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How to Fail in Business While Really, Really Trying: The True Story of J.C. Penney

Jennifer Reingold | Fortune | March 2014 | 29 minutes (7,108 words)

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When you find a savior, you don’t quibble over details. So it was that J.C. Penney, the long-stagnating mid-tier department store chain, announced in June 2011 that it was hiring Ron Johnson, the man in charge of Apple’s wildly profitable retail stores and a Steve Jobs acolyte whose golden halo also included past triumphs as an executive at Target. The news sparked euphoria, but conspicuously absent from the media coverage was any mention of how Johnson planned to save this faltering retailer in a fading industry. That’s because there were no plans. His mandate could be reduced to a single word: change. What that entailed could be figured out later.

That fall Johnson began unveiling his planned strategy to Penney’s board, culminating in a big presentation on Dec. 7. By then CEO for just a month, Johnson laid out his vision of a more upscale, more youth-oriented Penney, weaned of its addiction to price promotions.

Johnson demonstrated that he’d learned a thing or two about stagecraft from his legendary former boss at Apple. He had commandeered a large basement studio at Penney’s Plano, Texas, headquarters and had workers construct two rooms. (Johnson wanted to go further and install floating stages in the company cafeteria, but the fire marshal nixed the plan.) After he had made his presentation, the new CEO brought the directors downstairs to deliver the coup de grâce in the form of a sound and light show. In the first room was the taped commotion of shouting voices and visual noise: a profusion of signage, coupons, offers, and clutter. This was the off-putting cacophony of J.C. Penney at that moment. Johnson then ushered the directors into the next room, which was white, tastefully austere, and had a celestial serenity: the new JCP.

Finally Johnson led the board members into the cafeteria, where 5,000 employees, who had been waiting on their feet for hours, greeted the group with a raucous ovation. Then it was party time. Officially the fete was intended to bid farewell to Johnson’s predecessor, Myron “Mike” Ullman III, but it felt more like an ecstatic celebration of the company’s rebirth. With nary a whisper of opposition, the 109-year-old retailer had decided to abandon not only its strategy of many decades but arguably its fundamental way of doing business.

Just 16 months later Johnson was out. Penney was hemorrhaging cash; it lost $1 billion during his one full year as CEO. Its shares were hurtling downward. The press had turned against him. One of the two investors who installed him had fled. As fast as they had once anointed Johnson a messiah, Penney’s directors turned their backs on him.

Since his departure the company has behaved as if Johnson’s entire tenure was a coup rather than a strategy blessed by the board. The retailer has renounced his philosophy, restored Johnson’s predecessor, Ullman, as CEO, and reverted to its old ways. If we’re heading for oblivion, the board seems to be saying, let’s at least try to get there slowly. Some observers think bankruptcy is a possibility, despite improved results of late (at least compared with the previous bloodletting).

This era has seen some truly epic corporate conflagrations. There was the precipitous collapse of Lehman Brothers, which came to symbolize the greed and corruption of Wall Street, and the multidecade decline and, finally, bankruptcy of General Motors, which seemed to embody the slow death of American manufacturing. But for its stomach-churning mix of earnest ambition, arrogance, hope, and delusion — along with a series of comic and tragic miscues — it’s hard to top J.C. Penney.

“I came in because they wanted to transform,” the former CEO told me before his fall. “It wasn’t just to compete or improve.” (Johnson was interviewed for this article but declined to be quoted beyond saying, “I do not want to interfere with Penney’s attempts to succeed.”) He and his team did indeed transform Penney — from a sleepy behemoth known for serving the needs of Middle America into something quite different: an ambitious wannabe startup that fancied itself cool, with a radical pricing and merchandising model that had never been pulled off before. The outcome was doubly disastrous: Penney alienated its traditional customers without attracting new ones.

Everyone understands that the Johnson revolution ended in catastrophe. But the full story has never been told. The reality, it turns out, is even worse than many people imagine — and in a few respects, very different. What follows is the story of what actually happened at J.C. Penney, based on months of interviews with 32 current and former executives and vendors and more than 20 investors, analysts, and competitors.

It’s a saga with a swirl of overlapping forces. It stars a charismatic leader bent on radical change and features a failed attempt to Apple-ize Penney, a mission that ended up being every bit as crazy as it sounds. There’s a board of directors who sometimes seemed more concerned with what they’d be served for dessert than with the fate of the company. Then there’s the mistake that cost the company $500 million — and the fact that Penney actually began retreating from its controversial pricing strategy even before Johnson left, raising the question of whether the company can even truly be said to have tried his approach. Throw in a hedge fund titan who always knew better — except when he didn’t. The result: Billions in revenue were vaporized, and more than 20,000 people — many of whom embraced the new Penney — lost their jobs, seeming to hasten the decline of American brick-and-mortar retailing. This is a tale with very few heroes.

Into the cube

They called it a “cleanse.” On Feb. 6, 2012, a clear, acrylic 10-by-10-foot cube was installed in the area between the two cafeterias in Penney’s headquarters. It was a three-dimensional version of the retailer’s new square logo. Johnson told staffers that he didn’t want to see the old logo anywhere in the building. He thought it would be a useful ritual to have employees discard symbols of the stodgy old Penney. In theory, the cube was a giant time capsule, and the old Penney would be buried (exactly where, nobody said). In reality, it was a stylized, transparent dumpster.

For the next week people lined up to shed the evidence of Penney’s century-old history. Into the cube went T-shirts, mugs, stationery, pens, and tote bags. A few people even dumped the Chairman’s Award, the highest honor in the company, a glass plaque bestowed by former chairman and CEO Ullman on his most valued employees. As staffers pitched their corporate junk, they were invited to select a few replacement items with the new logo in exchange. By the time the purge was complete, 9,000 pounds of detritus had filled the cube.

The transformation had started with a single phone call a bit more than a year before. At 4 p.m. on Oct. 7, 2010, the phone rang in the office of then-CEO Ullman. The screen flashed “Vornado,” the name of the $2.8 billion (revenues) REIT run by investor Steven Roth. Ullman, a veteran of takeover attempts at Macy’s, had noticed that Penney’s stock had jumped 10% in the 10 minutes before the call, to $32. He had a pretty good idea of what was going on. “Do you come in peace?” he asked Roth, with whom he had worked on a past deal. Responded Roth: “I’m your new best friend.” And there was a second best friend: Roth had teamed with Bill Ackman, the head of hedge fund Pershing Square Capital, to buy more than 26% of the company’s stock. They believed Penney could easily be a $60 stock — if, of course, some changes were made. Could they meet to talk?

Ullman had run Penney since 2004. He had had a fantastic start, driving the stock to an all-time high of $86 in 2007 on innovative ideas such as bringing cosmetics seller Sephora inside Penney in a “store within a store” and opening some outlets outside traditional, and declining, malls. But when the Great Recession hit, Penney’s core customer — the middle-class mom — suffered more than most. Even when competitors began to pull out of the decline, Penney lagged. One reason: Ullman’s massive deal with Ralph Lauren to launch American Living in 2008, a Polo-lite brand sold only at Penney. It failed, in part because Penney was not allowed to use Ralph Lauren’s name or the Polo logo.

Penney was clearly in need of rejuvenation. Revenues had dropped from $19.9 billion in 2006 to $17.2 billion in 2011, taking the stock price along with it. Rather than resist Ackman, a brash, aggressively charming billionaire who likes to make huge bets on big companies and doesn’t hesitate to wage proxy battles against those that rebuff him, Penney invited Ackman and Roth to join the board. “I said, ‘These are two of the smartest people in their industries in America,'” Ullman recalls. “Why wouldn’t we want them in the boardroom?”

