JCPenney Sells Out with Joel Kim Booster and Scott Seiss | 39

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The JCPenney headquarters in Plano, Texas isn't the most exciting place.

As of February 6th, 2012, the department store, known mostly for coupons and affordable linens, has been in business for over 100 years.

But today,

something is different.

Today, there is a cube.

Between two cafeterias, a 10-foot by 10-foot acrylic cube has materialized with a large opening.

It looks like some kind of chic dumpster.

Curious JCPenney employees circle around it, and a line forms of co-workers clutching heaps of office paraphernalia.

Mugs, stationery, pens, tote bags, all stamped with the JCPenney logo, are brought to the edge of the cube.

The company's new CEO, Ron Johnson, has ordered them to cast their branded swag into this loose-sight abyss.

He imagines a 21st century company.

To create the future, he must first destroy the past.

Starting with all those damn mugs.

Death to JCPenney.

Long live JCP.

A new department store for a new generation.

With high-tech checkout systems, curated collections, a luxurious shopping experience.

In just a little over a year, Johnson's transformation of the company will implode, costing JCP billions in revenue, tanking their stock price, and making them a laughingstock thanks to a teapot that looks suspiciously like Hitler.

But right now, Ron Johnson believes in his vision and he's going to see it through, even if it takes the company down with him.

Well, don't just stand there.

Throw something in the cube.

Look, we know Ron Johnson, the high flyer from Apple, came over, big plans to turn around JCPenney.

Ron Johnson had joined JCPenney in June of 2012, was paid quite a hefty paycheck to join the company, compensation in the area of nearly $50 million.

And then over the past year, it has been a year of disastrous results.

The company lost more than $430 million this year.

I told you transformations are unpredictable and can be bumpy.

And this one has battle.

Turn off your loyal customers and they'll turn their back on you.

We

are on

a single ship.

From Wondery and Atwill Media, this is The Big Flop, where we chronicle the greatest flubs, fails, and blunders of all time.

I'm your host, Misha Brown, social media superstar and looking forward to my midlife crisis at Don't Cross a Gay Man.

And today, we're talking about JCPenney's late life rebrand, a classic attempt by an old-timer to stay hip and trendy.

On our show today, we have two actors, two comedians.

They're both amazing, and I am such a huge fan of both of them.

Joel Kim Booster and Scott Cease.

Welcome to the show.

Thank you for having me.

Yes, thank you for having me too.

Very excited to dunk on JCPenney.

Very excited.

This is a long time coming for me.

My mom worked at JCPenney's, actually.

Really?

And the first major injury I ever had occurred at a JCPenney's.

What?

What happened?

So this is a mystery.

It's actually still kind of a mystery.

We could do a separate podcast about the mystery of what happened to me at JCPenney's.

But I was like three or four and I like came out of, you know, the circular, like where they hang clothes?

I was like doing the little kid thing of like hanging out inside one of those.

I like emerged from the coats.

And my mom said my ear was like severely gashed and like they had to take me to the emergency room and I had stitches.

And my mom was so nervous because they were like, They're gonna, like, she couldn't explain it.

She couldn't tell them what happened.

So they were like, They're gonna take you away.

Like, this is it.

You weren't caught on a coat hanger or anything.

Like, I mean, I'm sure that must have been what it was, but like, I still don't, I don't consciously remember it happening.

So it's all, it's all suppressed.

Hopefully, by the end of the podcast, we'll get to the bottom of it, though.

Could have sued.

Well, don't worry.

Pennies will get their comeuppines.

Okay.

Scott, maybe for some of our international listeners, could you describe what JCPenney was in its heyday?

To me, I remember walking through like JC Penny.

That's how me and my mom would like walk into the mall when I was a kid through it, and we never shopped there.

So I always thought JCPenney was a luxury brand,

despite having the word penny in the name.

I was like, this is some fancy stuff here.

But I guess it's like, it's supposed to be like an affordable department store.

Is that kind of the vibe?

Yeah, exactly.

Family-friendly department store.

Well, are we ready to hear the story?

Absolutely.

I'm so down.

Absolutely.

I'm ready to sit down and listen for once, for once in my goddamn life.

Well, we should say many of the details in today's story came to us from the excellent 2014 Fortune article by Jennifer Rheingold called How to Fail in Business While Really, Really Trying.

Brutal.

Back in 2004, JCPenney is a century-old, reliable, mid-level department store known for bargains and beloved by moms.

The company hires Myron Mike Allman, the third, to be its next CEO.

Allman is a hit at the company.

Everyone likes this guy, from executives to employees.

