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.

By Aimee Picchi Jan 24, 2013 4:02PM

Customer Service counter at the J.C. Penney store in Westminster, Colorado on February 20, 2009 ( RICK WILKING/Newscom/RTR)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.


More in moneyNOW

Tags: Retail
293Comments
Jan 24, 2013 4:29PM
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Used to like Penny's cloths and underwear, not any more just as cheaply made as WalMart crap. Penny,s prices are no longer attractive since quality went down but not prices. I don't see Penny,s or Sears being around 2 years from now. I think it is too late for either one to turn around . They cut out customer service and quality in the name of higher profits and it backfired on them . Take them off the grill they are done.
Jan 24, 2013 5:07PM
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They've changed their product lines and alienated a lot of their older female customers. That's part of the problem; you can't dismiss a huge percentage of your customer base and expect sales to go up. I can't tell you how many older ladies I've talked to that feel like they've been dumped by JCP.
Jan 24, 2013 5:06PM
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Used to LOVE JCP.  Lack of selection and quality are driving me away.
Jan 24, 2013 5:44PM
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I was on to J.C.Penney's some time ago.   Jack up the prices then mark em down.  Yeah, whatever.   I've noticed poor quality @ Macy's as well.  Poor quality in every thing from washing machines and refrigerators  to cars, clothing and etc.....  Do you think  "Made in China"  has anything to do with it??
Jan 24, 2013 4:46PM
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Wow... And this is news? Everyone knows that every single retail store does this! I sold tools for five years. I had one tool, for instance, that was $149.99 yet was always on "sale" for $99.99. About once a month, it would go off sale for a day or two and then go right back on so that we could say "just reduced."

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.

Jan 24, 2013 5:19PM
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I went into Penneys the other day and one thing is very noticeable is the lack of merchandise.  Less clothing racks and more spaces betweens all merchandise.  I have noticed even on-line that Penneys is carrying less merchandise.
Jan 24, 2013 5:39PM
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I am very dissappointed with Penney's.  Their marketing technique was a big mistake!  I hardly shop there at all!  I did NO holiday shopping at Penney's at all!  They should go back to their previous marketing in order to gain back consumer's, such as myself!
Jan 24, 2013 5:54PM
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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..

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We used to go to JC Penny 2 years ago when they had good sales but ever since this clown took over the company it's been a constant disaster. I used to go there for glasses too but the quality there is lacking.
Jan 24, 2013 4:41PM
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The quality of their items has been reduced along with the price. Also, the selection is not as good as it used to be. You get what you pay for. Kohls for me.
Jan 24, 2013 5:44PM
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I would never shop at this store again...after being a card holder for over 20 years they craped on the loyal customers!

They made thier bed....now sleep in it!

 

Kohl's has had my business for the past 3 years...

Jan 24, 2013 5:46PM
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Used to like Penny's. Most of their clothing is made in Bangladesh by a bunch of 12 year olds. Wal-Mart is now the largest clothing seller, but their clothing is also made the same way, plus as a bonus you have a greater chance of getting mugged in the parking lot. So they make a man's polo shirt in Bangladesh for about $3.00 and it gets sold here for $35. They are as bad as the oil companies and pharmaceuticals companies. If they sold that polo shirt for $20 dollars, then that would be a fair price. Big big markup in cloths and jewelry. If it was made in the USA then $35 would be good and maybe we could keep some jobs here in the USA.
Jan 24, 2013 5:38PM
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 Two years ago I could not stay out of JCP,  they were stocked with a good variety of items, especially hand bags, at some reasonable prices.  I guess like everything else, all good things comes to an end.  I am also having the same issues with TJ Maxx.  We love JCP, and hope that they can find their way back to some fine merchandise, with some good bargins...
Jan 24, 2013 5:11PM
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The quality of their products is so bad now no price reduction will save them
Jan 24, 2013 6:10PM
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I was a very loyal JC Penney 's shopper for xmas alone I spent well over 600.00 dollars just on grandkids clothing and I would be in the store shopping every week the rest of the year.  The quality was good then I am a seamstress and when they started their new system I would not buy a piece of clothing from them especially their children 's clothing the quality was the worst quality of clothing, it was the type of clothing you would get at the dollar store, until they start bring quality clothing I will not shop there again, the same goes for Macys as they did the same thing.  They are both going to go under unless they bring their prices down and start buying from manufacturers in america.
Jan 24, 2013 4:49PM
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I feel the same way,I don't see anything cheaper even with the sales!
Jan 24, 2013 5:13PM
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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.

Jan 24, 2013 5:43PM
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Their pricing tactics are nothing new to the retail market.  What they are doing all other retail stores do the same thing.  The problem is that the QUALITY of their merchandise has gone down.  They no longer sell good quality clothes.
Jan 24, 2013 5:48PM
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It's actually WORSE than what this article describes. JCP has items on their shelves with tags but they are previously owned items. There are certain aspects- brand tags, etc that indicate the "era" of the item. Anything can be washed, pressed or steamed to look new but other aspects give it away. I "was" a Penney's customer but no longer. While I recognize new from used, I also recognize pricing abuse. When you are too smart for your customers, customers go elsewhere. Flush your management and hire people with actual retailing experience, integrity and enterprise- not administrative- expertise.
Jan 24, 2013 5:27PM
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I'll have to think twice about buying anything more from Penny's. Most of their clothes come from countries that make better garmets (compare theirs to Walmart), but to jack prices up wholesale so the retail can be cut isn't right.  Sounds like what Apple does, oh wait, penny's is run by an ex-apple guy. mmmmm!!    
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