In February 2011, Ackman and Roth attended their first board meeting. At dinner afterward, Ackman gave an emotional speech, hailing the company’s potential. Almost instantly, fate intervened. As Ullman’s driver pulled out of the parking lot after the meal, his car was sideswiped. Ullman, then 64, was knocked unconscious. He had multiple fractures where his skull attaches to his spine and spent 12 weeks in a neck brace. Even before that he had battled health issues. For years Ullman had suffered from nerve damage that makes it hard for him to walk (he moves around the offices by Segway). He had endured two major surgeries during his Penney’s tenure.

The accident intensified the board’s concern over Ullman’s health — as well as the undercurrent of dissatisfaction that the new directors felt with his leadership. As director Geraldine Laybourne told me in 2012, “You know you’ve done something wrong when you wake up and someone has bought 26.8% of your stock.”

There were no obvious successors at Penney. Ullman says he thought instantly of Ron Johnson, the Minneapolis native who had helped bring great design to Target before he was recruited by Apple to create its retail stores. Under Johnson they became the most profitable stores in the country, making him a star at what was then the hottest company on the planet. Ullman had called Johnson about a director position a few years back, but Johnson had rebuffed him. Now, however, with Steve Jobs ailing, a recruiter told Ullman that Johnson might be more amenable.

Beginning in March 2011, Johnson met with Ackman and Roth and separately with Ullman. Soon the conversation moved from a role as a director to the possibility of becoming the next CEO. Johnson, who started his career at Mervyn’s and had always loved the retail business, had been pondering the lack of innovation in department stores. He had a vision of a new type of store — a destination rather than simply a repository for product. Well-liked and relentlessly positive, Johnson, then 53, seemed to offer the kind of can-do Silicon Valley spirit that hadn’t been seen in the retail world since, well, Apple. “I just believed in the guy,” Ackman told me at the time. “I had a man crush on him.”

With Ackman as head cheerleader, Penney’s board offered Johnson the CEO position. When the announcement was made, on June 14, 2011, the retail world was astounded — and thrilled. Although Johnson wouldn’t start as CEO until Nov. 1 — he said the cancer-stricken Steve Jobs had asked him to stay longer — Penney’s stock rose 17% on the news. It was as if a triple-A team had just signed Babe Ruth.
When Johnson eventually unveiled his strategy, it centered on a few points. The biggest, perhaps, concerned Penney’s incessant price-slashing promotions — 590 in 2011 alone. The new JCP would have virtually none. There would be three prices for an item: the original price, which was far below the typical marked-up price; a month-long value price for certain items; and a twice-monthly “best” price for things that needed to move. No more clearance racks, no more mess, just an honest — or as a later slogan put it, “fair and square” — relationship between the customer and the store. In a retail world full of illusory market-share gains based on which retailer offered the lowest clearance prices, it felt like a welcome way to stop the madness.

The second component of his strategy was equally radical. Johnson wanted to remove the “department” from the department store, recasting each store as a collection of 100 separate boutiques, with a kind of town square in the center. The product mix would change too. The new JCP would feature a much higher percentage of branded merchandise — modern, higher-end, youth-oriented — compared with house brands. This was a very big move for Penney, which got 50% of its sales from its own brands and tended to display most of its products by classification (such as bath mats) rather than by collection (such as Martha Stewart).
The new strategy made sense if Penney could attract many top brands, which would lure consumers without the catnip of frequent sales. Clearly, the approach worked for iPhones. Would it work for mattress pads and pantyhose?

Johnson wasn’t going to wait around for an answer. When a director asked when he planned to test the notion, Johnson scoffed. Never mind that other retailers had tried such pricing only to see customers vanish. He had made his decision. After all, his hero, Jobs, disdained tests and instead relied on his gut. At the same time, Johnson didn’t seem particularly interested in how Penney operated, according to Ullman. The outgoing CEO noted in a regular update to the board that the new CEO had not asked a single question about how the business was currently running.

Meanwhile, there were hints that the board was not as focused as it could be.

Ackman had consistently complained about the chocolate-chip cookies served at Penney’s board meetings. Rather than soft, gooey orbs, Ackman grumbled, these were rock hard. To assuage him, say three people involved, Penney began ordering fresh-baked cookies delivered from local bakery Tiff’s Treats. Other Penney directors also expressed concern about the caliber of cuisine served at their meetings — so much so that on at least one occasion a senior executive personally sampled the food before it was served. (Ackman declined to comment on the company’s baked goods; Penney denies that an executive served as a food taster.)

The revolution begins

Johnson showed up in Plano on Nov. 1, 2011, ready to lead a transformation at the speed of light. By Jan. 25, 2012 — less than three months later — the new JCP would unveil its new look. A week later the new pricing strategy would be revealed. By the fall of 2012, hundreds of stores would be revamped. And by the end of 2015, if all went according to plan, the transformation would be complete. The timeline was beyond aggressive, but Johnson thought speed would be a great motivator and unifying force.

Johnson himself moved with alacrity. In his second week on the job, he met in San Francisco with Chip Bergh, the new CEO of Levi Strauss. Penney already sold the company’s jeans, but Johnson wanted Levi’s to open boutiques within Penney locations. He asked Bergh where his most innovative outlet was located, and Bergh said Tustin, in Orange County, Calif. “I’ve got a plane,” Johnson said, enthused. “Let’s go right now!” A few hours later Bergh led Penney’s CEO through the Tustin store. Johnson loved the layout, which included a “denim bar,” mobile checkout, and dedicated “fit specialists.” By the end of the day Johnson and Bergh had agreed to open 700 similar Levi’s boutiques inside Penneys in time for the back-to-school season in 2012 — less than a year later. Most of the cost would be borne by Penney.

Money seemed to be no object. It cost Penney some $120 million to build the Levi’s boutiques, according to one person involved. Johnson was also trumpeting a major new investment in Martha Stewart Living Omnimedia and an agreement to open Martha Stewart stores within Penney.

Meanwhile, Johnson was recruiting a team of high-priced all-stars from the outside. He’d hired Michael Francis, the head of marketing at Target, who was credited with bringing the low-end retailer its signature hip cachet. Francis became Penney’s president and head of both merchandising and marketing. Johnson plucked Apple alum Mike Kramer from apparel-maker Kellwood as COO, and Dan Walker, also an Apple veteran, as chief talent officer. Francis, Kramer, and Walker received a total of $24 million in cash signing bonuses, along with millions of stock options.

It was now Johnson’s show. The board had been stunned by the breadth of his planned transformation. But nobody insisted he slow down or test his theory that customers were sick of price confusion. He had a new team, an adoring board of directors, and a mission to reinvent his company.

Now it was time for his public debut at the official JCP launch party, which took place at New York City’s Pier 57 on Jan. 25 and 26, 2012. The cavernous shipping pier was bathed in white, with the new JCP logo omnipresent inside giant neon cubes. The lighting was perfect, the music appropriately ambient, the food top quality. A bevy of retail cognoscenti, including Martha Stewart, lent credibility. (She feted Johnson onstage, despite the fact that Macy’s had just sued her company, claiming that the new deal with Penney violated Stewart’s contract with Macy’s.) Calvin Klein, Mickey Drexler, Cindy Crawford, and Mary-Kate and Ashley Olsen were all in attendance.