He hands out coveted awards to hardworking staff that they proudly keep at their desks, and he improves the JCPenney website.

Most importantly, he gets the stock price all the way from $24 to $75 a share in just three years.

Whoa, work.

Omen does this while suffering from spinal injuries that make it hard for him to walk.

In fact, he gets around the office on a Segway scooter.

Perfect time to let everyone know we have an upcoming episode about the Segways.

That spinal injury was also mysteriously received at a JCPenney and no one knows quite how it happened.

Yeah.

Things have been happening at the JCPenney.

Don't know what's going on in there.

Well, in 2007, Allman's tenacity is no longer enough.

The Great Recession, Slay, hollows out America's economy in a matter of months.

JCPenney's loyal fan base, moms on a budget, need even steeper discounts, and they start to look for some online.

The stock prices fall drastically, and over the next couple of years, all department stores and retail brands suffer.

But when things start to turn around for other companies, JCPenney is still struggling to regain its value.

Here's a question.

What would you have done to try and save JCPenney at that time?

They should have taken a page out of Abercrombie's book.

And instead of having like hot Abercrombie models outside ushering people in, it's the JCPenney version of whatever an Abercrombie problem is.

Just ushering people inside, like moms and like the JCPenney customer outside, really like shirts off, discount bras on display.

I'm just picturing those two, like people that had like their guns on the front lawn.

Like the people that, you know what I'm talking about?

Like those two?

They're the JCPenney moments.

Yeah.

Yeah.

Well, JCPenney's board of directors and Allman decide it's time to discuss the future of the company.

In a meeting, followed by a fancy dinner, everyone's on the same page.

JCPenney needs to take bold steps to survive.

The meeting ends and Ullman is in high spirits.

There is hope for the future, everyone.

Ullman gets in his car and his driver pulls out of the restaurant parking lot when their car is sideswiped by another vehicle.

Whoa.

Allman is rushed to the hospital.

His already fragile spine now has multiple fractures.

Oh my God.

He'll be okay, but it will take him months to recover.

The board huddles with Allman and the CEO needs needs to convalesce, but the company still needs a leader to pull off these big changes they were just talking about over their risotto.

Oh my god.

Allman himself makes a suggestion.

How about this guy, Ron Johnson?

Now, there are about a million Ron Johnsons.

Do you have any guesses which one we're talking about?

I'm going to guess libertarian,

white,

old, brown tie.

You've described 90% of Ron Johnsons.

I don't think you whittled it down a single bit.

Well, to any of our cheese heads out there, this is not Ron Johnson, the senator from Wisconsin.

Johnson is the golden boy of retail.

He helped rebrand Target, changing its vibe from cheap to kind of cool.

Yeah.

He also built Apple's retail business from scratch.

Like before he and Steve Jobs teamed up, there were no stores dedicated to one computer brand only.

You had to buy tech at places like Best Buy.

His Silicon Valley resume is gorge, but can you guess what kind of person he might be?

The kind of person that like takes blood from younger people and injects it into himself to keep himself young forever.

He has sister wives.

I don't know.

Wears cargo shorts.

I don't know.

No, Ron Johnson is a type A, zero inbox, middle-aged Midwestern dude with Sunday school teacher vibes.

The sort of guy who wakes up at 4 a.m.

without an alarm clock to run three miles before running a whole ass company.

I mean, he likes keeping busy, spending his days in meetings, and never looking at screens.

How do you think Wall Street feels about him?

I mean, they got to love him with the track record.

The track record seems unimpeachable.

Yeah.

He's the Sasha Colby of brands.

Yeah.

He really is nailing it on all fronts.

I got to ask, though, like, how is he doing it with no screens?

He like created the store for screens, and he's not looking at any screen.

It's obviously.

He strikes me as a standing, like, uh, treadmill desk guy.

Yes, actually.

Yes, I think so.

Well, you are right.

Wall Street loves him.

When he's announced in June of 2011, the stock price immediately soars by 17%.

The entire retail world is thrilled to see what this tech industry insider can do for a stodgy old brand like Penny's.

So for six months, Johnson gets to work reimagining the company in relative secrecy.

Once he's got his vision, he invites the company's board of directors to the headquarters in Texas for a presentation.

It turns out Johnson has a flair for the dramatic.

I can't relate.

He leads the board down into the basement where he's built a space that simulates the experience of being in a JCPenney.

Oh my god.

What would you have included in a JCPenney simulation?

A four-year-old with a bleeding ear.

For sure.

It all goes back to that trauma.

It all goes back.

Just wandering around looking for his mom.

Well, you're not too far off the mark.

