What I've Learned From Three Decades in Retail
When Ron Johnson began working in retail, he was entering a startup field. "That's when Mickey Drexler first went to the Gap from a department store" and when "Les Wexner, of Limited fame and Victoria's Secret, invented the modern specialty store," he recalls. "That's when big box retailing started."
Johnson, who started his career on the loading dock of Mervyn’s, later went on to Target, where his idea for selling a low-priced tea kettle led the discount store to remake itself. In April, he was pushed out of JCPenney after failing to turn it around, but he had plenty of wisdom to share on May 19, when he spoke at a View From the Top event. There, the newly minted founder of the Johnson Partners investment fund revealed what three decades in retail has taught him.
Right Answers Are Relative
Johnson learned this reading hundreds of case studies at Harvard. "We'd all read the same case, but everyone would have a different opinion," he says. "That led me to recognize, in part, that there is no one right answer to most business problems, but it will be informed by your own experience, and ultimately, your own intuition."
Don't Rely on Data
"If you rely on data, and the data's going to drive the evidence that drives the decision, well, most companies would come up with the same approach," he says. "When you have an approach that's like a commodity, it doesn't do very well. Most of the great businesses had a spark of innovation."
Learn by Doing
When Johnson joined Mervyn's, he asked to start at the lowest level rather than in an office job. "I unloaded trucks for three months and I got really fast," he recalls. He also learned how merchandise was packaged, loaded into a trailer, stocked efficiently, and put on the floor. "I can walk through a store and see things that I wouldn't [be able to see] if I hadn't done that," he says.
Follow Your Gut
Early on at Target, Johnson ran the home products section and traveled to Europe often. "I love things that are beautiful, that you’d find in these really high-end boutiques," he says. "But there was nothing like that in Target." At the time, merchants purchased something only to make a cheap copy. "And it hit me, why do the small expensive brands create, when the big brands with all the resources copy?" Johnson then did the unspeakable and tapped designer Michael Graves to make an affordable version of his best-selling tea kettle. Graves agreed, and the rest is retail history.
Fight 'Reality Filters'
Designing and selling tea kettles was far removed from what Target had been doing and executives were skeptical. They bombarded him with questions like, "Why do you think our customers will like design?" Justifying innovation is hard when it's your idea, says Johnson. "Anytime you imagine something, you’re going to be stuck battling reality filters--the kind of assumptions about the business that are embedded in the company you’re at." Target eventually relented and began stocking the kettles in 1999, which gave the store more cachet.
Don't Fear Starting Over
Before Apple opened its first store in May 2001, Johnson was riding with Steve Jobs to a weekly planning meeting. "We’ve organized it like a retail store around products, but if Apple’s going to organize around activities like music and movies, well, the store should be organized around music and movies and things you do,'" Johnson confessed. Jobs turned to him and said, "Do you know how big a change that is? I don’t have time to redesign the store." Ten minutes later, Jobs walked into the meeting and said, "Well, Ron thinks our store is all wrong. And he’s right, so I’m going to leave now. And Ron, you work with the team and design the store." That lesson of doing things well "carried through to so many things I’ve done," recalls Johnson. "It’s not about speed to market. It’s really about doing your level best."
Own Your Mistakes
Johnson's wanted JCPenney to attract younger customers, do away with discounts, move quickly, even if that meant losing some sales in the process. Today he realizes his pace was too fast for the traditional company. "Most of the things I’d done at Apple and Target worked, and so [I thought], Well, this will work too." Unfortunately, the board, customers, employees, and shareholders weren't ready.
Know Where You Fit
In the end, Johnson knew JCPenney wasn't right for him. "It was disappointing because I really believed we would make it work, but it was a relief because the lesson I learned is I was a terrible fit for JCPenney."
This story was originally published by Stanford Business and has been republished with their permission. Follow GSB @StanfordBiz
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