Penney CEO search is finally (almost) over

J.C. Penney’s board of directors has been dealing with criticism over the slow pace of its search to find a replacement for interim CEO Mike Ullman, who has been on the job, at this point, for about 18 months. As of yesterday, the department store can say with certainty that its new permanent CEO will be on the job as of Aug. 1, 2015. Aug. 1, 2015?

Penney announced the appointment of Marvin Ellison, a retail executive who helped get Home Depot turned around over the past 12 years, as its new president and CEO-designee as of Nov. 1. Before joining Home Depot, Mr. Ellison served in a variety of roles at Target for 15 years.

marvin ellisonAt Home Depot, Mr. Ellison, currently executive vice president of U.S. stores, was credited with improving customer experience by making the chain’s big boxes easier to shop. He also found ways to free up associates to assist customers in stores.

"He has proven his ability to produce results by improving operations, building customer loyalty, and motivating his teams," Mr. Ullman said of his eventual replacement. "His experience and leadership are exactly what we need to accelerate the progress we have made over the last 18 months. I look forward to working closely with him and the rest of our outstanding team in the coming months to ensure a smooth transition."

Under Mr.Ullman, Penney has been able to staunch the bleeding from Ron Johnson’s ill-fated plan to turn the department store chain around. While business has improved, critics say much more change is needed in light of the company’s current cost structure. The company’s leadership has also been criticized for not being more aggressive in closing underperforming locations.

"There is an extraordinary passion to win at every level of the organization. … I am confident that we have the customer proposition, the brand, and the talent to make J.C. Penney successful over the long term," Mr. Ellison said in a statement.

An interesting side story is that Penney also eased Mr. Johnson into his CEO role when he joined the company from the Apple Store in 2011. Mr. Johnson was focused on marketing and merchandising while Mr. Ullman oversaw accounting, finance and other duties during the transition period.

"It’s very important we give Marvin as much time as he needs," Mr Ullman was quoted by The Dallas Morning News. "I believe he will be a much better CEO than I am."

BrainTrust

Discussion Questions

What do you think of the biggest challenges facing Marvin Ellison as he joins J.C. Penney? Do you think Mr. Ellison’s background in operations is the right fit for the challenges facing the department store chain at this point in time?

Poll

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David Livingston
David Livingston
9 years ago

Other than J.C. Penney being a completely ineffectual Kmart-esque retailer, just keeping the lights on until August, 2015 is the biggest challenge.

All I know about Mr. Ellison is the glowing, carefully-worded press release hype which every company says about every new employee. If everything in the press release is true then I predict world retail dominance by 2016.

Dick Seesel
Dick Seesel
9 years ago

There is some comparison being made between Mr. Ellison and Brian Cornell, the new CEO at Target. Mr. Cornell was also praised for his operational background (especially given Target’s data breach and missteps in Canada). But he also identified merchandise categories that will help Target the brand differentiate itself from more consumables-oriented competitors.

Yes, Mr. Ellison is faced with some operational challenges—and, in particular, he needs to attack the store count and bloated SGA more aggressively. (This was a big unanswered question at the J.C. Penney analysts’ meeting last week.) And “blocking and tackling” becomes more important in an omni-channel environment, with competitors like Amazon who are experts at logistics.

But, at the end of the day, any new leadership at J.C. Penney needs to redefine the meaning of the brand without repeating the mistakes of the Ron Johnson era. Right now, J.C. Penney is in an “error correction” mode, but turning back the clock to 2010 can only get you so far. Let’s see if Mr. Ellison is up to the task.

Marge Laney
Marge Laney
9 years ago

In today’s omni-channel environment focusing on connecting with the customer, in all ways, should be the focus. Online shopping and research must be harmonized with the in-store experience making the customer experience seamless.

Mr. Ellison’s challenge is to remind himself that J.C. Penney is primarily an apparel retailer and that conversion happens in the fitting room. Developing sales floor customer engagement strategies that drive customers to the fitting room and service customers while trying-on will result in higher sales and more engaged and loyal customers.

Mark Heckman
Mark Heckman
9 years ago

J.C. Penney is a brand on the mend, but making a comeback in a dynamic retail environment, where both physical stores and online options are changing and adapting to the shopper, makes Mr. Ellison’s job that much more difficult.

With his operational expertise, he should be able to author improvements in shopper engagement, whether it be through associates or technology. On the marketing and merchandising side of things, it is imperative that J.C. Penney find an identity that separates them from Kohl’s, Macy’s, and others that play in the mid-tier of soft goods retailing.

J.C. Penney is no Home Depot, but if Mr. Ellison can adapt and put the right team in place, he could be just what Penneys needs to live on.

