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JCPenney comparison ad

It was one year ago this week that JCPenney launched a radical new experiment. Sales and coupons were thrown out, in favor of “Fair and Square” everyday low prices. To paraphrase Dr. Phil – so how’s that working out for them? Well enough, that the chain is now admitting what shoppers have already noticed – sales, and some coupons, are back.

In what can generously be described as a small understatement, CEO Ron Johnson told the Associated Press that “our sales have gone backward a little more than we expected.” Presumably, $2.75 billion fewer sales than 2011 is a little more than “a little more than we expected.”

The department store chain plans to launch an advertising campaign tomorrow, which compares its prices with manufacturer’s suggested retail prices. And it also plans to introduce more sales into the mix.

Last year, JCP tried offering monthlong discounts on some items (don’t call them “sales”). Now, it’s saying the “s” word out loud, and will offer more sales timed to specific events, like Valentine’s Day, summer, back-to-school and – as it did last November – Black Friday. It’s still not saying the “c” word out loud (“coupons”), but it’s already offered several of them in recent months, under the guise of “offers” or “gifts” (read much more about JCP’s recent woes here).

Critics are chortling. “The reversal shows he misunderstood J.C. Penney’s customers at the start and that his ambitious plan isn’t taking hold,” Forbes reports. Johnson is “scrambling to recover from his disastrous move last year to ditch traditional department-store discounting,” writes the New York Post. Putting it more delicately, retail consultant Walter Loeb tells the AP that Johnson “is now realizing that he has to be more promotional to attract shoppers.”

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In addition to sales, and don’t-call-them-coupons coupons, JCPenney is adding “suggested retail prices” to tags and signs for the majority of its products. “I still believe that the customer knows the right price, but they want help,” Johnson told the AP. But some retail consultants are dismissing the price comparison as as a gimmick, saying it represents a false savings, since few department stores actually charge anything close to MSRP. The New York Post is even accusing JCPenney of showing “fake prices”, by “pushing some manufacturers to concoct phony suggested retail markups,” a charge that JCPenney denies.

“We had 590 unique promotions in one year,” Johnson said when he announced the abandonment of sales and coupons last year. “If you have to market that much, you don’t believe in your product.”

Many who initially covered his announcement bought into his ideas. “J.C. Penney just blew up its brand — in a good way,” reported Forbes. Others were skeptical from the start. “I think Ron Johnson is the wrong guy,” the always colorful retail analyst Howard Davidowitz said, after Johnson became CEO in 2011. “This is an incremental business. The story of Penney’s is not a reinvention. If you try to reinvent this, you’re going to go right into the s#!%house.”

A few months into the new pricing plan, Davidowitz was no less colorful, calling Johnson’s reinvention plan a “crackpot” idea that would cause “incalculable damage’ to the company.

One other prediction last year that proved prescient? Forbes’ comment in 2012 that “J.C. Penney is about to be the most interesting retail story of the year.”

You can say that again.

Image source: JCPenney

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2 Comments

  1. Ha! Is that all they’re worried about?
    I recall their CEO calling his customers ignorant. …But that would be his FORMER costomers.
    Former customers. Like me.

    He’s so smart that he doesn’t need customers like me. Yea’ he’s so smart. Don’ ‘cha know.

  2. Very interesting. Coupon forums were blowing up last year over this. We’re also waiting to see how Walgreen’s fares with their Balance Rewards and now HEB and no stacking. Looking forward to seeing how it all plays out.

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