Johnson presided with a beatific smile. Clad in a V-neck sweater over a button-down shirt, he waxed eloquent on the lessons he’d learned from Steve Jobs. Seemingly in perfect sync, Johnson and Francis — the two looked almost like brothers — rolled stylish, funny clips that featured Ellen DeGeneres, the company’s new spokesperson, and promised a world of fresh, compelling Americana. Fusty old J.C. Penney’s was no more. The company had rebranded itself with a sleek modern name — JCP — to match its new aesthetic. Ackman and other directors sat in the front section, beaming.

Many in the audience admired Johnson’s passion and nerve, even as they doubted that his plan could succeed. Johnson himself told me that day that J. Crew CEO Mickey Drexler had cautioned him, “Be very careful. You don’t have to be that bold. There’s only one Steve.” (Comments Drexler today: “I’m not sure that he heard me.”)
There was a fair amount of eye rolling in the audience. As Johnson talked about the “six Ps” driving the plan — product, place, presentation, price, promotion, and personality — Adrianne Shapira, then a Goldman Sachs analyst, said, “One ‘p’ that seems to be missing is people.” Kramer, the COO, added to the swagger with his refusal to provide sales projections because “we don’t want to cap what we think it could be.” Penney’s stock vaulted from $34 to $41 the next day.

Back in Plano, the employees were excited too. Many acknowledged that Penney needed an infusion of energy. On Feb. 1 an ebullient Johnson hosted a $3 million extravaganza to salute the company’s workers. Stages were constructed onsite, with four areas meant to conjure a particular season. In “winter,” set up in the cafeteria, there was a snowmaking machine. “Summer” boasted grass for a picnic, and “spring” had a wall of water. There were margarita bars, live bands, and caramel apples mounted on long poles. Hung on the walls were photographs of employees that had been taken at a welcome picnic on Johnson’s first day.

Still, the moment was fraught. The company had announced $900 million in planned cost cuts, and everybody knew that meant looming layoffs. Many of the people celebrated in photos would soon lose their jobs. Some of their images remained on the walls for months, ghostly reminders of the human costs of radical change.

The cool kids take over

The era of good feelings would be measured in nanoseconds. Indeed, the only thing speedier than Johnson’s planned changes was the velocity with which they unraveled. Inside Penney, the conflict started almost instantly. Johnson “wanted to do this as a mixed marriage,” says former COO Kramer. “He wanted to prove that we could do this with new people as well as the older management. But it was very clear that it was oil and water from day one.”

It was all well and good that Johnson wanted to, as he frequently proclaimed, run Penney like a startup. But it was a venerable company with 159,000 employees and 1,100 stores. It already had a culture, for better or worse.

The newcomers distanced themselves from the holdovers, starting with the fact that a cadre of new top executives refused to move to Dallas and instead jetted in weekly. The Ritz-Carlton, where Johnson and some of the most senior executives stayed, became an unofficial club and meeting spot for the people at the top. Johnson, Francis, and Walker each remained in other cities, and several created powerful satellite operations there; only Kramer moved to Dallas.

Those who were not part of this new team, with a few exceptions, found themselves out of the loop and, increasingly, out of a job. “You felt like you were back in high school with the cool kids and the noncool kids,” says one senior old-guard executive. “I felt slow, dumb, and weak.”

Many of the former Apple-ites looked to implement what they viewed as streamlined Silicon Valley ways. HR chief Walker eliminated performance reviews, which he saw as useless. That happened to make it that much easier to ax people, because all decision-making was up to the boss and there was no need to consult any performance-assessment data. Says Walker: “I abhor make-work HR bureaucracy that doesn’t really improve the capabilities of the people and the company.”

Johnson’s character shaped the tone of Penney’s transformation. As genial as he is — he is the quintessential cheerful Sunday-school teacher and kids’-little-league-coach kind of dad — he has the personality of a zealot. Johnson displays the sort of enthusiasm and unwavering commitment that inspires followers. (And he showed his belief in his own plan by investing $50 million in Penney warrants that would pay off only if the stock rose.) There were only two kinds of people in Johnson’s world — believers and skeptics. “I choose to inspire and create believers,” he told me at the time. “I don’t like negativity. Skepticism takes the oxygen out of innovation.”

Criticism, valid or otherwise, marked you as a skeptic. Executive vice president Steve Lawrence joined that category when he suggested that Johnson should conduct tests before eliminating price promotions from one day to the next. When a decision was made to reduce the top merchants from two to one at the end of February, it was Lawrence who was cut rather than Liz Sweney, who publicly supported the new plan.

Some 60 top performers from the old regime did have a chance to be part of the revolution via a new program called (naturally) the iTeam. The group brainstormed ways to improve the company and visited famous retailers like Selfridges and Printemps for inspiration. But when the firings began in April, many of the iTeam members were purged, causing a vacuum of talent who understood Penney’s business.

Employees who remained say the new leadership team seemed to have little respect — in some cases, they had outright contempt — for the holdover employees. Michael Fisher, the chief creative officer and another Apple veteran, lectured his team that they needed to learn more about fashion, according to two employees. Each, he said, should wear at least one piece of camouflage clothing every day, as he did. Fisher went so far as to deride the holdovers as DOPES, or dumb old Penney’s employees, according to six staffers. (Fisher declined to comment.) Some veterans retaliated by calling the new team the Bad Apples.

The contempt seemed to extend to customers. As JCP spent more and more on new collaborations with higher-end brands such as Vivienne Tam and Nanette Lepore, the company abandoned previous mainstay labels. Southpole, a clothing brand that appealed primarily to black and Hispanic customers, was dropped. The women’s line for St. John’s Bay, a drab private-label brand — but one that generated $1 billion in annual revenues — was eliminated.

Johnson was totally absorbed in his quest but, say numerous insiders, relatively removed from many specifics of how his team was forcing through the change. It’s hard enough for CEOs to get honest information when they ask for it, since nobody wants to displease the boss. But when you announce that you don’t want to hear skepticism, you’re doubly isolating yourself. In Johnson’s mind, everybody was behind him.

Ellen and the white picket fence

Johnson and his team knew that sales would slide in the short term. Penney had internally projected a 10% to 15% drop in same-store sales for the first quarter after the relaunch. But when the results were tallied in May 2012, they were dismaying: Stores open for at least a year had sold 19% less than in the previous year’s first quarter. Penney customers were bolting, with no sign of replacements, despite millions spent on new marketing that depicted white-picket-fence Americana with great prices and gorgeous products.

Instead of resonating, the ads sparked a firestorm. The company had named Ellen DeGeneres — a popular celebrity and an out and proud lesbian — as its spokesperson. A conservative group, One Million Moms, threatened a boycott.

“DeGeneres is not a true representation of the type of families that shop at their store,” the group claimed. “The majority of J.C. Penney shoppers will be offended and choose to no longer shop there.” The company was deluged with enraged letters after a Mother’s Day circular included a photograph of two moms. Johnson, who had supported the marketing as inclusive, began to fret.

When Johnson found out that a Father’s Day ad featuring two dads was also in the works, he decided the messaging had gone from inclusive to political. Too late, Francis told him. The photos had already been printed. Johnson went to the board, which supported going ahead with the ads. He then told Francis he wanted more say over marketing — much of which happened in Minneapolis, where Francis had built a large communications and advertising operation.

Quickly the mood shifted. “Do we need two cooks in the kitchen?” Francis asked. Within days of the meeting he was gone. DeGeneres stopped appearing in most Penney ads. (A source in her camp says the relationship ended amicably.) Says Francis: “I will forever be proud of the remarkable body of work, and I believe it delivered on the mandate.” Johnson himself decided to take on Francis’s duties. So hands-off in many realms, the CEO would become intensely hands-on when it came to marketing. “Ron read every single line of copy,” says Greg Clark, a former senior vice president in the marketing group. “He wrote half of it. He reviewed every single page, every single photograph.”

