Conventional wisdom says that to succeed in the mass retail department store arena, you must agressively promote discounts using a high-low pricing strategy. This led Penney’s to 590 promotions in 2011 so that 73 percent of revenues were at a 50% plus sale discount prices, but customers were only in Penney’s an average of 4 times during the year.
Ron Johnson, Penney’s new CEO who led Apple’s entry into retail stores, is out to change all this with vastly simplified pricing. In 2012 J.C. Penney’s has slashed all of its regular line pricing, added month long specials on select goods, and features closeout discounts only on the first and third Friday of each month. Calling this pricing scheme “fair and square” Penney is counting on this simplified structure to differentiate it from the barrage of discounts from the likes of Macy’s and Kohl’s which Penneys feels creates confusion among consumers and discourages purchases as needed in favor of gambling on the next sale.
What say you? Are department store buyers ready to for the softer sale of Penney’s fair and square approach? Or do they prefer the aggressive “take an additional 20% off this week end only” used by Penney’s competitors?
Just click on the comment section below to vote Yes or No for Penney’s new pricing method. Add any comments that you wish.