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J.C. Penney changes its pricing strategy ... again

July 26, 2012|By Dalina Castellanos
  • Michele Crosta, a freelance fashion and wardrobe stylist, shops at J.C. Penney in New York. Six months after J.C. Penney got rid of the hundreds of sales it offers each year in favor of a three-tier pricing approach, the mid-priced department store chain is revamping its pricing strategy again. Among other changes, the blue "best price" signs will be eliminated, and "clearance" signs will be reintroduced.
Michele Crosta, a freelance fashion and wardrobe stylist, shops at J.C.… (Bebeto Matthews / AP Photo )

Haven’t gotten used to J.C. Penney’s “Best Price” system yet? Don’t worry. It’ll change again soon.

Starting Aug. 1 the struggling retail company will bring back clearance sales and eliminate one of the three pricing tiers it introduced in February.

The company introduced the three-tier pricing with the backing of new Chief Executive Ron Johnson, confusing many customers who were accustomed to seeing ads for Penney’s 590 annual sales.

Johnson’s approach called for lower everyday prices, monthlong sales and periodic sales events.

Penney is maintaining its “Every Day” low prices that are consistently 40% lower than regular prices. Items marked “Best Price” will now be under “Clearance,” and “Month Long” deals will cease to be.

The company now also plans to revamp its advertising to explain the pricing to customers.

Johnson, who joined the company in November after successful stints at Apple and Target, proposed a new strategy, dubbed “fair and square,” to revive sales by simplifying pricing, replacing the never-ending sales.

The approach hasn’t seemed to work.

The department store giant lost $163 million, or 75 cents a share, in its first quarter this year, which ended April 28. Revenue was down 20.1% to $3.15 billion. At the same time, the company said it had experienced an 18.9% drop in same-store sales compared with the first quarter of 2011.

In June, an executive in charge of merchandising, marketing and product development, left the company amid declining sales.

ALSO:

J.C. Penney Co. reports $87-million fourth-quarter loss

J.C. Penney executive brought in for changes leaves company 

J.C. Penney announces plan to cut 350 jobs from its headquarters


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