Johnson plays shrill recordings of aggravating lights recreating the chaos of a typical JCPenney.

There were coupons, there were sales, a soundtrack of people shouting, children crying.

But then, Johnson walks them into a second room.

To quote Fortune, it's white, tastefully austere, and had a celestial serenity.

Lana Del Rey.

Yeah, exactly.

No longer will this be stuffy old JCPenney.

Johnson is pitching a new, modern JCP.

Whoa.

So, what sort of changes do you think a Silicon Valley executive is going to make to a company like JCPenney?

New logo.

Fleece vests everywhere.

Hammocks in the office.

Hammocks in the office.

Yeah, that's probably right on track.

Well, in addition to the vibe of celestial serenity, Johnson's vision is rooted in two primary issues.

pricing and experience.

First, Johnson believes customers want an honest relationship with their retailer, a fair deal up front.

So even though JCPenney is known for sales, Johnson decrees no more price slashing, no more half-off or barn burner clearance gimmicks.

No, moms love a deal.

You have to keep the deal.

Even if it's the same price, they want the dopamine hit of knowing that they got a bargain.

That's like so basic 101.

Like you got to know that about Midwestern moms.

I got to see 20% off of a 20% upmarked item.

I got to see that.

Yeah.

Well, and while we're at it, there are no more hoops to jump through.

If a customer doesn't like a product they've purchased, they can return it without a receipt.

No questions asked.

I wish I had known that at this point.

I would have really been taking advantage.

Just taking anything back to JCPenney.

I think I bought my Kia here.

If you could give me $30,000, that'd be great.

Well, the second issue Johnson believes he can solve is that the stores are uninviting and don't encourage discovery.

People file in, get the cheapest version of what they need, and leave.

Johnson wants to invite higher-end brands to sell products in his stores, and he wants to organize things by collection.

For instance, the Martha Stewart section instead of type, like home and garden, so that each section looks like its own little store that people will browse.

So to be clear, Johnson plans for hundreds of stores inside his JCPs.

And the stores will be divided by, I'm sorry to trigger you, Joel, these five by five clothing racks.

Don't go near them.

So if you're in a mall, you'll be shopping in a store that's in a store that's in a store.

You know what customers love?

Confusion.

Oh, yeah, I was about to say.

Something sense to to me is like mass confusion and hysteria.

To be like, I'm going to reorganize my store inspired by inception,

stores within stores, a nesting doll game.

Part of me, the vision for me is like an open-air market in like the Middle East where like Indiana Jones is running through it from, you know, Nazis or something like that.

And he's pushing through the clothing racks and each store is a different country and a different culture.

And it's actually kind of beautiful.

I see the vision.

I see the vision.

Each store has its own currency.

There's an exchange rate.

Well, you know where a perfect place where you could exchange currency would be?

That would be like a town square, which is funny because Johnson envisions JC Pennies to be this self-contained community.

Each will have what he calls a town square where people will hang out, get coffee, and attend events.

Outside of that will be what he calls Main Street, surrounded by all of these mini stores.

Question, does hanging out in a JCPenney in the mall sound appealing to you?

I'm actually going to defend this.

Okay.

I'm going to defend this decision for a second.

No, I really am.

Because here's the thing.

We have lost so much public space in this country.

You're seeing like all these articles about how Gen Z is like, they're not hanging out.

They're only on their phones.

They're only socializing on social media, online, and stuff like that.

And it's it's like, well, where the fuck are they supposed to go?

Because the mall was where I used to go.

The instinct, I don't think, is bad.

I think JCPenney is maybe the wrong platform for it.

Yeah, that's what I was going to say.

The people that should own those public spaces should be corporations, obviously.

Like, we should have

unlimited advertising.

I understand.

You're actually bringing me around to his idea, though.

I can get on board with the public spaces, but the idea of a man getting up and being like, people should live inside JCPenney.

I'm like, I don't know.

You've gone too far at that point.

I like parks, but I don't know.

Yeah, yeah, yeah.

Sure.

Well, Johnson finishes this pitch to the board, and it's time for the grand finale.

He brings the execs into the company's cafeteria where 5,000 cheering employees who have been waiting on their feet for hours welcome the board to the party.

And the board is impressed, like big time.

Johnson has proved that the entire organization from the board to the 5,000 minions will follow whatever he does.

If I were there, if I were on the board, I literally would have gotten to that last space and been like, this could have been an email.

Couldn't you put this in a power?

I came to Texas to do your weird JCPenney horror experience, like escape room experience.

Like, no, like, just tell me what the plan is.

I don't need to see all this.