Jerry Gelsomino
Jerry Gelsomino
9 years ago

The biggest challenge is to get contemporary and connected with the times. Also to answer the question: Who is their target customer?

Mark Burr
Mark Burr
9 years ago

J.C. Penney has been improving by executing on Ron Johnson’s strategy in his absence. The choice of Mr. Ellison is an interesting one and an optimistic choice for their continued improvement.

Both Target and Home Depot have dramatically changed their experiences with the most surprising results being that of Home Depot.

With experience from Target and the very good results of the turnaround for Home Depot the choice would seem to be great on the surface.

Can Mr. Ellison bring the learning from these two retailers and execute with the same results? That will be for him to prove out over time. The potential is there.

There are many strengths from both of his preceding companies that lend potential to J.C. Penney, not the least of which is building the brand and executing on the brand strategy from the foundation that is already in place.

It’s a good choice.

Tom Redd
Tom Redd
9 years ago

Ellison is a perfect match for J.C. Penney. The stores are the first impression point for a majority of J.C. Penney shoppers and the store must operate like a smooth-running DIY or smooth-running Chevy Silverado.

The store must integrate with all other shopper touch points—from marketing and promo and brand image work to the other channels. Key is that Marvin has experience across these areas and knows how they impact store ops and inventory flow.

J.C. Penney is far from Kmart (as David L. mentioned, unless you found a nice Kmart, DL?). J.C. Penney can drive their new image with the right merchandise mix, strong store teams, integrated channels and by leveraging the right technology and tossing the stuff that does not best serve the shopper.

Have some faith. J.C. Penney is part of our of our original retail world and they must stay strong.

Gene Hoffman
Gene Hoffman
9 years ago

We all wish the very best for Mr. Ellison and J.C. Penney. But J.C. Penney has been guided into being a fifth corner, a me-too corner where there is no longer a compelling need in today’s marketplace. Other than price and coupons why do people go to J.C. Penney today?

The Conflict: Mr. Ellison’s background seems strong and Penny’s prospects seem weak. If hope is an awakening dream, Mr. Ellison should be able to wake up the old lady from Wyoming.

Lee Kent
Lee Kent
9 years ago

I wish Mr. Ellison all the best, however I really don’t think J.C. Penney needs an operational fix so much as it needs a brand fix. Very different sides of the brain, methinks!

… And that’s my two cents!

Craig Sundstrom
Craig Sundstrom
9 years ago

His biggest challenge? There are so many it seems easier to try and pick the smallest one, but here goes: he needs to give people a compelling reason to shop there. If you look at their locations, you’ll find either smaller, standalone sites in strip malls—perhaps with a Kohl’s down the road—or malls with a Sears and a used-to-be-a-local-dept-store turned Macy’s as neighbors (in the South you might sub a Dillards or Belks). In the former case, too many people are just driving by; in the latter, too many are using JCP as an entrance/exit to the parking lot (if they venture inside at all). He needs to change that…yeah, just that small detail. I wish him well.

Naomi K. Shapiro
Naomi K. Shapiro
9 years ago

I think the others covered the answer to this question quite well. I’m just wondering, what happens to Penney’s while they wait for Mr. Ellison to start working there?

vic gallese
vic gallese
9 years ago

Mr Ellison appears to be a very good choice for JCP! He is a winner! He should apply what he knows best (service is an issue at JCP) and surround himself with great players for the things he may not be as strong in: merchandising, marketing, and mobile to start with. He will have to make some uncomfortable calls on the leadership in those areas.

Good luck, Mr. Ellison!

Ed Rosenbaum
Ed Rosenbaum
9 years ago

There are several challenges ahead, the main one being enough customers in the stores to pay the bills until he takes over. Next is keeping those customers in the stores as well as bringing old customers back. Then he has to find a way to attract new customers. He also has to convince current managers and store personnel he is the right person to lead them back to relevance. No big deal, right?

Roger Saunders
Roger Saunders
9 years ago

Marvin Ellison is the ideal candidate to lead J.C. Penney. He has been instrumental in Home Depot’s significant turn-around that was lead by Frank Blake, following the disastrous way that Nardelli had lead Home Depot. The later made everything about “All about Me,” while Blake and Ellison have made the Depot a shining star for customers, employees and shareholders by making it about “All about We.”

Execution always has been critical for profitable retail success. Mike Ullman staunched the JCP bleeding. Ellison has the energy, brains, listening skills, and balanced vision to rally a group of dedicated JCP Merchandising, Marketing, Store Operations, and Financial associates.

Some stores still have to be closed, but don’t bet this player out. They have a loyal core group of shoppers who will respond to their merchandising offerings.