Internally the changes were hitting hard. The first round of layoffs had begun in April, with 19,000 employees losing their jobs over several months. Soon afterward, Johnson held a Q&A session. The mood was somber. People knew that the company’s results had been worse than expected, and they’d anticipated some cuts. Were more layoffs coming? Johnson remained unruffled. He joked that he had worn his Nikes “in case they chase me out of here.”

By May, less than four months after JCP’s gala launch, a few directors were already getting nervous. Debates over pricing policy began erupting. (On the plus side, the menu options at a board meeting that month — including New Mexican rubbed beef tenderloin with bourbon-ancho sauce and saffron poached sea bass — didn’t seem to rile the directors.) For the moment, they were boxed in. Johnson had warned that the transition would be painful, and the board had greenlighted his plan. There was little it could do at that point besides acquiesce.

Penney’s spending continued to mount. Johnson wanted to make checkout easy for customers by deploying Apple-style roving clerks who could take customer payments on iPads. To do that, Johnson spent millions to equip stores with Wi-Fi and mandated that every item have an RFID tag by early 2013. (As money grew scarce, the plan was shelved.) At Fortune’s Brainstorm Tech conference in July 2012, Johnson was calm and blithely confident, despite growing negative press and a stock price that had halved since the New York show. He reminded everyone that it had taken several years for the Apple retail stores to succeed.

Yet oddly for a former executive of a tech company, Johnson also made a crucial mistake relating to the Internet. He decided to separate JCP.com’s buying groups from the store buying groups — the way Apple did it — severing coordination between what was stocked for the website and what was available for stores. The dotcom decision-making team was based in Silicon Valley, while the store buyers were in Plano. As a result, a customer could no longer find, say, four colors of underpants in the women’s department and be confident that the four colors would also be available online. Ullman had consolidated the teams. All of a sudden the website found itself stripped of support and leadership. Johnson was focused on getting the right look and feel into the physical store. “The first thing is to fix the store,” he said at the time, though he added, “It doesn’t mean online isn’t an equally big opportunity.”

But by the quarter ending in October 2012, dotcom sales had plunged 37% compared with the previous year’s quarter. Just as the rest of the retail world was scrambling to boost mobile and online buying, the Silicon Valley executive was going in the other direction. Penney lost $500 million on that one decision, according to Ullman.

Other Johnson initiatives backfired. In his well-intentioned desire to build trust with customers, the CEO loosened Penney’s exchange policy, allowing customers to return merchandise — without a receipt — and receive cash. Almost instantly, some people began to abuse the policy, grabbing items off Penney’s shelves, bringing them to the register, and then trading them in for cash. At least one popular item was “returned” so frequently that its total sales turned negative for a time.

A second component of Johnson’s strategy — the headline-generating plans to put Martha Stewart stores inside Penney’s — also blew up. In August 2012, Macy’s followed through on its threat and sued Penney. Already Macy’s had managed to temporarily block the new stores. Stock speculators began licking their chops, with short interest that month hitting 40% of the total float.

Quietly, an even more fundamental part of Johnson’s strategy — the moratorium on sales promotions — began to be pared back. Between the rising resistance from the board and the terrible customer response, Johnson had gotten the message. He authorized a return to limited sales and promotions like free haircuts for kids, for example, which weren’t called sales but were certainly promotional. The word “clearance” began trickling back into use.

By Thanksgiving, Johnson — who had always said the transformation would take four years — had started to sound as if he were bargaining for more time. He claimed, on CBS This Morning, that Penney’s benchmark would come in February 2013. “It’s going to take a year to teach people how to respond to the new pricing,” he said. “We will return to growth next year.” He laughed off a question about the increasing pressure. “I’m trying to position JCP for the next 100 years,” he said, “not this year.”

The overthrow

Despite Johnson’s public optimism, the ground was quickly shifting beneath him. Penney’s board had begun splintering into two factions: a pro-Ackman “New York” contingent and a larger cohort led by chairman Tom Engibous, the former CEO of Texas Instruments. Johnson “is still the right man for the job,” Ackman proclaimed publicly. “We don’t walk away.” Still, he was so worried about JCP’s accelerating cash burn that he threatened the board that he would sell all his shares if he was not made the head of the finance committee. Ackman got the appointment — and hired investment bank Blackstone and AlixPartners, a firm best known for advising distressed companies, to explore ways to raise cash.

When 2012 results came out in February, they were atrocious. The company’s revenues had plunged by $4.3 billion, with same-store sales falling 25%. Penney recorded a $1 billion loss. The stock tumbled to $18 — less than half its value a year earlier, even as the overall stock market continued to surge. Cash fell from $1.5 billion to $930 million, and Standard & Poor’s cut the company’s debt rating to CCC+, deep in junk territory, based on concerns about Penney’s liquidity.
Johnson’s job was clearly in jeopardy. He offered to resign. But Engibous assured him of the board’s support.

Amid this turmoil the Martha Stewart case went to trial, and Johnson was forced to take the stand. He looked naive at best, arrogant at worst, as his emails revealed his belief that he could intimidate Macy’s CEO, Terry Lundgren. The best way to stop Macy’s from renewing its agreement with Martha Stewart, Johnson wrote to his team, “is to make our offensive so strong they simply pick up their toys and go home.” After the announcement, he gloated in an email to Ackman: “I’m inclined to let the press run and let [Lundgren] stew for a bit. The more this is seen as brilliant for JCP and Martha, the more he won’t want to interfere.”

The bad news was cresting. And almost simultaneously came the stiletto in Johnson’s back — from the very investor who had paved the way for Johnson’s accession. In March 2013, Penney director Steve Roth, the CEO of Vornado, suddenly sold 43% of his Penney shares at a loss of nearly $100 million. It was a long way from the email he wrote Johnson on Dec. 7, 2011: “Amazing to me how much you’ve gotten done in such a short time, not to mention the quality of the work and genius of the ideas.” Penney CFO Ken Hannah couldn’t make sense of it. “Steve was as supportive and as constructive in [the most recent] board meeting as he had ever been,” he explained at an investors’ conference. “There was not one indication coming out of that meeting that he was going to do anything with his position.”

Why did Roth bail out? The investor declined to be interviewed, but he was facing myriad pressures of his own. The CEO of Vornado had stepped down abruptly, and Roth, already the chairman, had re-assumed the position. Vornado’s shareholders were unhappy with the stock’s performance and questioned why the REIT had invested in retail companies at all. No matter the particulars, the message was clear: Roth had lost faith.

The noose was tightening around Johnson’s neck. Once again he offered to step down, and once again the board told him to stay. (The latter meeting occurred in Ackman’s conference room, which ironically is equipped with a vintage nuclear bomber’s ejector seat.)

In the midst of the turmoil, Johnson embarked on a family vacation in the South of France. When he returned, he got a call from Engibous, according to two executives. The chairman told Johnson that the board would, in fact, be accepting his resignation on Monday, April 8. Less than a year and a half after embracing Johnson’s vision, the board had renounced it. Penney quickly announced that Johnson was “stepping down.”

Most startling was the man chosen to replace him: Mike Ullman, the chief of the J.C. Penney that presumably had been left behind. Previously portrayed as infirm and on the point of retirement, Ullman was now Schwarzenegger on a Segway, back with a vengeance. Johnson never returned to the Plano office. Within weeks, all but one of his disciples were gone too.

