LAS VEGAS — Ron Johnson is a big believer in retail — just not the way it exists now.
Johnson sat comfortably on a sofa just outside the Aria convention center here, a place that represents retail on steroids — with outlets and multiple malls ranging from luxury to mass packed into a roughly three-mile strip. He was on his way to the airport Monday afternoon, headed to Dallas to interview prospective candidates to hire for his start-up Enjoy after delivering a keynote at the inaugural Shoptalk retail and technology conference.
“For the last decade, bricks-and-mortar retailers have been working on how to become omnichannel so they’ve been investing in online shopping, a variety of initiatives to integrate a digital and a physical experience,” Johnson said in an interview with WWD following his keynote. “The question is, ‘Are those investments paying off and are they making the right investments?’ There appears to be a long-term decline in the importance of the store and a longer-term increase in the importance of digital. I don’t believe we’re in crisis but I think the last quarter was a wake-up call.”
He was referring to the dismal results posted last week by the likes of Macy’s Inc.; Kohl’s Inc.; Nordstrom Inc., and J.C. Penney Inc., as well as warnings from Gap Inc. that its sales were continuing to decline. The string of poor results led to handwringing that the retail world as it’s now known was disappearing — and fast.
So Johnson’s Enjoy aims to be the third leg in the commerce stool focused on what he calls personal commerce. The start-up, which has raised $80 million to date, focuses on the consumer electronics space — at least for now — sending out a salaried workforce of people mostly in their twenties and thirties directly to the homes of customers who buy smartphones, drones and other devices online to help them with set up and understanding their new purchase. The company will total some 210 workers within the next month and by back-to-school will have expanded its reach to offering its services in a total of 10 markets, including Miami, Atlanta, Dallas, Houston, New York, Chicago, San Francisco, San Jose and Orange County. Fall is right around the time Enjoy also expects to become profitable.
Johnson said he drew on his time at Apple to create Enjoy and the consumer experience service it aims to deliver.
It’s that time at the tech company that he is also rolling into Nasty Gal, the Los Angeles-based firm whose $16 million, Series C round he led about a year ago. He now sits on the company’s board as it refines its strategy at bricks-and-mortar retail after 10 years in business existing predominantly as an online brand.
“Great brands are hard to find,” Johnson said of why he invested. “It’s rare when you can find a brand that has a real authenticity to it, where it’s founder-led.”
The company has been largely mum about its retail strategy but Johnson reiterated the potential, saying the two stores have “really very high sales per square foot.”
“We’re now testing and experimenting with stores,” he said. “Once we get the model right we’ll probably add some more stores.”
For Enjoy, growth doesn’t have anything to do with scaling a fleet of doors but rather markets and potentially other categories, such as luxury apparel and other products with high price tags, though Johnson tempered the idea of growth and expansion with lessons learned from the past.
“Those are all opportunities but for now we’re focused like a laser beam on consumer electronics,” he said. “We’re still building out our business model, proving lots of things and so you don’t want to get distracted. That’s another Penney’s thing — we tried to do too much at once. We tried to remodel the stores, change the pricing, redo the brand. That was too much and so that’s one of the lessons I learned.”
Johnson, during his keynote, called his experience as chief executive officer at J.C. Penney Co. a humbling one and the best mistake he’s made thus far in business.
“It turned out it was a really bad decision for everybody,” he said during his keynote. “I was a round thing in a square peg. I’m a creative innovator, look[ing] forward, [a] change-the-world kind of thinker. That isn’t who Penney’s was and so to go insert yourself in a place that’s really at odds with your DNA is not a good idea but it was incredibly humbling for me personally. I don’t like to think I’m arrogant but maybe [in] the situation I was arrogant about things.”
Whether he’s glad to be out of the department store business, especially given last week’s headlines, Johnson said he comes from a place of empathy for the executives and workers at those companies.
“They’re really smart people,” he said. “They’ve been working really hard. None of us can anticipate when sea change happens and that moment where the world kind of moves beyond our business model. And that’s where I think the last quarter was a little bit of a wake up call for investors and stores. Now, it’s a 20-year issue we’ve been aware of, but we might look back and say 2016 was the year when it became very apparent that stores have to move faster.”