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  • You’ve probably seen the annoying commercials?

    Posted on January 31st, 2012 admin 8 comments

    JC Penney starts a new pricing and promotional strategy today which is a complete turn-around from the way they’ve done business over the last 30 years.  From now on when you go into a JC Penney store, every item will be at its lowest price, all the time.  Gone are the weekly 50% off sales.  You won’t see coupons or Sunday circulars (good for the environment) anymore, either.   Penney’s compares their new model to that of upscale department store Nordstrom, when in fact it seems identical to discount giant Wal-Mart.   Either way JCP positions it, it isn’t unique.

    Retail stores as late as the 80’s had only two big sales per year:   Winter Clearance in January and Summer Clearance in July.  The clearance “cleared out” the merchandise they couldn’t sell at regular price.  Then some retail executive came up with the great idea of running discounts all the time.  By marking-up their merchandise 200% and sporadically running a 50% off sale, they’d fool customers to flock to the store and buy up the sale merchandise, at what used to be the regular price.  It worked, and many retailers scrambled to follow the same pricing tactic.   For years customers fell for it, but they finally got wise to the game.

    Now customers wait for everything to go on sale before they make a purchase from stores like JCP.  If Jockey underwear isn’t on sale at Penney’s this week, it will be next week, or it’ll be 50% off at Kohl’s, and JC Penney just missed a sale.   It took awhile, but retailers finally figured out that the customer wised up to their price gimmicks.  So, JCP is going back to the way it was, hoping that their customers, who have become fed-up trying to keep-up with the “what’s on sale this week” game, will start buying the things they want when they want them.  They won’t have to wait for it to go on sale or buy it from JC Penney’s competitor, because Penney’s will always have it at the lowest price.

    Will the new/old pricing strategy work for JCP?  And if it does, will other stores follow?  Will the coupon craze (Groupon, Foursquare, Tjoo’s…) fade away, too, if retailers always price their merchandise at the lowest price?  I love change – it keeps us on our toes!   Beth Carroll

     

    8 responses to “You’ve probably seen the annoying commercials?”

    1. [...] smoke-stackers or new startups, is how and at what level to price their product(s). Beth’s blog yesterday outlined how JCP is going back to its roots, adopting a single pricing strategy without gaming [...]

    2. Laila lemcharfi

      I can’t agree more! It seems like Penny’s always finds some holiday (even none traditional ones) to have a sale on. Even without a holiday, there’s always a sale. I have been to Penny’s recently and I’ve noticed some new price changes. I still think the coupons will come out to get costumers to by their products. I wonder if any other stores will follow Penny’s in this promotion.

    3. I do not think that this pricing strategy will work for JCP. In my opinion, JCP is on its way out and needs to update more than its prices. It should try to convince consumers that they are a fashionable place to buy clothing. I do not think that other stores will follow this strategy, because it tends to just cheapen the image of the store. However, maybe it will attract customers who need to buy low priced clothing. They should change their commercials that are currently playing though, because they are confusing and do not fully show what JCP is changing in their stores.

    4. Michelle Lawson

      I believe that this just might bring in some of the crowd diversity I used to see when I was a kid. Penney’s and other stores like it have made it feel ‘unacceptable’ for people who might even look a little out of their price range, to even set foot in the store. I know people are truly tired of all the different sales and gimmicks and just want some straight forward shopping. I would like to be able to go into these stores and feel welcomed because I simply have decided to spend time, and maybe some money, in thier store. With this model going into effect, I hope the equality that I remember will come back, as well.

    5. Samantha Buzzard

      I think that it is more like Wal-mart. It feels like they are trying to get everyone to come to their stores hoping that they won’t have to look else where for lower prices not necessarily the quality of their product.

    6. I think this should work to an extent. I’m sure their sales will increase, but I don’t see the move being a major game changer.

    7. I think this JCP’s low cost approach will work if they promote it correctly. For instance, I did not know about this change until I read this article. I think something this monumental for their store should be advertised on every commercial like Wal-Mart does. If they are able to do this, I think we will see sales increase and also other stores eventually going down the same path.

    8. Stephanie Dickerson

      I know that I will defiantley be looking at JCPenny more when it comes to shopping. I think their business model is a good idea, and it will be interesting to see how it pans out. However, I don’t see how they could make very much profit if all their products are at the lowest they could possibly be all the time?..

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