The grand experiment was over — just as much of Johnson’s new merchandise was beginning to appear. On May 1, the company ran an apology ad for misleading the customer. “We learned a very simple thing,” an earnest female voice said, “to listen to you.” In June, Johnson’s baby — the renovated home department — finally opened, with quirky Jonathan Adler lamps, mod Conran tables, and Pantone sheets. It was gorgeous, but the items were far beyond the budget of the traditional Penney’s customer. It bombed.

With Penney stuck in limbo by the court case, the company’s Martha Stewart stores were reduced to displaying things that didn’t compete with Macy’s, such as a few party supplies and window treatments. And in what seemed like a cruel joke, a new billboard erected in Culver City, Calif., to announce the Michael Graves home collection featured a teakettle that, viewed from on its side, inexplicably evoked Adolf Hitler, moustache and all, his arm in Nazi salute. The topic “This kettle looks like Hitler” trended quickly on social media site Reddit. There was at least one upside. Unlike Graves’ other wares, the Hitler teakettle immediately sold out.

The unwinding

With Ullman back, it was only a matter of time before Ackman was gone. The investor initially resisted, demanding that the board quickly find a replacement for Ullman. When he was rebuffed, Ackman dispatched two caustic letters to the board, which found their way to the Wall Street Journal. “Sometimes being ‘disruptive’ is exactly what a company and board needs at a critical time,” he wrote. But by now the other directors were aligned. On Aug. 12, 2013, Ackman resigned from the board. He sold his Penney stake at a loss of $470 million.

For his part, Ullman took a giant eraser to just about every plan of Johnson’s. The new home store was jettisoned; by summer I saw 50% to 70% markdowns on newly introduced products. They ended up piled toward the back of stores. Many of the brands that were promised prominent placement found their wares tossed on clearance tables, prices slashed. That in itself caused headaches for Penney. One such brand, Bodum, sued for breach of contract in December. (Penney declined to comment.) Once again, customers’ mailboxes filled with “the noise” of multiple promotions.

Ullman began shoring up Penney’s finances, but not without a stumble: The company stated that it was “comfortable” with its liquidity — and then, only a few weeks later, announced an 84-million-share offering. (The news of the highly dilutive offering walloped Penney’s shares yet again.) The Securities and Exchange Commission briefly investigated Ullman’s U-turn before closing the inquiry with no action.

The company website, reintegrated with the stores, again became a major contributor and helped make up for still-anemic in-store sales. Finally, on Feb. 26, 2014, Penney reported its first glimmer of good news: increases in same-store sales for the first time in two years, up 2% over the prior year’s fourth quarter (which, let’s not forget, was down 32%).

Earnings, however, were even worse than the previous year. The company lost $1.4 billion. Still, Ullman has stabilized the business, slowed the sales skid, and hired a marketing executive who at least seems to be matching the products to customers’ desires. But if Penney has pulled back from the brink of extinction, it remains a long, long way from thriving.

Returning to the pre-Johnson status quo is not a solution. Brick-and-mortar retail remains in deep trouble. During the recent holiday season industrywide in-store traffic slumped by 6.5%, according to RetailNext, even as spending surged online.
Was Johnson’s plan doomed to fail? It’s easy to say virtually nothing would work. For starters, there are far too many stores in America. In early March alone, Radio Shack announced plans to close as many as 1,100 stores, and Staples said it would shutter 225, or 12% of its total. And there are no obvious giant candidates to take over the mall spaces, diminishing the value of real estate for companies like Penney.

Of course, much of Penney’s failure was self-inflicted: the bold attempt — blessed by an impulsive board — to wave a magic wand and make a deeply embedded culture disappear, not to mention the rejection of its own customers. Says one executive brought in by Johnson: “It’s akin to people who try to remodel a house when their family is living in it. What we did was try to remodel 80% of the house and, by the way, try to host Thanksgiving and Christmas and a wedding in the backyard.”

Some acolytes fiercely defend Johnson and maintain that his plans would have worked if given enough time. “I think the strategy was right on the money,” says former HR head Walker. “We’ll never know what the results would’ve been if we’d gotten to the point where the stores had been largely transformed. Then it becomes a different store. We don’t get to replay that.”

Indeed, several Johnson initiatives have paid off. The Levi’s stores have had healthy sales (as have similar Disney boutiques). Penney is also holding on to another Johnson favorite, Joe Fresh. And Penney’s wider aisles and polished concrete floors do make the stores look and feel more contemporary.

What Johnson hoped to do was laudable. He wanted to conjure the elusive magic that delights customers at Apple stores, or at a handful of brick-and-mortar retailers such as Burberry, H&M, Target, J. Crew, Lululemon, and a few others devoted to the art and design of the product and the space. Says analyst Brian Sozzi of Belus Capital Advisors: “I will give Johnson this: He did things too quickly, but at least he was trying to set up a company to thrive in terms of where the future of retail was going. He just didn’t go about it the right way.” It’s impossible to know whether Johnson’s reforms could have succeeded, but he does leave one legacy: Nobody will be attempting something similar for a very long time.

Reporter associates: Marty Jones and Susan Kramer

Originally published in Fortune, March 2014. Subscribe to the magazine here.

Photo: idovermani, Flickr

Remembering The Man Who Brought Helvetica To The Masses

This post comes via Longreads contributor Laura Bliss:

In this week’s Economist, a remembrance of “font-god” Mike Parker, the typographer who developed more than 1000 fonts in his 50+ year career. Parker, who died last month at age 84, was a champion of great type: never drawing fonts himself, but rather coaxing others into perfection. His faculty for shape, space, and fine gauge of cultural currents changed the industry, and much more, when Parker brought Helvetica to the masses:

In contrast to the delicate exuberance of 16th-century types, Helvetica was plain, rigidly horizontal – and eminently readable. It became, in Mr. Parker’s hands, the public typeface of the modern world: of the New York Subway, of federal income-tax forms, of the logos of McDonald’s, Microsoft, Apple, Lufthansa and countless others. It was also, for its clarity, the default type of Macs, and so leapt smoothly into the desktop age.

Not everyone liked it. He did not always like it himself; as he roared around Brooklyn or Boston, opera pumping out at full volume from his car, he would constantly spot Helvetica being abused in some way, with rounded terminals or bad spacing, on shopfronts or the sides of trucks. But far from seeing Helvetica as neutral, vanilla, or nondescript, he loved it for the relationship between figure and ground, its firmness, its existence in “a powerful matrix of surrounding space.” Type gave flavour to words: and this was a typeface that gave people confidence in swiftly changing times.

Read the story

 

All Aboard: Four Stories About Trains

Ah, the romance of the rails. I still bear vivid memories of my family’s post-Christmas train ride to New York City when I was an adolescent. I listened to my non-Apple mp3 player and watched, wide-eyed, the people and places passing by. Last year, I hopped commuter train after commuter train trying to bridge the unwieldy path of public transit from Baltimore to Washington, D.C. Today, my social media feeds are overrun with my writerly friends pining for a free Amtrak ticket and a quiet place to work. All aboard, indeed.

1. “Small Towns in Southwest Fear Loss of Cherished Train Line.” (Dan Frosch, New York Times, Feb. 2014)

The Southwest Chief train line is a historic fixture in small-towns in New Mexico, and its absence might bring about their demise.

2. “Train in Vain.” (Evan Kindley, n+1, March 2014)

A reality check for the writers salivating over the possibility of Amtrak’s writer residency.

3. “Starchitect Trio: The Men Behind Germany’s Building Debacles.” (Der Spiegel, June 2013)

Billions of euros, year-long delays in construction — just what is going on in Stuttgart’s train station?