He's putting in like a Halloween, scary sound C Day as they enter the room.

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One of Johnson's first moves comes in the form of a cleanse of the company.

He builds a giant acrylic cube in the middle of the headquarters.

Here, he tells workers to deposit anything and everything with an old JCPenney logo on it.

T-shirts, mugs, bags, even those coveted awards are tossed in, with 9,000 items eventually ending up in this gigantic cube.

Whoa.

This fucking stunt queen

is

insane.

Like this is like he's literally doing sleeping beauty with the spinning wheels.

He's like, bring it all.

Like we have to get rid of all of it.

Yeah, I mean, and he positioned it as a time capsule, but it's never buried.

It was never locked up.

As far as anyone knows, everything inside is just thrown out.

Where is the cube now?

Yeah.

Sounds like a Burning Man installation.

Like a giant cube full, just full of old JCPenney shit.

In less than three years, hundreds of JCPenneys across the country will be completely transformed.

So at a Steve Jobs-esque launch gala in New York City, Johnson announces these plans to completely transform JCPenney into JCP.

The audience is a who's who of retail royalty, including including Martha Stewart, Calvin Klein, and J.

Crew CEO Mickey Drexler.

As the former Apple executive lays out his plan, there's a fair amount of eye-rolling.

They're skeptical of Johnson's approach.

But Johnson plows ahead with the rebrand and begins advertising the new high-end merchandise.

Among the ads is an LA billboard off the 405 promoting a Michael Graves stainless steel tea kettle.

And this billboard certainly gets the attention of drivers.

So I'm going to show you a picture of the tea kettle.

Okay.

But if you can describe the tea kettle to the listeners,

maybe see if it reminds you of anyone.

Well, the tea kettle has like a penis head.

Yeah, I was about to say it's an uncircumcised tea kettle, if that helps the listeners at home picture it at all.

I don't know.

I mean, it's a tea kettle for assholes, like clearly.

Maybe if we zoom out, maybe it looks a little bit like this guy.

Oh, my God.

Wait, does it look like him?

Look at the hair, look at the mustache.

Oh, yeah,

readers at home, the teapot looks like Adolf Hitler.

Somehow,

it is both uncircumcised and Hitler.

That was the twist of the century for me.

So, for the listeners, the handle is the hair, the knob is the mustache, and the spout is the little saloo.

So this predictably turns into an internet sensation.

Soon reviews of the teapot list the pros.

It's great at boiling water and the cons, looks like Hitler.

I can just imagine the people who bought it like after seeing the Hitler stuff being like, well, I'm just going to rotate it on the stove so you can't see the face.

It's only from that angle it's Hitler.

Well, I mean, within hours of it going viral, the teapot sells out, fetching up to $200 a piece on eBay.

Before long, the company catches wind of the whole thing and tweets the following response.

Totally unintentional.

If we designed the kettle to look like something, we would have gone with a snowman smiley face.

And then the teapot was discontinued shortly after that.

The thing is about brand Twitters now is that

that was like so wholesome, but like the people that run brand Twitters now would have been like, sorry about our teapot.

Like here's a picture of our hole.

Like

they're just like, every brand now is like trying to be like too cool and too in on the joke.

Just desperately trying to be relevant.

Like, you would have seen JCPenney tweeting, like, we're serving Hitler realness with this teapot right now.

Not us with this Hitler teapot.

Jeez.

Well, Ron Johnson didn't spend long dealing with the Hitler teapot.

In fact, he didn't spend much time on anything because he likes to move fast.

Within only weeks of joining JCP, he brokers a deal with the CEO of Levi Strauss to open 700 boutiques inside of JCPenney that same year.

The Levi's project costs $120 million.

No big deal.

No big deal.

Johnson also gets Martha Stewart on board to have her own boutiques, and he doesn't even pause to consider that it might be a major conflict of interest since she already has a product product deal with Macy's.

But we'll put a pin in that for now.

Uh-oh.

Johnson is also fixated on a pricey roving checkout system like he instituted at the Apple Store, where workers follow people around and help them check out without standing in line.

I know I would just offend someone by approaching someone and being like, hey, I need to check out.

And they'd be like, I don't work here.

I just look like I work at a JCPenney.

Well, if we're thinking about an Apple store, you know what you want.

You go in, you buy an iPhone or a computer, and that's your one thing.

But, you know, what if you're a mom of 14 fucking brats and you all have a pair of jeans for back to school shopping?

Like, how do you stand around and check out without like a table?

Just seems a little crazy to me.

I do wish JCPenney had a genius bar, though.

Yeah.

