J.C. Penney Returns Commissions To The Sales Floor

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Bloomberg is reporting today that J.C. Penney Company, Inc. (NYSE:JCP) has decided to reverse what it believes was another ill-conceived idea under the stewardship of former CEO Ron Johnson. Johnson put an end to sales commissions during his disappointing efforts to turn the retailer around. J.C. Penney Company, Inc. (NYSE:JCP)’s is trying to ramp up its sales and giving its better salespeople extra incentive is a strategy that’s going live next month.

Why now?

The move is also designed to keep its sales force from jumping a sinking(?) ship. The revived program will see over 3,000 salespeople nationwide rewarded for their sales skills. This was confirmed by Daphne Avila, a J.C. Penney Company, Inc. (NYSE:JCP) spokeswoman, in a phone interview with Bloomberg. No details were given as to what the hourly wage cut would be nor the commission percentage that associates would receive but she did say that the move was primarily made to raise sales numbers in fine jewelry and home furnishings.

“As we continue to stabilize the business and regain market share, one of our most important goals is to reconnect with our customer,” Avila said.

In what can only be called a failure, Johnson chose to lose commission-based sales in the hopes that salespeople would begin to focus more on customer service than commission hunting. Department store salespeople at Macy’s, Inc. (NYSE:M), Nordstrom, Inc. (NYSE:JWN), and Sears Holdings Corp (NASDAQ:SHLD) all pay commissions, and end of the day, each are doing considerably better than J.C. Penney Company, Inc. (NYSE:JCP)’s. Wal-Mart Stores, Inc. (NYSE:WMT) does not given their low prices and the fact that they drive sales.

Johnson reversals in JC Penney direction

This is by no means the first time that present CEO Mick Ullman has reversed the policies of Johnson. He’s restored promotions and has overseen a return to selling popular private-label brands. He also nixed Johnson’s aim towards turning J.C. Penney Company, Inc. (NYSE:JCP)’s into a collection of boutiques believing that the retailer as a whole was better than the sum of niche parts. In November, the chain posted its first gain in monthly sales in almost two years with rising demand for home products, men’s apparel and women’s accessories.

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