4. “How to Spend 47 Hours on a Train and Not Go Crazy.” (Nathaniel Rich, New York Times Magazine, Feb. 2013)

Why do people choose to travel cross-country via train? Meet the passengers of the Sunset Limited.

***

Photo: Feliciano Guimarães

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NPR's Nina Totenberg On What It Was Like To Be The Only Woman In The Newsroom

How did sources treat you differently than your male colleagues?

The bad news was you weren’t one of the guys so you didn’t chum it up with them and go drinking. The good news was they assumed you were young and stupid. I was young. I wasn’t stupid. They would very often say the most incredible things to me because they weren’t concentrating on the fact that I was concentrating on them.

I probably scored a number of scoops that way. It’s just hilarious. One time I was doing a story about junkets on Capitol Hill. I think Northwest [Airlines] had inaugurated a new line to Japan and Korea. They had taken on their maiden voyage most of the members of the Senate Commerce Committee, which of course controlled regulation of the airline industry.

So I did a bunch of interviews with people who went, and then I asked the people who didn’t go why they didn’t. I remember [Montana Democrat] Mike Mansfield said something of great integrity. He just said, “Don’t do that kind of thing.” But there was a senator, [New Hampshire Republican] Norris Cotton, who said, “Oriental food gives me the trots.” And that was the subhead in the story! It was just too good.

Nina Totenberg, interviewed by Adrienne LaFrance. Nina Totenberg’s tenure at NPR began nearly forty years ago, and since then her voice has become one of the most familiar on public radio. As LaFrance put it, “her work is so well known that NPR even sells a “Nina Totin’ Bag,” which pays homage to the legal affairs correspondent and pokes fun at public broadcasting for its classic pledge-drive gift.” Read more about public radio in the Longreads archive.

Photo: Wikimedia Commons

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‘So What Do You Do?’: A Reading List

“So what do you do?” is one of the most commonly asked questions at parties. Here: four first-person accounts of folks working in different industries.

1. TSA Screener: “Dear America, I Saw You Naked.” (Jason Edward Harrington, Politico, January 2014)

Those full-body scanners? They don’t work. One TSA agent is speaking out.

Read more…

Top 5 Longreads of the Week

Below, our favorite stories of the week. Kindle and Readmill users, you can also get them as a Readlist.

Sign up to receive this list free every Friday in your inbox.

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Read more…

Top 5 Longreads of the Week

Below, our favorite stories of the week. Kindle and Readmill users, you can also get them as a Readlist.

Sign up to receive this list free every Friday in your inbox.

***

Read more…

This Is Danny Pearl’s Final Story

Longreads Pick

Asra Nomani, a close friend and colleague of Daniel Pearl — who was murdered in 2002 by Khalid Sheikh Mohammed, an architect of the 9/11 attacks — discusses how she grappled with Pearl’s death years later while investigating his murder:

One of the first people I come across while waiting for the courtroom doors to open is James Connell, a defense attorney.

“I’m sorry for the death of your friend,” he tells me. “This must be hard for you.”

I don’t know how to respond. Condolences aren’t what I expected to hear, especially from the defense. I’ve come defiant, wearing a gauzy pink tunic to reject the dark black shroud that a radical like KSM would expect on a Muslim woman. “Thank you,” I finally say.

By 9:25 am, we’re seated and a Guantánamo bailiff bellows, “All rise!” As Army colonel James Pohl, the judge, enters, the five defendants remain sitting.

Source: Washingtonian
Published: Jan 23, 2014
Length: 30 minutes (7,639 words)

‘I’m One of the Others Now’: What Life Was Like for a Family in East Germany

Maxim Leo | Pushkin Press | April 2014 | 17 minutes (4,200 words)

Download .mobi (Kindle) Download .epub (iBooks)

 

For our Longreads Member Pick, we’re excited to share the first chapters from the book Red Love: The Story of an East German Family by Maxim Leo. Growing up with bohemian parents in the GDR, Leo recreates their lives as rebellious artists in an increasingly restrictive world. Our thanks to Pushkin Press for sharing the book with the Longreads community.

 

Prologue

When I stepped into the hospital room, Gerhard laughed. He said something. Weird, throaty words came out of his mouth. Then he laughed again. I can’t remember my grandfather ever being so pleased to see me. The doctor told me the stroke had damaged the language centre in Gerhard’s brain. All he could do now was express emotions. The rational side of him was blocked. I reflected that it had been precisely the other way around before.

Gerhard talked away at me. I pretended I understood. Eventually I told him that unfortunately I didn’t understand anything at all. Gerhard nodded sadly. Perhaps he’d hoped I might be able to free him from his speechlessness. Just as I’d sometimes helped him out of his emotional stiffness in the past. With a joke or a cheeky remark that shook his authority. I was the clown of the family, the one nobody suspected of evil intentions. I could overstep the mark with the hero of the family, the man no one else dared to contradict.

A clear spring light shone through the window of the hospital room. Gerhard’s face was slack and empty. We said nothing. I would have liked to have a conversation with him. I mean a real conversation. Usually conversations with Gerhard turned into monologues about his latest successes after ten minutes at the most. He talked about books he happened to be writing, about lectures he’d given, about newspaper articles people had written about him. A few times I tried to learn more about him. More than the stories everybody knew. But he didn’t want to. Perhaps he was scared of getting too close to himself. That he’d got used to being a monument.

It was too late now. This man, for whom language had always been the most important thing, has become speechless. I can’t ask him questions any more. No one can. He’s going to keep his secrets.

Gerhard was a hero even before he entered adulthood. At the age of seventeen he’d fought with the French Resistance, was tortured by the SS and freed by partisans. After the war he came back to Germany as a victor and built up the GDR, that state in which everything was to be better. He became an important journalist, a part of the new power. They needed people like him at the time. People who had done everything right in the war, people you could refer to if you wanted to explain why this anti-fascist state had to exist. They sent him to schools and universities. Again and again he talked about his fight against Hitler, about torture, about victory.

I grew up with those stories. I was proud to belong to this family, to this grandfather. I knew Gerhard had had a pistol at some point, and that he knew how to use explosives. When I visited my grandparents in Friedrichshagen, there was apple cake and fruit salad. Again and again I asked Gerhard to talk about the past. Gerhard talked about frightening Nazis and courageous partisans. Sometimes he jumped up and acted out a play with different parts. When Gerhard played a Nazi, he pulled his face into a grimace and spoke in a deep, gurgling voice. After the performance he would usually give me a bar of Milka chocolate. Even today I think of those monster Nazis every time I eat Milka chocolate.

In the presence of adults, Gerhard wasn’t as funny. He didn’t like anyone in the family to “go around politicking”, as he put it. In fact everybody who didn’t, like Gerhard, believe in the GDR, was politicking around the place in one way or another. The worst was Wolf, my father, who wasn’t even a member of the Party, but had married Gerhard’s favourite daughter Anne, my mother. There were lots of arguments, mostly about things I only really understood later on. About the state, about society, about the cause, whatever it happened to be. Our family was like a miniature GDR. It was here that the struggles took place, the ones that couldn’t be fought out anywhere else. Here ideology collided with life. That struggle raged for whole years. It was the reason my father went around the house shouting, why my mother secretly cried in the kitchen, why Gerhard became a stranger to me.

Gerhard and I sat together for a while on that spring day in that hospital room, which smelt of canteen food and disinfectant. It was slowly getting dark outside. Gerhard had caved in on himself. His body was there, but he seemed to be somewhere else. It may sound strange, but I had the feeling that the GDR only really came to an end at that moment. Eighteen years after the fall of the Wall the stern hero had disappeared. Before me there sat a helpless, lovable man. A grandfather. When I left we hugged, which I don’t think we’d ever done before. I walked down the long hospital corridor and felt at once sad and elated.