Like near the men's underwear section.

Yeah.

That would be good.

Something like that.

But thinking about how inconvenient this might be for moms and back to school shopping, maybe maybe that's the point.

No more families, which would explain the next move.

Oh, discouraging customers on a budget from shopping at JCP.

He wanted to be a luxury brand.

He wanted to be luxury.

Affordable brands like St.

John's Bay and Joe Fresh, brands that Penny's customers love, are eliminated in favor of upscale lines.

St.

John's alone brings in $1 billion in sales annually.

Jeez.

Yeah, JCPenney also drops Southpole, their brand play for black and Hispanic customers.

But remember, Johnson works fast.

And some of the JCPenney executives surrounding him say he doesn't test these ideas before implementing them.

He just spends that cash money.

The thing is, I'm like sort of torn because like he did it for Target.

Like he, he like bumped Target up from like on par with Walmart to like fancy Walmart, basically, which I get.

And that was very successful.

Like that's how I see Target now, definitely.

But it feels like the jump from JCPenney to JCP is like he was trying to really overdo it.

Like you're alienating your base and no one cool is going to shop at JCPenney.

Exactly.

Like even if you say JCP, like we know, we know what it is.

You can't trick us with your town square.

At corporate headquarters in Plano, Texas, the employees are generally looking forward to the changes that will happen in the stores.

I mean, they're really desperate for a shakeup and want JCP to pull out of that post-recession slump.

But they quickly realize that Johnson's planned billion dollars in cost cutting has to come from somewhere.

And of course, massive layoffs follow.

19,000 of the nearly 160,000 employees are let go over the first few months of the company's transformation.

He's like, this white cube was really expensive.

Okay.

This is a high-quality cube, and I'm also sending it to space to be frozen in time.

Why don't you just go ahead and climb in there yourself, actually?

Like, you've deposited your employee of the month trophy with the old JCPenney logo, and now you need to also join the cube.

Well, it was also easier for Johnson to do this thanks to the elimination of performance reviews at JCPenney, which means employees can be terminated without cause, a popular Silicon Valley tradition.

Whoa.

So you don't get sacked for poor work.

You're just like sacked, judged on vibes.

Yeah.

Which honestly is fair.

Yeah.

Totally fair.

Fair.

Honestly, Janice, you suck.

No, yeah.

Honestly, I got fired from a Coldstone Creamery for basically those reasons.

Didn't fit the vibe.

So what's a corporate overhaul without some cronies?

While firing tons of existing JCPenney employees, Johnson hires and or poaches his friends to come work with him.

For just two of the new hires, Target's Michael Francis and Apple's Dan Walker, Johnson forks over $24 million,

plus millions in stock options.

Cool, cool, cool, cool, cool, cool, cool.

Absolutely.

Yeah.

Nothing wrong there.

No.

Now, do you think the old guard and the new guard are like getting along?

Yep.

Absolutely.

Absolutely.

So they're making $24 million and we're making minimum wage.

We got demoted somehow.

Yeah.

No, of course they're not getting along.

There's even some name-calling.

The new Silicon Valley types regard the remaining JC Penny employees with disdain, calling them dopes.

D-O-P-E-S.

What do you think dopes stands for?

Dusty old people.

Elderly suck.

I don't know.

It stands for dumb old pennies employees.

Wow.

Scott, you were actually very close.

So close.

I almost had it.

I know Ron.

Ron is a close friend.

Now, most of the new employees don't even move to Plano, not even Johnson himself.

They just use private planes to commute to work.

Okay.

Taylor Swift coded.

The nearby Ritz-Carlton, where they all stay, becomes the de facto headquarters.

Oh, gosh.

So the JCPenney veterans are frustrated with Johnson's old buddies from Apple.

So they come up with their own nickname, which is bad apples.

You know what?

I'm going to call it a draw

in terms of

the name calling.

I think it's sort of a lateral move away from dopes.

I mean, bad apples is so sweet because it's like, that is what my mom, a JCPenney employee, would call someone she considered evil.

Coming up with the insult bad apples, it reinforced dopes, the acronym dopes.

Like, you know what I mean?

It's like, okay, yeah.

So each argues that the other is hurting the company.

The dopes are too resistant to change.

The bad apples don't get the business and aren't realistic.

It's not long before Johnson gets feedback on his big changes.

First quarter sales figures come in and

sales are down 19%,

almost double what they they expected with the overhaul.

Revenues plunge by $4.3 billion.

Oh my God.

It's a transitional period.

Sure.

Some bumps in the road are expected.

Sure.

Stock prices also plummet to $18, less than half of what they were a year ago.

