This Saturday, Marvin Ellison arrived at J.C. Penney as the retailer’s latest CEO, after working with outgoing CEO Mike Ullman for some 10 months.
Ellison was named last year, hailing from Home Depot and, earlier, Target, where he proved himself to be “masterful” at operations — “the unsexy-but-critical nuts-and-bolts of retailing that ranges from inventory control to supply chain management — as well as ‘service innovation,’ which these days often means creating a seamless experience for consumers shopping in physical stores, online and from mobile devices,” according to Forbes.
Ellison and Ullman have laid out the retailer's back-to-school and holiday strategies for this year together, with a goal to reach $1.2 billion in earnings before interest, taxes, depreciation and amortization by 2017.
Myron “Mike" Ullman was pushed out to make way for retail guru Ron Johnson some years back, a move that has been widely viewed as a disaster for the discount department store. But, while Ullman’s return in a very real way has also meant J.C. Penney’s return, many of the retailer’s fundamental problems remain from those pre-Johnson days.
That includes a touchy consumer with high expectations for deals and discounts and increased and more sophisticated competition from mobile and e-commerce.
One of Johnson’s great sins was eliminating the retailer’s habit of marking discounts upon discounts on tags, and bringing real prices in line with what J.C. Penney’s shoppers were typically paying. That upset customers, who apparently liked the idea that they were getting a deal, even if nobody really paid that “original” price.
In fact the retailer is in a bit of hot water, facing lawsuits and scrutiny over the practice, known as “price anchoring.”
Ellison may need to find a way to bring value to the J.C. Penney customer without playing this pricing game. But that may not be his strong suit, experts say.
"Ellison's first task is to maintain the current momentum, and then step it up. Return the retailer to profitability and increase free cash flow," Deutsche Bank analyst Paul Trussell told Forbes.
Although Ellison is known as an operations guy, his own experience with J.C. Penney and his humble roots in retail could inform his next moves—he began at Target as an associate making $4.25 an hour and worked his way to an executive position. And as a child his hard-working mother shopped at J.C. Penney, thanks to its value.
"This journey for him is not just professional, it's absolutely personal. And we think it's that authenticity that's going to drive his authority, not only with his customer but also with his associates," Neely Tamminga, Piper Jaffray managing director, told Forbes.