JCPenney Pricing – “I Really Miss My Coupons”
Today is Best Price Friday. According to the sticker on the front page of the Minneapolis StarTribune that means, “best prices start today…and last until the goods are gone. every 1st and 3rd friday. every month.”
I support JCPenney’s desire to wean shoppers from the markdown mentality that has become the norm among most retailers. Markdown mentality causes retailers to markup products, say 100%, so they can offer the same product at 50% off and still make a profit. Markdown mentality drives consumers to buy products only when they are on sale. Markdown mentality makes for dumb merchants and dumber shoppers.
I first wrote about JCPenney’s pricing in February. In the post, “JCPenney Pricing Strategy Will Pressure Competitors To Change” I explained the company’s strategy as, “JCPenney’s new strategy is to have a three-tiered pricing format which includes everyday pricing, month-long value pricing and “best price” (the last is in lieu of clearance but is designed to move out goods quickly).
According to my explanation, today is the start of clearance. Clearance of what…I’m not 100% certain.
JCPenney execs may have overestimated the intelligence of the American consumer. Consumers love finding deals; they relish in hunting for bargains. When you follow the JCPenney model, you are in danger of removing some of this excitement from the equation. In other words, you’ll never have any real leverage in getting people to act now. Why should they? The same deal will be available a week or two from now.
“I really miss my coupons”, wrote Robyn Anderson on the company’s Facebook page. Ms. Anderson may not be alone. Consumers and some employees have difficulty explaining Fair and Square Pricing.
“Rather than inundating the customer with a relentless series of sales, coupons, rebates, and retail gimmicks, JCPenney will host 12 promotional events each year, on a monthly calendar,” reads a JCPenney statement.
“We want customers to shop on their terms, not ours,” said CEO Ron Johnson. “By setting our store [sales] monthly and maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us.”
I understand the concept…and I think it is a move in the right direction. The question remaining is if the strategy drives away the coupon clippers like Robyn Anderson – where do new, smarter consumers come from?