Welcome!

Eclipse Authors: Pat Romanski, Elizabeth White, Liz McMillan, David H Deans, JP Morgenthal

Blog Feed Post

The Failure Of J.C. Penney's Ron Johnson - Lessons For The Health Club Industry

This week the former Apple and Target darling, Ronald B. Johnson, was shown the door by J.C. Penney’s board of directors. After 17 months of attempting to remake the Penney’s brand, Johnson failed, at least in the near term, as sales and cash flow plummeted amid his reinvention of the business model.

Johnson’s story and Penney’s plight provide great lessons on the challenges facing businesses and industries in today’s atmosphere of uncertainty. Consumer habits are evolving so much and the buying experience is undergoing a revolution that cuts across retail, health clubs and everything else. Don’t believe me ? Check out accenture’s recent retail research and this Forbes article as evidence . You see the bricks and mortar fitness industry is changing just as dramatically as retail and other industries are and established players are all going to have to wrangle with the issue of how they will remain relevant or die.

Some felt Ron’s arrogance would result in his demise; but what should one expect from a guy who was a Steve Job’s protage and engineer behind Apple’s retail rise with a stellar track record at Target to boot ? In fact that is why he was chosen. An article by Stephanie Clifford, Chief’s Silicon Valley Stardom Quickly Clashed at J.C. Penney, depicts Johnson’s attempt to transform the retailer. However, Clifford’s story fails to put some important parts in context.  J.C. Penney, though profitable, was seen as a poor performer that was losing ground to competitors like Macy’s on the high end and Kohl’s on the value end. (Yes Chuck Runyon its the bifurcation dynamic again :)). Its a similar situation several major health club chains face, as they are being picked apart by low price competitors and high end Equinox along with other niche micro gyms and studio concepts. Its easy for anyone to play Monday morning quarterback with Johnson’s strategies; but he was hand selected by the board exactly for being a change agent and innovator because the board saw an emerging problem. Did Penney's bold efforts fail more because of the way they were executed or how they were timed? I'm not sure, but consider that the tablet revolution started with the failed Newton, 10 years ahead of the iPad.

All retail competitors are facing the same challenges as Penney’s and while Ron failed, it sure is interesting how many people were curious about his strategies. An excerpt from Clifford’s article shares this: “Ken Murphy, senior vice president at Standard Life Investments, said that “many retailers, while openly cautious and dismissive of the JCP experiment, were actually nervously watching JCP’s plans unfold with some concern that if their strategy worked, the industry would be required to adapt faster than expected to a new trend in retailing.” You see because Macy’s, Kohl’s and others may be winning a battle with Penney’s, they might still lose the war to digital competition and a chameleon consumer whom they are desperately trying to figure out. This is the tight rope that the revolutionary Johnson walked and its the same one faced by many leaders in the health club industry today.

The same pressures that face Penney’s business model are impacting a number of significant health club brands today. Fitness First, formerly the world's largest club chain, failed last year. 24 Hour Fitness saw the majority of its senior leadership let go recently. These events and many others only evidence the high stakes game that is being played out across the health club industry, as it is with most consumer industries. Leaders know things have got to change but its hard to know just how. Sometimes they succeed and often they fail.

I’d theorize that leadership changes won’t be exclusive to 24 Hour or Fitness First . In the coming months more changes, consolidations and new entrants will emerge because in this day and age no industry or leader is immune from digital darwinism. Just ask Ron Johnson and J.C. Penney’s shareholders.

So what do you think ? How do you see the health club industry going through change like retail and other industries? Do you see changes in leadership in some health club brands ? Please let me know. I want to hear from you !! Thanks for reading.

About the author:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He works for Fitmarc, which delivers Les Mills programs to over 700 facilities in the US. He advises successful global brands, serves as a member of the GGFA Think Tank and serves as CEO of the Fitness Industry Technology Council. To learn more contact Bryan here today .

Read the original blog entry...

More Stories By Bryan O'Rourke

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He consults with global brands, serves as a member of the GGFA Think Tank, is President of the Fitness Industry Technology Council and a partner in FitmarcIntegerusFitsomo and the Flywheel Group. To learn more contact Bryan here today .

IoT & Smart Cities Stories
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...
The standardization of container runtimes and images has sparked the creation of an almost overwhelming number of new open source projects that build on and otherwise work with these specifications. Of course, there's Kubernetes, which orchestrates and manages collections of containers. It was one of the first and best-known examples of projects that make containers truly useful for production use. However, more recently, the container ecosystem has truly exploded. A service mesh like Istio addr...
Nicolas Fierro is CEO of MIMIR Blockchain Solutions. He is a programmer, technologist, and operations dev who has worked with Ethereum and blockchain since 2014. His knowledge in blockchain dates to when he performed dev ops services to the Ethereum Foundation as one the privileged few developers to work with the original core team in Switzerland.
The challenges of aggregating data from consumer-oriented devices, such as wearable technologies and smart thermostats, are fairly well-understood. However, there are a new set of challenges for IoT devices that generate megabytes or gigabytes of data per second. Certainly, the infrastructure will have to change, as those volumes of data will likely overwhelm the available bandwidth for aggregating the data into a central repository. Ochandarena discusses a whole new way to think about your next...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
Digital Transformation and Disruption, Amazon Style - What You Can Learn. Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 25+ years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to ...
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
"MobiDev is a Ukraine-based software development company. We do mobile development, and we're specialists in that. But we do full stack software development for entrepreneurs, for emerging companies, and for enterprise ventures," explained Alan Winters, U.S. Head of Business Development at MobiDev, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...