Is JC Penney faking its prices?
After taking a stand against phony pricing last year, the embattled retailer is reportedly asking suppliers to concoct 'fake' prices to make discounts look better.
Just a year ago, J.C. Penney (JCP) had a bold marketing plan: vanquish "fake" prices and offer simplified pricing that would do without markdowns and sales.
But a new report says the retailer is still faking -- and this time around, it's allegedly playing the same old mind games that it disavowed.
Penney is reportedly asking some manufacturers to make up "phony suggested retail markups" for their clothing, reports the New York Post.
Then, to give shoppers the perception of hitting upon a bargain, Penney's stores reportedly tag the clothes and accessories with the chain's own lower prices, the Post reports. In one hypothetical example of how the strategy works, a table with sweaters might have a sign reading $30, but the price tags on the clothing could read $22.
One thing's for sure: J.C. Penney is under a lot of pressure.
Doubts are swirling about the company's turnaround plan, with UBS analyst Michael Binett earlier this month saying he expected same-store fourth-quarter sales to drop 28%. The company is expected to report fourth-quarter results on Feb. 27.
Penney is asking manufacturers put in writing the suggested retail prices, to ensure it can back up pricing claims, according to the Post. Penney officials didn't respond to the newspaper's requests for comment.
CEO Ron Johnson, a former Apple (AAPL) executive, has bet the retailer's turnaround on a "fair and square" pricing strategy. The company debuted splashy ads featuring Ellen DeGeneres making fun of marketing gimmicks.
So far, it appears shoppers aren't buying it.
Revenue has declined by more than 20% for three straight quarters, while the stock has slumped 47% during the past year.
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| Tags: | Retail |
If you go to Walmart or any other store, you'll see things that are simply on sale all of the time and never go off. If you pay attention closely, you'll see that they raise some prices but then put them on sale to the original price so that it looks like a bigger sale. Why does MSN always want to pick on one specific store? Every retail store does this and it is nothing new. If you're blaming Penney's for this deceptive tactic then you must also blame every store that you have ever been to or else you're just making a double standard.
The "New" Penneys wrote off adult clothing shoppers, instead opting to target the demographic that's the lowest paid with the highest rate of unemployment. Du-uh.
This is what you get when you bring on a CEO from Apple - a very skewed and unreal view of consumers that translates into plummeting sales. Apple's sales may have been great, but its customer base has always been deeper than it is wide. A department store chain, on the other hand, needs a wider customer base.
The bozos on Penney's Board are largely responsible for this fiasco, hiring someone who's background is selling i-Phones to the already converted with no immediate experience moving crock pots and ladies lingerie.
I haven't spent a dime in Penney's since it re-launched itself. It no longer carries anything I want to buy at any price..
As an outside contractor who did some work in a JCP store, I was able to see the new pricing scheme up-close, immediately after JCP introduced it. They made it sound like the whole store was deep-discounted when that just wasn't the case. The only deep discounts I happened to come across were past season and clearance items that they desperately wanted to get rid of, and should have either been donated or thrown in the dumpster. JCP never recovered. People went into a JCP store expecting one thing, got another, and never came back.
JCP somehow managed to screw up the "for the whole family" genre of sales. Using blue jeans as an example, people do not consider womens' jeans on weekly special, mens' jeans on monthly special, and kids' jeans at every day price to be a sale.
The new "boutique" format has a chance to work, but it's something that will take 3 to 5 years. This company is lucky to have 3 to 5 quarters left before it's BK time.
If 4th quarter 2012 sales are as bad as they are being forecast, JCP is finished 1st quarter of next year. They'll try to hold out for one last-ditch 4th quarter this year. The whole purpose of the 4th quarter and holiday sales is to pull one out of your backside to salvage a lousy year, not to take your year head-first off a cliff.
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