So to catch up, refreshing a brand, the Silicon Valley Way means firing workers, spending millions on perks, and making stores inaccessible to working-class customers.

They're known for coming into an industry and just destroying it completely, like upending it to the point that it doesn't work anymore.

This guy did it in seemingly record time.

He was like, I'm going to set the record for ruining this brand that's been around for decades.

Impressive.

Yeah.

I'm surprised he didn't come in and rename JCPenney X,

quite honestly.

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Not all of Johnson's ideas are techie, diabolical nonsense, though.

Some of them are well-intentioned and forward-thinking for the time.

However, they do still contribute to his demise.

One of the earliest marketing moves Johnson and his buddy Michael Francis make is to hire Ellen DeGeneres, a proudly out lesbian, as JCP's new spokesperson.

This is 2012.

Everyone still loves Ellen.

Okay.

Her talk show is top rated, winning daytime Emmys two years in a row.

At the time, more countries are expanding human rights like marriage equality, so hiring her as a spokesperson, no brainer.

Unfortunately, within weeks of the announcement, a lobbying group called One Million Moms launches a hateful campaign to get Ellen fired.

JCP doesn't give in.

but the company does decide to lay low for a while.

And then, in honor of Mother's Day, they launch a campaign featuring a family with two moms.

Scott, can you describe the photo?

I was really expecting the two moms to be dressed as Hitler.

Like, that's what I've been set up for in this moment.

Would have been the perfect escalation of the bit, for sure.

I would have screamed.

Okay, we've got, is it two families?

Well, this actually looks like a thrupple.

Yeah, it looks like it's three moms I'm looking at.

This looks like a polycule is what we're looking at.

It's three women and two young girls.

It's the three Ron's sister wives.

Yeah.

Pictured are partners, Wendy and Maggie.

They're two daughters, and that's Wendy's mom over there on the left.

Wow.

But still, maybe like the most inoffensive photo we've ever seen in our lives.

Yeah, definitely.

Oh, totally.

The ad copy calls the women partners and they're wearing wedding bands.

And in a flash, one million moms is back with a collective coronary.

The group urges members to go to the stores and call customer service lines and urge JCPenney to nix the gay stuff and to, quote, remain neutral in the cultural war.

Oh, God.

Can I just say really quickly, as of 2020, 1 million moms had less than 5,000 Twitter followers.

So I want to know, like, how many moms?

Let's be real honest here about the numbers.

How did we get to 1 million?

Yeah, 1 million moms.

If you're listening, all three of us on this podcast episode can get that in one day exactly

so suck it yeah sorry well by this point johnson does become worried the company is becoming too political and people i have bad news for johnson because he discovers a father's day campaign is in the works with a picture of two dads

scandalized

Well, Johnson, he tries to pull the plug on the campaign, but he's too late.

The Father's Day photos have already gone to print and the board doesn't want to pull the ads.

Neither does the marketing team.

Francis, the marketing whiz Johnson hired away from Target, is proud of his work.

But then, in the space of a few days with only a super vague press release, Francis leaves the company and the catalogs, they're mailed out.

Joel, could you please read 1 Million Moms' pearl-clutching response?

I would love to.

Oh, God.

1 Million Moms is disturbed that JCPenney is continuing down the same path of promoting sin in their advertisements.

If you receive their advertising booklets or catalogs in the mail, OMM recommends you write refused return to sender on your JCPenney catalog and try sending them back.

If they receive an onslaught of their return magazines, they will take notice.

Yikes.

Yi.

Yikes.

This reminds me at IKEA, like the IKEA had a commercial that depicted a gay couple.

When I worked at the call center there, we would get like literally like 100 replies on any post a day complaining about this.

And it's like all of the complaints whittled down to like, your commercial offends me because I will never experience love myself.

So I'm

that's the insecurity there.

No, I mean, come on.

It's like equality.

Like gay couples can fight and break up at IKEA too.

It's the same experience.

Yeah.

Unfortunately, OMM was right.

They do take notice and Johnson bends to 1 million moms.

Suddenly, Ellen is no longer the spokesperson for JCP.

And according to a senior VP of marketing at the time, Johnson becomes obsessed with personally reading every single line of ad copy and actually writes half of the campaigns himself.

But I mean, the thing is, though, with this kind of stuff, though, is that like you expect a pat on the back because you had gay people in your ads.

Like, it's that, like, queer smoke train thing of like, that was especially starting to ramp up, I think, around 2012, 2013, of like, we, like, love diversity, but behind the scenes, it's all like, you know, fucking over everybody.