* * *

That day I wished for the first time that I could go back to the GDR. To understand what had actually happened there. To my grandfather, to my parents, to me. What had driven us apart? What was so important that it had turned us into strangers, even today?

The GDR has been dead for ages, but it’s still quite alive in my family. Like a ghost that can’t find peace. Eventually, when it was all over, nothing more was said about those old struggles. Perhaps we hoped things would sort themselves out, that the new age would heal the old wounds.

But it wouldn’t leave me be. I went to archives, I rummaged in cupboards and boxes, I found old photographs and letters, a long forgotten diary, secret files. I asked my family questions, one after the other, for days, weeks. I asked questions that I’d normally never have dared go near. I was allowed to do that, because I was a genealogist now. And all of a sudden our little GDR was there again, as if it had been waiting to emerge again, to show off from every angle, correct a few things and perhaps lose some of the rage and grief that were still there.

On that journey into the past I became reacquainted with Gerhard, Anne and Wolf. And I discovered Werner, my other grandfather, whom I’d barely known until then. I think something was set in motion after that day with Gerhard in the hospital. A speechless man made us speak.

 

The Shop

I’m the bourgeois in our family. That’s chiefly because my parents were never bourgeois. When I was ten, my father walked round with his hair alternately dyed green or blue, and a leather jacket he’d painted himself. He barked when he saw little children or beautiful women in the street. My mother liked to wear a Soviet pilot’s cap and a coat that my father had sprayed with black ink. They both always looked as if they’d just stepped off the stage of some theatre or other, and were only paying a brief visit to real life. My mates thought my parents were great, and thought I was a lucky person. But I thought they were embarrassing, and just wished that one day they could be as normal as all the other parents I knew. Ideally like Sven’s parents. Sven was my best friend. His father was bald with a little pot belly, Sven was allowed to call him Papa and wash the car with him at the weekend. My father wasn’t called Papa, he was called Wolf. I was to call my mother Anne, even though her name was really Annette. Our car, a grey Trabant, was washed only rarely, because Wolf thought there was no point washing a grey car. And he’d painted black and yellow circles on the wings so that you could see us coming from a long way off. Some people thought the car belonged to a blind person.

Sven’s parents had a colour television, a three-piece suite and cupboards along the wall. In our house there were only bookshelves and a seating area that Wolf had cobbled together from some pieces of baroque bedroom furniture. It was quite hard on the bottom, because Wolf said you didn’t need to be comfortable if you had something to say. Once I drew a plan of our flat the way I’d have liked to have it. A flat with a three-piece suite, a colour television and cupboards along the wall. Wolf laughed at me when he saw it, because the policeman’s family that had lived there before had furnished it exactly as it was on my plan. He told me it was stupid and sometimes even dangerous always to do what everybody did, because it meant that you yourself didn’t have to live at all. I don’t know if I understood what he meant at the time.

At any rate, from the beginning I had no other choice but to become a sensible, orderly person. At the age of fourteen I ironed my shirts, at seventeen I wore a jacket and tried to speak proper German. It was the only way I had of rebelling against my parents. It’s their fault that I became a good, well-dressed revolutionary. At twenty-four I got my first job, at twenty-eight I was married, at thirty the first child came along. At thirty-two a flat of my own. I’m a man who had to grow up early.

When I stand on my balcony and bend over the railing, I can see the shop where I was born. The shop is only two houses away, on the right down on the corner. You might say that I haven’t moved much in my life. Thirty yards in thirty-eight years. I have no memory of the shop, we moved away when I was a year old. Wolf says they often put me in the street in my pram because the air in the shop was so damp. The shop was Wolf ’s first flat of his own. 26 Lippehner Strasse, Prenzlauer Berg, Berlin. His studio was in the front, towards the courtyard at the back there was a dark connecting room and a little kitchen. The winter of 1969, when Wolf and Anne met, must have been quite a hard one. The snow was three feet high in the street, and the tooth mug was full of ice in the morning. The first time Anne came to visit, Wolf had heated the stove in the bedroom and put a coffee bean on the bedcovers, like in a hotel. Because the rest of the flat was cold, they ended up in bed pretty quickly. Two months later Anne was pregnant. She always says I was an accident. And the way she says it, it sounds more like Chernobyl than a happy chance. Maybe they wanted a bit more time on their own, just the two of them.

Today there’s an engineering office in the shop. Whenever I walk past, a grey-haired man is sitting motionlessly at his desk. You can just see his head and his feet, because the big shop window has a broad strip of frosted glass in the middle. Sometimes I think the man is a dummy. An engineer who stops at the waist. Perhaps that’s why I’ve never dared to ask if I could take a look at the shop.

The house next door used to be a butcher’s shop. The butcher lady used to slip my father packets of bacon pieces, because she knew he didn’t have money for things like that. An aristocratic lawyer from southern Germany who bought the house a few years ago sometimes plays saxophone in the empty room, still tiled as it was in the old days.

Diagonally opposite was a soap shop whose lady manager recorded exactly which women went in and out of Wolf ’s house and sometimes confronted him about it. Today it’s a design office, run by an American with an asymmetrical fringe, who listens to nothing but opera.

In the photographs that Wolf took of the street in those days, you see grey, broken walls and kerbstones with no parked cars. Wolf ’s scooter stands outside the shop. Everything looks empty, forlorn. Today the street is a dream in pastel colours. Gold leaf gleams from stucco facades, and it’s hard to find a parking space. The people who live in the flats are couples in their late thirties who feel more as if they’re in their late twenties. They are men with expensive sunglasses and women who wear tracksuit jackets with short skirts. They push buggies with sports tyres, buy their meat at the organic butcher’s and emanate that feeling of complete effortlessness that always implies a lot of effort. I live here, and to be quite honest I fit in pretty well.

That’s what Wolf thinks too. He sometimes laughs at me for needing so many things to be happy. Because I’m one of the others now. The Westerners. He can’t believe what’s happened to his son and his street. I wonder about that too. I don’t know how it happened, how the Easterner in me disappeared. How I became a Westerner. It must have been a creeping process, like with one of those highly infectious tropical diseases that spread undetected in your body for years, and eventually take control. The new age has changed my street, and me too. I didn’t need to move, the West came to me. It conquered me in my own home, in my familiar surroundings. It made it easy for me to start a new life. I have a wife from France and two children who don’t even know that there was ever a Wall in Berlin. I have a well-paid job on a newspaper, and my chief concern at the moment is whether we should have floorboards or a stone floor in our kitchen. I don’t need to take a position on anything, I don’t need to be committed, I don’t need a point of view. Politics can be a topic of conversation if you can’t think of anything else. Society isn’t the main subject of my life, I am. My happiness, my job, my projects, my dreams.

That sounds so normal, and perhaps it is. Nonetheless, I sometimes have a bad conscience and feel like a turncoat. Like someone who’s betrayed his past. As if I were still a bit guilty for my first life, as if it were forbidden to leave the things from those days alone. Now, that life in the GDR strikes me as strange and unreal. It’s as if I’m reporting from a distant time that has hardly anything to do with me. I feel like one of those old men who sit in a pink television studio telling Guido Knopp about the siege of Stalingrad. I’ve become an eyewitness, a man who experienced something a long time ago. Like my grandfather, like all the others who were someone else in their youth.

