J.C. Penney Co. Inc. is permanently marking down all of its merchandise by at least 40 percent so shoppers no longer have to wait for sales to get bargains.
Penney's said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing.
Starting on Feb. 1, the retailer is rolling out an "Every Day" pricing strategy with fewer sales throughout the year.
The plan, the first major move by Apple executive Ron Johnson since he became Penney's CEO in November, is different from Walmart's iconic everyday low pricing. Unlike Walmart, Penney's goal isn't to undercut competitors, but rather to offer customers more predictable pricing.
"Pricing is actually a pretty simple and straightforward thing," Johnson said. "Customers will not pay literally a penny more than the true value of the product."
Penney's plan comes as stores are struggling to wean Americans off of the profit-busting bargains that they have come to expect in the weak economy. The move is risky, though, because shoppers who love to bargain-hunt might be turned off by the absence of sales.
"The big question on investors' minds will be how customers will react to a single price point versus a perceived discount under the old strategy," said Citi Investment Research analyst Deborah L. Weinswig.
Here's how Penney's pricing strategy will work:
- Sale prices become everyday prices. The company will use sales data from last year to slash prices on all merchandise at least 40 percent or lower than the previous year's prices. So, a woman's St. John's Bay blouse regularly priced at $14.99 could have the "Every Day" price of $7.
- Fewer sales. The retailer will pick items to go on sale each month for a "Month-Long Value." For instance, jewelry and Valentine's Day gifts would go on sale in February, while Christmas decorations would be discounted in November. Items that don't sell well would go on clearance during the first and third Friday of every month, when many Americans get paid. Those items will be tagged "Best Prices," signaling to customers that's the cheapest price.
- New tags. The retailer used to pile stickers on price tags to indicate each time an item was marked down. But now each time an item gets a new price, it gets a new tag, too. A red tag indicates an "Every Day" price, a white tag a "Month-Long Value" and a blue tag a "Best Price."
- Simpler pricing. Penney's will use whole figures when pricing items. In other words, you won't see jeans with a price tag of $19.99, but rather $19 or $20.
- New advertising. Ads began airing Wednesday with a shopper screaming "No" to discounts as they look in their mailboxes, a pile of coupons and big sales signs. The company also has a new spokeswoman (talk show host Ellen DeGeneres) and logo. And a 96-page catalog will be mailed each month to 14 million customers, along with other promotional efforts.
The Associated Press
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