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JCPenney Pricing – “I Really Miss My Coupons”

05/04/2012

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?

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3 Comments leave one →
  1. Lily permalink
    05/10/2012 11:43 am

    We aren’t stupid for liking the old system better. With coupons, WE decide what we want to buy on discount. If I need jeans in April, I can afford them with a coupon. Under this new system, where some CEO decides what will be available to purchase on sale, jeans will probably only go on sale sometime in July – September.

    While some things may be more affordable, I’ve found that many things, I was able to get for a better price with the old sale + coupon system last fall. The EXACT same things could be gotten for much less last fall when they were new than I can get them for now on “best price” clearance.

    I used to buy the majority of my clothes at JCP. They have some very good basics. I used to find jeans, tees, simple, lightweight sweaters, and twill pants that fit my “real person”, size 12-14 pear shape very well. I’ve only been to JCP twice since Feb. 1. I bought one sweater on “best price” clearance. I spent about $15. Meanwhile, I have spent close to $500 at Kohls in the past 3 months…. Most of that money would have been spent at JCP last year.

    JCP still has decent goods, but I’ve found that Kohl’s basic merchandise is getting better. With sales + 30% off coupons at least once a month, I have no need to go to JCP. I’m still not crazy about Sonoma or Croft & Borrow (I always wear a small or medium in these brands… they run HUGE!), but lately they have a few less “old ladyish” styles. I love Apt. 9 and Elle. Jennifer Lopez is dumb, and Vera Wang is always either sold out or too long in the torso even in petites, which is almost always too short for me in every other brand.

    Yesterday, I bought a very cute casual dress at Kohls that was originally $38 50% off with 30% off coupon and $10 Kohls Cash for approx. $3.50. JCP has a similar dress on their website on clearance (only available in size 8), for $21.

    • 05/10/2012 12:17 pm

      No one is suggesting that anyone who prefers coupons, x% off days, etc. is less intelligent.

      I happen to agree with JCPenny’s pricing model as a similar model worked for Lands’ End during the 16 years I was a merchant with that company.

      There’s no doubt JCP has its work cut out. Customers are turning to Kohls and other retailers who have stuck with the “off price” model. Time will tell if JCP is right or it will be successful.

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