The Non-Obvious Insights Blog. Non-Obvious Insights
The Non-Obvious Insights Blog.

Dedicated To Helping Readers
Be More Interesting
Since 2004.

As Featured In:

Why Simplicity Saved Apple, But Couldn’t Save JCPenney

Simplicity always wins.

If there is one lesson the modern business world teaches us, it is that complexity kills and simplicity wins. Apple, Flip Camera, Twitter, Uber, Walmart — all are examples of companies that owe their success at least in part to their ability to simplify a service or product to an extreme level.  I have written often about how the business world loves simplicity, though it is often portrayed as difficult to get right … particularly for smart people.

For example, there is a moment on the now classic political television show West Wing where the staffers are trying to convince their Nobel Prize winning Economist President that he needs to avoid complexity and simplify his message. Frustrated with the constant pressure to simplify the complex, he finally sarcastically asks, “can someone get me some crayons so I can color in my PhD?” Smart people resist simplification sometimes – and few pricing models are as complex as department store retail.

So when former Apple head of retail Ron Johnson took over at JCPenney two years ago, one of the major changes he announced (apart from updating the logo and branding) was to simplify their pricing model to an everyday discount. At the time, it seemed like a smart choice. Discount stores were growing in market share against department stores, and he argued the discounting was eroding brand value for JCPenney. And if the Apple retail example proved anything, it was that a relentless focus on simplicity can lead to big results.

But JCPenney seemed to focus on simplicity, and it failed. Why?

Unfortunately for JCPenney, Johnson’s vision of simplicity involved changing the pricing model from complex discounting schemes to everyday low price discounts. The shift failed to consider one of the most basic emotional pleasures of the retail experience: treasure hunting.

Sometimes customers don’t want a target – they want to hunt.

In comparison, Nordstrom is a retailer that has focused a key part of its growth strategy on its less expensive sub-brand Nordstrom Rack.  Aside from lower prices, the store has built its stellar reputation by word of mouth from delighted customers who have found actual “treasures” intentionally hidden throughout the store. Amazing finds like a pair of Michael Kors women’s shoes offered at a discount of 90% off are scattered throughout the store for customers to find amongst the more reasonably (and profitably) priced merchandise. Of course finding a $150 pair of shoes for $14.99 is rare, but it is the delight of searching for (and sometimes finding) a deal like this which drive customers to keep coming back.

What makes the operation of a business more simple isn’t always the same thing as what simplifies an experience for customers. Ironically, by “simplifying” the logistics of the retail operation at JCPenney’s by removing complex pricing and introducing a color coded system for clothing, Johnson actually made the retail experience JCPenney offered MORE complicated for customers.

So yes, simplicity always wins.  That is, unless you forget who you’re simplifying things for.

2 thoughts on “Why Simplicity Saved Apple, But Couldn’t Save JCPenney”

  1. Rohit – agreed, they forgot who their audience was. Also a good example about how it’s hard to make an economic argument against feelings, however sound that argument is. I know that free McDonald’s iced tea should not motivate my actions… but it does! Predictably irrational…

    Reply

Leave a Comment

The Non-Obvious Insights Newsletter. Non-Obvious Insights
Layer 97
The Non-Obvious Insights Newsletter
Layer 118

Skip the obvious and anticipate the future with our weekly newsletter. Join over 25,000 subscribers and start receiving the stories (and insights) you’ve been missing.

All Books

#1 WSJ & USAToday Bestselling Author

Rohit is the author of 8 books on trends, the future of business, building a more human brand with storytelling and how to create a more diverse and inclusive world.

Vector Smart Object

Contact

Have a Question or Inquiry?

Just fill out this form, and we’ll get back to you within 24 hours!

About You

What Are You Contacting Us About*:

Your Message