Apple veteran Ron Johnson is taking home the CEO role at J.C. Penney, following a nearly year-long search for a new leader to turn around the struggling retailer.
Ron Johnson wants to rebuild the retail industry 10 years after leaving his position as Apple Inc.’s top salesperson and eight years after an ignominious stint as J.C. Penney’s chief executive.
Mr. Johnson, who is 63 years old, is the founder and CEO of Enjoy Technology Inc., a business that seeks to solve an issue that is plaguing high-end electronics manufacturers and luxury brands. Many of these businesses devote careful attention to client experiences only to have the ultimate product, if delivered, come in a cardboard box on the doorstep. He started his business with the goal of bringing high-end shopping into people’s living rooms.
The extent to which he succeeds may have an impact on the future of internet purchasing. It will also have an impact on his reputation, as it will determine whether he is regarded as a retailing pioneer who faltered at J.C. Penney, or as someone who performed his greatest work at Apple but struggled thereafter.
“He’s back in his groove,” said Gene Munster, managing partner of Loup Ventures, a venture capital company that invested in Enjoy. Mr. Munster believes in Mr. Johnson’s new vision and thinks that if the business can deliver on it, “he’ll be redeemed.”
Enjoy is the result of a collaboration between a white-glove delivery service and a legion of door-to-door salesmen. Mr. Johnson’s teams are busy hand-delivering iPhones and other devices to consumers’ homes throughout the United States, Canada, and the United Kingdom on behalf of Apple, AT&T Inc., and other partners. Then they take advantage of the delivery to make additional sales. Enjoy announced in September that it was extending Apple delivery to a total of 14 metro regions throughout the United States.
Mr. Johnson plans to go public with the business next week via a special-purpose acquisition company, or SPAC, with a $1 billion value. The vote on the merger is set on Wednesday.
Enjoy’s more than 1,000 delivery employees, dubbed “experts” by the business, come from high-end retail settings like Apple and Tesla Inc. Each receives over 120 hours of training before being sent into the world with a Mercedes van loaded with goods. For example, a client buys an iPhone from Apple’s online shop but opts for Enjoy’s free home delivery and support. The Enjoy employee comes, assists the customer in setting up the gadget, and then takes the chance to offer other services or products, such as Apple TV+ or a wristwatch.
Ron Johnson at the Enjoy headquarters in Palo Alto, California. In 2025, the business wants to make $1 billion in revenue.
In an interview, Mr. Johnson remarked, “There are a lot of individuals that can deliver to the door.” “We’re the only ones who’ve developed a strategy for generating additional value for partners just by walking through the door.”
The success of Enjoy hinges on that incremental sale. Mr. Johnson stated that 20% of the company’s income comes from being paid to make deliveries, and that the company’s route to profitability in 2023 is via upselling clients. The problem for Enjoy is that its first connection with the client stems from a sale by Apple or other partners, and its success is dependent on customers who want in-home service and who want to purchase more. Another danger is if Apple or Amazon.com Inc. chooses to duplicate such a service and undercut it in the market.
Building such a network, according to Mr. Johnson, is difficult. And it’s why he’s stepping up his attempts to expand.
Enjoy is one of several businesses taking use of the SPAC craze. Investors have invested billions of dollars into these “blank-check” businesses, which are listed on exchanges with the intention of merging with a private company, such as Enjoy.
Unlike some of the other SPACs that went public this year, Enjoy has income, despite losing $158 million last year. According to filings with the Securities and Exchange Commission, the business has expanded, with sales projected to increase to $109 million this year from $15 million last year. The business expects to break even in 2023 and to achieve $1 billion in revenues in 2025, according to the company.
Its SPAC agreement with Chicago Cubs owner Tom Ricketts’ Marquee Raine Acquisition Corp. MRAC -4.62 percent should invest more than $450 million into the business to finance its expansion ambitions, which include extending operations to 100 cities throughout North America. Enjoy has received $350 million in funding since its inception in 2014, notably from Kleiner Perkins.
“‘I was a little situationally arrogant,’ she says.
— Ron Johnson on his time as CEO of J.C. Penney
Mr. Johnson rose to prominence in the retail industry during his almost 12-year tenure at Apple, when he was chosen by the late Steve Jobs to shape the company’s store strategy after his success at Target Corp.
Mr. Johnson supervised the establishment of about 400 Apple shops, which completely changed the way people purchase technology. Apple chose prominent sites and dedicated half of the light-filled rooms to educating customers how to operate their gadgets at Genius Bars. The strategy has spawned imitators ranging from Tesla to Microsoft.
As CEO of J.C. Penney, his idea for retail did not go down well. Mr. Johnson, who was hired in 2011 to revitalize the department store chain, wasted no time in putting his stamp on things, abandoning the company’s long-held strategy of aggressively touting merchandise as “on sale” and carving up department store layouts to create in-store shops for popular brands.
However, after 17 months, few individuals were satisfied. He left because sales were low and investors were becoming anxious.
Mr. Johnson said he didn’t understand the patience needed to manage a turnaround at a large business, even if he thinks portions of his plan to concentrate on well-known brands with shops inside stores has subsequently been proven correct. He said, “I went too quickly for the workers, too fast for the board, and too fast for the consumer.” “I was a little cocky in that circumstance.”
The store continued to suffer, declaring into bankruptcy last year amid difficulties exacerbated by the epidemic; it currently trades under the name JCPenney and has new owners. The store did not respond to a request for comment.
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One of Enjoy’s early challenges was figuring out how to expand the company. The firm promotes its asset-light strategy. Enjoy utilizes delivery trucks that act as shops, carrying up to 500 items, to bring the store into the house. To manage goods committed to Enjoy’s warehouses and available delivery slots, the back end of operations is backed by indigenous software. Mr. Johnson’s goal is to have a 15-minute turnaround time between when a customer places an online order and when it is delivered.
Labor is one of the most expensive components. While Enjoy was growing, companies like Uber Technologies Inc. and DoorDash Inc. saw rapid development by employing independent contractors to provide on-demand services. Mr. Johnson objected to such a business model, stating that Enjoy’s delivery personnel must be full-time employees who have been educated in the operation’s intricacies.
Mr. Johnson said, “You have to have an employee in order to create a company you can execute with genuine high-quality standards.”
Enjoy first signed up AT&T to transport phones, but it wasn’t until June of that year that the firm won a trial contract to supply iPhones for Apple in the San Francisco region.
As the pandemic shut down companies throughout the United States amid quarantines and social distance, Covid-19 threatened to ruin years of progress. Mr. Johnson kept an eye on the situation, wondering whether consumers would let a stranger inside their homes to deliver an iPhone.
“I knew we were going to be part of the future three weeks after the world shut down—while shops were closed and we could [still] provide an experience and consumers liked it,” he added.
Tim Higgins can be reached at [email protected]
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