Have you noticed the changes at JC Penney?
The store's new look. Photo courtesy of JC Penney
Shoptimist Rebecca Holland has a column today about the changes at JC Penney.
Perhaps you’ve noticed the fresh, modern look the company has adopted for its Sunday newspaper ads. Or, if you’ve been to the store recently you’ve probably seen the racks labeled “Best Price” and “Everyday Price.” Maybe you’ve noticed that the store has reduced its prices in lieu of holding frequent sales.
Those are just a few of the changes the company’s new CEO, Ron Johnson, has implemented.
You can read more about the changes in Rebecca’s column, and comment on her blog about whether the approach will lure you into the store.
February 15, 2012 - 9:53 AM
My immediate thought is that no business reduces their ‘every day low prices’ so drastically without reducing the quality of their product just as much, normally more. Oh, maybe back in the 1950′s, but corporate retailers have done far too much for me to believe the soft and fuzzy sales pitch that JCP now has. Call me cynical, but I expect that JCP’s ‘quality level’ is now that of WalMart’s or lower.
Considering the exorbitant shipping charges JCP has always put on anything ordered online, and the way they’ve historically handled other instore transactions, I’ll continue to wait until other people can buy and confirm or disprove my suspicions.
I have noticed the changes and love it. I have not noticed quality differences they still carry the same brands. They price point is amazing I hit the clearence rack and got something that was 5.99 clearence under the new pricing it was 3 dollars its amazing.
I bought a pair of uniform pants for my daughter on Saturday there. They were “on sale” for $11.99 but under the new price structure they were $6. Same name brands in the store, so I don’t anticipate declining quality.
Wall Street Journal had an excellent article on this last month. According to an interview with their new CEO, their quality level is exactly the same — it’s just that department stores have tended to ‘mislead’ consumers by artificially inflating the base prices on their products, then tricking them into thinking that they’re getting a great deal by using ‘doorbuster’ prices and huge sale markdowns.
Their new strategy is simply to charge a more true base price and avoid the huge doorbuster sales. The WSJ article stated that most of their revenue came from doorbuster sales, but those sales tend to confuse consumers and lead to short-term spikes at the expense of losing customers in the long run.
Shouldn’t be any difference in quality, but the prices should be better and without needing any ‘one day’ coupons, etc.
@RP: I think this is the WSJ article you’re talking about.
I’ve noticed a change – less junk mail and less newspaper inserts. I hope Belk’s takes notice. You cannot have a sale every week and have people really think it is a sale.
So a corporation can ‘slash’ prices by 40% and become more profitable without cutting any other expenses, such as COGS – cost of goods sold? Umm… okay.
JCP is trading at 42 on the NYSE today, with a P/E of 46 and an E/S of .92. Let’s see where they stand one year from now. Let’s see how this experiment works, and what the corporate outlook is then.
Also, let’s not pretend that a womens shirt that sells for $11 – pretty cheap – won’t lose quality in the next few months so that the corporation can still make the same ratios of profit margin, if not increase them to offset the 40% reduction in pricing. It was $11, but now it’s $4, and the company isn’t cutting costs anywhere?
Like I said before, embrace the sunshine 1950′s mentality if you wish, but we’ll talk in twelve months, and hear if that $4 shirt is still in your closet, much less what JCP’s profitability is at that time.
I think this is in direct response to everyday low pricing at stores like WalMart. Is this a desperate move? Their image is dowdy at best, and this shakes it up, but I’ll bet they have piles of research about how people feel about the frequent sales, so they have some basis for the move.
A couple of notes, my examples were based on anecdotal reports by other posters – $11 to $4, and by the advertised ‘price cuts’ of at least 40%. Obviously, I know a shirt cut from $11 to $4 is more than a 40% discount. Please don’t waste blog time by arguing that. Also, let’s see how this plays out further than the second week after announcement. As I said above, let’s have this discussion a year from now. Everyone can then rave on how fresh and pretty the merchandising is, and how wonderful the customer service is, and how the quality is as good as ever. Or…
David, that is probably why JCP noticed their sales volume spiking so drastically around sale days. Something else to consider is that this really does pit JCP against WalMart in terms of pricing. WalMart’s got a pretty impressive W-L record in that arena.
One last note, with the consistent three tier pricing, that seems to be getting passed over in the discussion, aren’t the sales going to spike just as much for those same days of the month? Only at lower selling points for the ‘same’ merchandise? Yes, advertising costs mount, but they still are not THAT much of a percentage of sales price. I just don’t see the numbers adding up. I know JCP expects a swarm of new volume, but the CEO keeps referencing his time at Apple, and to use the pun, we are not just talking apples & oranges here, we’re talking Apples and bowling balls.
Good luck to all the JCP fans…
Shaking my head @ the ‘gullible’ public.
A legitimate business, with a legitimate price, cannot sell an item for 1/2 what it is marked. A fictitious price is put on the item to start with, and the “sale” price is far closer to the real, fair price for that item.
This is an obvious effort on the part of JCP to distance themselves from a NC lawsuit some years back, when they were directed to reveal how many units were sold @ regular price, and how many days of the year that regular price was in effect. In essence to ‘legitimize’ the SALE.
How often do you see the sticker on a new car for $40,000 and the salesman is going to sell it to you for $20,000 ???
That house down the street listed @ $ 175,000, but it’s now “on sale” for $87,500 ??? Not going to happen.
By the way, did you hear the one about the bank down the street is having a sale on $1 bills? Today only, just 50 cents each !!!
WAKE UP folks! “VALUE” is what you need to be looking at. Quality + price + service.
Steve, thanks for reaffirming my point. I know the point of this blog is only to cheerlead business development in the region, but sometimes folks need to wake up. The financial crisis, the housing crisis, the automobile crisis, all of the corporate scandals of the last three decades should eventually sink in to people’s reference points.
Corporations do not just cut sales prices in half without making other changes. We’re not living in the days of the hometown company being selfless and supportive of the community any more. That died out decades ago. Even then, company housing, script, and company stores told a different tale.
We’re living in the times of corporations answering only to their shareholders, and usually on a quarterly basis. You can NOT cut sales price in half without expecting shareholders to drop you like a rock. You HAVE to cut some other expense. Anyone involved in business, including those reporting on it, should be aware that advertising expenses for retail department stores do not constitute such a percentage of net cost that 50+% price reductions can be had by cutting back on advertising alone. Increased merchandising expense, reduced quality control, reduced labor costs, reduced customer service capability, all of these are the ‘go to’ answers for corporate bean counters when it comes to new marketing strategies.
As I said before, come back in one year and tell me if that $4 shirt (a $4 shirt? Seriously? That is what JCP wants to make their reputation on? A $4 shirt?) is still hanging in your closet and if the signage, the merchandising, the customer service at JCP are all bright and shiny.
Good luck to the believers…