But in fact the East isn’t far away at all. It clings to me, it goes with me everywhere. It’s like a big family that you can’t shake off, that people are always asking you about, that’s forever calling you up. Even in my little family, the East is always there. I sense him when I visit Wolf, who’s now living a few streets away, in an attic that was once his studio. He moved there after he split up with Anne five years ago, when bourgeois coupledom became too constricting for him. Apart from his study area there’s a bed, a circular dining table, two chairs, a home-made shower and a toilet separated off by a curtain. Wolf says it’s enough for him. He’s opposed to all that luxury, consumerism, dependence on money and status. He wants to live modestly and be free, as he had been right at the start in his little shop. Anything else would actually have been difficult, because he didn’t earn that much money after the Wall came down, and only gets 600 euros’ pension a month. Financially speaking, he says, things in the GDR were much more straightforward than now because things like the flat and food were almost free, and only luxuries really cost any money. Again and again we urged him to prepare for his old age. But Wolf refused to worry about the future. “I hope I’ll be dead by the time I’m sixty, I don’t want to rot away in some old people’s home,” he said. Now he’s sixty-six and fit as a fiddle.

I don’t find it easy to be with Wolf in his attic, so I usually invite him to ours. Compared to his poverty, our affluence looks completely ridiculous. I have this constant nagging feeling that I should be justifying myself. I probably find it harder than he does, because Wolf is really content with very little. He has quite a young girlfriend now, and all the time in the world. He says he hasn’t felt so great in ages.

Wolf had lots of time in the GDR as well, or at least that’s how it always seemed to me. He made good money, and was able to work just for a few months a year. The rest of the time he made art. And took holidays. We had a little house with a big garden in Basdorf, in the north of Berlin. We spent our two-month summer holidays there, and usually our one-month winter holidays as well. My little brother Moritz, Wolf and Anne and me. We went on cycling, canoeing and skiing trips. Today the whole of my childhood seems like an endless holiday. Wolf was good at football, climbing trees, building huts and high-diving. So I wanted to be a bit like him. As free and strong as that.

Anne’s a lot calmer and more sensible than Wolf. She doesn’t take herself so seriously, either, probably a good start if you want to live with a man who thinks he’s the centre of the world. When I think back to my childhood, I see a woman in front of me, sitting in the corner with a book and a glass of tea, emanating such deep calm and contentment that you’d have to feel pretty important to risk dragging her from her absorption. Anne says she didn’t really know what to do with me at first. She was twenty-two when I was born, and in the photographs from those days she looks like a fragile princess who shouldn’t be exposed to too much reality. There’s a photograph of her holding me in her arms. Her pretty, pale face is turned slightly away from me, and her dark eyes gaze longingly into the distance. It was only when I started to read that she really started getting interested in me. I got the books that she’d been keen on when she was a child, and she was delighted if I was as keen on reading them as she had been.

When she first gets to know Wolf, Anne’s impressed by his rough, rebellious manner. He’s so entirely different from the men she’s met before. He’s cheeky, he’s an artist, he breaks the rules that she always respects. And he’s a handsome man with merry eyes and a goatee that gives him a slightly raffish appearance. The first time they go out together, they walk through the snowy park that starts at the end of my street. The paths are slippery, and Anne is wearing the wrong shoes, as always. Wolf takes her by the hand and leads her through the park, and somehow she knows she’s found a protector. Someone who won’t let go of her again.

They talk about politics, about the country they live in. Wolf tells  her how terrible he finds this GDR, how uncomfortable he feels, how much he hates having these old men speaking on his behalf. Anne says she’s in the Party. Then Wolf stops, lets go of her hand and falls silent. “Everything couldn’t have been right all at once,” he said later. It’s the start of a long love and a long argument. With my parents, the two things always went together.

Anne talks about her father Gerhard, the Communist who fought the Nazis in France. She paints the picture of a tender hero who loves his Party and his daughter. Wolf talks about his father Werner, the little Nazi who became a little Stalinist. A man he doesn’t know much about, a man he fell out with. Wolf says he wished he could find a new father back then. He likes the tender hero Anne tells him about.

Before Wolf is invited to Anne’s parents for the first time, they ask Anne if the new boyfriend is in the Party as well. When Anne says he isn’t, her father’s face darkens, and her mother advises her not to take it too seriously each time she falls in love. Wolf says today that it was all quite clear already, before he even saw her parents. Anne says that’s overstating the case.

At any rate she’s got a birthday, and there’s a dinner at her parents’ place in Friedrichshagen. Anne barely slept the night before, because she’d been summoned for a Socialist auxiliary unit on the railway, along with some other students. A set of frozen points had to be cleared of snow. But in fact all they did was stand around, because there weren’t enough shovels. Anne thinks it’s stupid that she has to join units like that as a student. Gerhard is annoyed. He says: “If there’s a problem in Socialism, everyone has to help.” His voice is unusually harsh. Anne doesn’t understand why he reacts like that. They defend themselves, one word generates another. Wolf looks on in silence and wonders whether this is really the man Anne has said so many good things about. Eventually Gerhard says, looking at Anne, “When it comes to the crunch, you’re on the other side of the barricade.”

I heard that sentence often later on, mostly from Wolf, who quoted it time and again as proof that it was Gerhard’s fault if the family never really came together. When we were doing the French Revolution in school, my history book had a picture of a barricade in the streets of Paris. I imagined my parents on one side and my grandparents on the other. I didn’t know which side I was supposed to be on. I just wanted everyone to make sure we were a real family. Without a barricade.

Anne grabs her clothes, takes a fat blanket and moves into Wolf ’s shop-apartment. For a while her mother tries to talk her out of her new love. She says Wolf is a wayward artist, not someone you can depend on. And he isn’t intelligent enough for her, either. It’s only when her parents discover that Anne’s pregnant that they give up the fight. The marriage takes place at Prenzlauer Berg register office. In the wedding photograph Anne wears a short floral dress, her belly swelling slightly beneath it. She has her hair up and looks like a girl. Wolf wears a dark suit and grins into the camera. Gerhard stands beside him wearing a serious expression.

The wedding is celebrated at Anne’s parents’ summer house. A French friend of the family grills marinated meat, there are roasted snails, baguettes, olives and claret. The guests speak French and English, they wear expensive suits and make jokes about the GDR. Wolf is impressed by the party. He’s never been to a barbecue before. He doesn’t know you can eat snails. He sees his first pepper mill, takes out the peppercorns and then doesn’t know what to do with them. The others laugh, he blushes. Anne introduces him to her parents’ friends, writers or journalists who lived in exile in France, America, Mexico or Shanghai during the Nazi era. Wolf listens to their stories about fighting, fleeing and suffering. They are people unlike any he’s ever met before. Heroes, survivors from the big wide world who have found their new home in the little GDR. Because they aren’t persecuted here, because they are safe here. Their stories are so different from those of his family. It’s all so strange. Wolf wonders if he can ever belong among these people, this family, this woman he’s just married. Gerhard raises a glass to him without looking at him. They drink to a happy marriage and a long life.

* * *

Reprinted with permission of Pushkin Press. English translation © 2013 Shaun Whiteside. Purchase the book.

Longreads Best of 2013: The 10 Stories We Couldn't Stop Thinking About

For four years now, the Longreads community has celebrated the best storytelling on the web. Thanks for all of your contributions, and special thanks to Longreads Members for supporting this service. We couldn’t keep going without your funding, so join us today.

Earlier this week we posted every No. 1 story from our weekly email this year, in addition to all of the outstanding picks from our Best of 2013 series. Here are 10 stories that we couldn’t stop thinking about.

See you in 2014. Read more…