "liberated women and gave women their rightful place in society."
Because of department stores, jobs became available for women that "opened career opportunities" in various professional fields, and department stores "changed society's values in accepting that women could go and shop on their own" (Tamilia, p. 3). Moreover, department stores contributed to the emergence of the "modern skyscraper" and, importantly, the innovation of offering credit to customers — the Singer Sewing Company was offering installment credit as early as 1856 — helped "democratize consumption" and greatly influenced American values and lifestyles (Tamilia, p. 4).
Author Jan Whitaker presents a slightly different perspective on the beginnings of the department store era. In the late nineteenth century, small merchants were bitterly opposed to department stores, and in order to fight back against the big stores, "aggrieved grocers" started rumors that "the big stores intoxicated women customers with liquor by the glass" (Whitaker, 2006). At the time these rumors were launched in the 1890s, the middle class in America "abhorred the idea of public drunkenness," Whitaker explains.
Because of the public pressure small merchants placed on department store managers — and newspapers' coverage of attacks against the big stores — "citizen vice squads investigated the morals of underpaid store clerks" and some state legislatures passed laws attempting to "regulate the stores through taxation" (Whitaker). By the turn of the century, most "punitive legislation had been overturned," Whitaker explains.
Works Cited
D'Innocenzio, Anne. (2012). J.C. Penney slashing prices on all merchandise. Associated Press. Retrieved July 10, 2012, from http://www.usatoday.com.
Girard, Kim. (2012). Is JC Penney's makeover the future of retailing? Harvard Business School. Retrieved July 11, 2012, from http://hbswk.hbs.edu.
Mattioli, Dana. (2012). How J.C. Penney was minted. The Wall Street Journal. Retrieved July 10, 2012, from http://online.wsj.com.
Mattioli, Dana. (2012). J.C. Penney chief thinks different. The Wall Street Journal. Retrieved July 11, 2012, from http://online.wsj.com.
Reingold, Jennifer. (2012). Ron Johnson: Retail's new radical. CNN Money. Retrieved July 11, 2012, from http://management.fortune.cnn.com.
Tamilia, Robert D. (2002). The wonderful world of the department store in historical perspective: A comprehensive international bibliography partially annotated. Retrieved July 10, 2012, from http://faculty.quinnipiac.edu/charm/dept.store.pdf.
Whitaker, Jan. (2006). Service and style: How the American department store fashioned the middle class. New York: Macmillan.
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