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JCPenney Evolves Back To Sale Pricing

01/30/2013

Evolve-or-PerishSales prices are back at JCPenney.

After nearly a year of poor results from the retailers new pricing strategy, CEO Ron Johnson blinked.

The everyday pricing plan has been closely watched by others in the retail industry. But so far the experiment has served to illustrate the challenges retailers face when attempting to change consumers’ behavior.

Penney next month is expected to report its fourth consecutive quarter of big sales drops and net losses. After losing more than half of its value, Penney’s stock is trading at about $19. And the company’s credit ratings are in junk status.

In addition to sales, Penney also plans to add price tags or signs for more than half of its merchandise to show customers how much they’re saving by shopping at the retailer. For store-branded items such as Arizona, Penney will show comparison prices from competitors – which is smart.

The reversal comes on the eve of the one-year anniversary of its original vow to almost completely get rid of the sales that Americans covet but that cut into a store’s profits. The idea was to offer everyday low prices that customers could count on rather than the nearly 600 fleeting discounts, coupons and sales it once offered.

Last February I was in support of Johnson’s vision. The post “JCPenney Pricing Strategy Will Pressure Competitors to Change“. In it I felt the foundation of Johnson’s pricing strategy was solid.

That same month I also began to call out the company’s marketing – which did little to prop up the pricing or the product. “JCPenney Needs To Focus On Product” and “JCPenney Marketing Must Focus on Product” were two early spring posts on the topic.

By fall 2012 I was overtly identifying JCPenney’s marketing as its single biggest problem.

Johnson, who rolled out the pricing plan shortly after taking the top job in November 2011, told The Associated Press the latest moves are not a “deviation” from his strategy but rather an “evolution.”

I hope Johnson sees an evolution of JCPenney’s advertising and marketing strategy as well – or Johnson’s tenure will perish along with the JCPenney brand.

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