It's obviously upsetting that one million moms won, but at the same time, I'm also not like bending over backwards to like congratulate JCPenney on trying in the first place either.

For sure, right?

But it's not the ads that are the problem, it's the chaos.

The customers who like the rush of catching a good sale went on to shop elsewhere, like TJ Maxx, a company that actually grew over this period.

That no question asked return for cash policy is immediately abused with customers pulling items off of the shelf and returning them for cash.

Good for them, honestly.

There was even one item that had a negative sale percentage, meaning more are returned than are bought.

Whoa.

Incredible.

Yeah.

I love it.

I love the scam of it all.

Congrats.

Good for them.

Good for fucking them.

Yeah.

At least customers are making a profit.

Yeah.

This one policy decision of his loses JCP half a billion dollars.

So big whoopsie.

Jeez.

I mean, doesn't it feel at this point like he's there to specifically tank this company?

Honestly, yes.

A little bit it does.

I'm also starting to get the feeling that maybe money isn't real.

Yeah.

You know,

Ron seems evil

or just stupid.

But he knows he's in trouble, though.

And he jokes about wearing sneakers in the office so he can run out of headquarters quickly in the event that he's overthrown.

Oh, wow.

So remember that deal with Martha Stewart that Macy's was mad about?

Well, in August, Macy's takes Martha and JCP to civil court for interfering with the contract Martha already had with Macy's.

And if that's not bad enough, private emails from Johnson go public where he brags that he's going to steamroll Macy's and their CEO.

Sexy.

Love that.

Wait, but also,

it's been less than a decade at this point that Martha's been out of prison for financial fraud.

Yeah, tough.

Wow.

Martha, be more careful.

In my movie version of these events, it's just challengers, but it's Martha Stewart as Zendaya and then the Macy CEO and Ron Johnson as Mike Weiss to Josh O'Connor.

Oh my God, yes.

Well, by October, the third quarter sales figures come in and they're actually pretty abysmal.

And all told, the company loses more than half of its value.

That's insane.

So maybe, just maybe, the holiday shopping season can rescue JCP.

Maybe starting with some some of those sweet Black Friday deals?

Well, let's listen to a clip of Johnson speaking with CBS's Charlie Rose about his strategy around Black Friday.

Well, first off, this is the most Ron Johnson-looking motherfucker I've ever seen in my entire life.

Why didn't you follow what other stores were doing and make an exception for your store or your stores on Thanksgiving?

You know, I really believe there's two great traditions that happen this time of year.

One is Thanksgiving, and the second is the kickstart to the holiday season.

And Black Friday is called Black Friday because it should start on Friday.

And no matter when you open, you'll have a big crowd.

But we think we should honor both families and shopping, and we chose to do both.

Now, hold on.

I say let him cook.

Exactly.

Like, I think...

I kind of am on board with this as someone who worked retail for a long time and has a lot of family members who worked retail for a long time.

That period is brutal.

Unless you're about to reveal something very nefarious to me about this situation, I think he was onto something here.

I think like more stores should do that.

Like let the retail workers rest on Thanksgiving.

You're totally right.

It's stressful as hell going to work like 6 p.m.

Thanksgiving night to start a Black Friday shift that should be the next day.

So he's got something here, but

his strategy is like, let's make less money, which I don't know if that's what the shareholders want to hear in that situation, but the employees are like, that's fine with us.

We'll eat fucking mashed potatoes.

That's fine.

Well, the holidays do not save JCP.

No.

So Johnson, at this point, offers to resign twice by springtime.

But so far, the boards assured him, like, no, you're good.

We believe in you.

He was trying to get out.

He was trying to escape.

He's trying so hard.

This is so crazy that, like, if you are someone in his position, like, you can literally want to accept consequences, and yet you will still fail upwards because people will be like, no, no, no, no, no, no.

Don't do that.

You're good, girl.

Go on.

Keep going.

So in April, despite JCP crashing and burning, Johnson and his clan go on a much needed vacation to the south of France.

And while Johnson's away, the board members realize they've made a terrible mistake and decide Johnson's got to go.

And they finally accept his resignation.

After only 18 months as CEO, Ron Johnson steps down.

18 months.

I didn't even realize it was that short of a time period.

I thought that's a shit.

It felt very long.

I thought this was over the course of at least like five years or something.

18 months.

18 months.

Wow.

Trick question: Did he deserve it?

Yeah.

Yeah.

Yeah.

Yeah.

Absolutely.

You lose $4 billion.

It's like, yeah, get out of here.

Get out of here.

Here's a crazy piece of information.

Johnson's out before his new high-end merchandise ever even hits stores.

Well, it takes a long time.

It's high-end.

Damn.

That's true.

Well, but then it does hit the stores.

And do you think it sells well?

Absolutely.

I hope

you're not going to be able to do it.

It must have.

Yeah.

It must have.

The second coming of Ron.

Yeah.

It's about to happen.

No, of course not.

$160 Jonathan Adler floor vases and $115 Designer Dutch ovens by Michael Graves are too expensive for the average JCP customer.

And new customers with higher incomes haven't been enticed enough.

Except when it comes to, you know, the Hitler-shaped teapot.

Everyone bought that.

So all in all, things have been better at JCPenney, and they need someone new and fast.

So where can JCP find a new CEO on such short notice?

The hospital, of course.

Actually, fully recovered from the car accident, old standby Mike Ullman returns as CEO and quickly undoes almost everything.

He slows the bleeding and gives the company back its logo, and JCP is once again JCPenney.

But the company is still far from thriving.

After years of declining sales, the company files for Chapter 11 bankruptcy in 2020 and then comes under new ownership.

Bless him.

I mean, do you think Ron Johnson could have succeeded if he'd been given more time?

No.

Yeah, no.

I think it's like hubris.

I think he had two successes and then he felt bulletproof and he just completely misunderstood the assignment, but couldn't see it.

Yeah.

Jojo Siwa level rebrand disaster.

Oh my God.

Oh my gosh.

So let's do a little, where are they now?

Yes, please.

I'm dying.

Martha Stewart, she's doing just fine.

Yep.

But in 2014, the judge for Macy's contract interference suit against Martha and JCPenney ruled in favor of Macy's.

Damn.

In 2017, the companies settled on their own terms and the civil suit was ultimately dismissed, though the terms of the deal were not revealed to the public.

Oh, wow.

Well, I hope it was worth it.

Oh, yeah.

Ron Johnson founded a startup called Enjoy in 2014, which planned to make online shopping more fun by having mobile stores operating out of trucks that will come to your house.

The thing is, is like he kind of created DoorDash, like Uber Eats, like, you know, you can send them to Walgreens, but like, he did it wrong.

He made the wrong thing mobile.

Enjoy went public in 2021 and then went bankrupt a year later in 2022.

Mike Allman became the new chairman of Starbucks in 2018 and then retired in 2021.

Now, here on the big flop, we like to be positive people and end on a high.

So are there any silver linings that you can think that came from JCP's rebrand?

I mean, it sounds like at least employees got Thanksgiving off.

That's like, yeah, that's the truly, I was like rocking my brain.

I was like, is there anything else?

Is there anything else?

I mean, we got the Hitler teapot.

Huge.

Huge for the community.

I mean, the mistakes have been studied by businesses who want to avoid similarly massive failures.

Some takeaways include: don't take your loyal customers for granted.

That's a big one.

Don't fire people who know what they're doing.

Start with small, easy changes is a good idea, and maybe test your ideas before just implementing them blind.

Yep.

So now that you both know about JCPenney's failed revamp, would you consider this a baby flop, a big flop, or a mega flop?

I'm going to say big flop, only because JCPenney does still exist, correct?

Yeah, so I mean, he didn't completely raise the entire thing and burn it to the ground.

True.

It's still, they managed to limp their way out of their experience with Ron Johnson.

So I suppose it was just a big flop and not a mega flop.

I'd have to agree.

I think big flop, if there was like an element to the story that like they discovered people were trapped inside the white cube like months later, like oh, there's skeletons?

No one died.

Yeah, exactly.

No one died.

Yeah.

That we know of.

That we know of yet.

Well, thank you so much to our guests, Joel Kimbooster and Scott Cease for joining us here on the big flop.

And thanks to all of you for listening.

If you're enjoying the show, please leave us a rating and review.

We'll be back next week with what is perhaps the Your Flop, one of the most famous flops of all time.

That's right, we're finally doing new Coke.

Bye.

Bye.

Bye.

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The Big Flop is a production of Wondery and Will Media, hosted by me, Misha Brown, produced by Sequoia Thomas, Harry Huggins, and Tina Turner.

Written by Anna Rubinova.

Engineered by Andrew Holtzberger with support from Zach Grapone.

Our story editor is Drew Beebe.

Our managing producer is Wally Getman.

Our executive producers are Kate Walsh and Will Milnati for At Will Media.

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Music supervisor is Scott Velasquez for Freeson Sink.

Our theme song is Sinking Ship by Cake.

And executive producers are Lizzie Bassett, Morgan Jones, and Marshall Louie for Wondery.

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