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
292Comments
Jan 25, 2013 7:18PM
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WHAT A RACKET. If most retailers do that as well, I sure wish i could sew my own clothes.
Jan 25, 2013 6:55PM
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I've said this for the last few years.  They advertise great sales 50% and then you look at the regular price, and it's very high.  My exact words while shopping to salesperson, "they mark everything up and then list as 50% off.  I do not shop there anymore because of this.

Also, Herbergers has started not listing prices on certain items frames.  They will have 50% off frames but the price of the frame is on it, so you only know when check out that it's much higher.  So far, Kohls is still the best at honesty.

Jan 25, 2013 6:47PM
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penneys is on their way out. haven't been in their stores since december 2011. they don't advertise so I guess I am not missing much. I am now shopping at Carson"s and it is a great store.
Jan 25, 2013 6:39PM
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have you ever noticed jewelry on sale during the holidays? "Regularly $2999.99, now$150"? who pays more than a hundo at kmart for an alleged diamond? or wal mart? for any jewelry?
Jan 25, 2013 5:52PM
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I fell for it for awhile.  Then I noticed they stopped carrying some of the brands I really loved like St. John's Bay and American Living.  Even worse, JCP stuck a Sephora in the middle of the store (which is almost always empty of customers), consequently removing a huge chunk of retail floor space that used to contain racks and racks of clothing - in the middle of the women's department - even though there is a stand-alone Sephora store in the same mall!  It's sad.  They are selling clothing now that are mostly neon colors which do not appeal to most grown women I know.  I will likely be cancelling my JCP card in the very near future. 
Jan 25, 2013 5:49PM
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I used to shop at Penney's all the time but in the last year or so I've noticed the quality of their clothing has diminished greatly.  Practically all of their women's and junior's clothing (tops) are made of super thin material and they don't wash well.  I have purchased tops from other stores that are of much better quality and wash well.  Therefore, I have decided I am done shopping at JCP.
Jan 25, 2013 5:49PM
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love JC PENNYS  have not had any problems and feel their  quality is far above Wal -marts and any other out let store
Jan 25, 2013 5:26PM
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I was mostly done with JCP years ago. Got a flyer in the mail with 50% off anything in the store. Went to buy a shaver that Target sold for 36 bucks. JCP had the exact same shaver with a price tag of $100, with discount = $50.00. Some lawyer may say this isn't criminal, but it is in my eyes. Recently I bought an induction cooktop advertised at one price,  the in store web site they accessed listed it as more expensive. I personally "searched" the website and the correct price came up. Some lawyer may say this isn't criminal but it is in my eyes. I would be a fool quite frankly to keep patronizing them. They treat their customers like they're stupid.
Jan 25, 2013 5:14PM
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Well, they lost me, after 50 years of shopping at JCP, when they chose  Ellen as a spokesperson. I am not into political correctness. That was a dumb move so fakery somehow does not surprise me. I don't do the WalMart gig either just to save a buck. I like buying made in the USA items. USA made items are out there, you just gotta do a little research to find them.
Jan 25, 2013 4:44PM
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I used to shop at Penny's all the time because they had good stuff and pretty good prices,too! But all that has changed to cheaply made products and higher prices ! Yeah, I've known for sometime about their pricing gimmicks, it shouldn't be a surprise. Another reason a person might as well shop at Walmart, becasue the quality of their stuff is the same, just with a different name tag. I'm doing more of it now myself ! 
Jan 25, 2013 4:42PM
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I never shopped in Penny's until I happened to walk thru one day and saw the great improvement. The clothing lines are different and up to date and the prices are wonderful. This is coming from a woman who would only shop at Macys and you have Sephora too. When I shop your the first store I go to.
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I worked at J C Penney for two years in the window department. With 20 years experience in making and installing custom drapes I was appalled at the prices and quality of their ready made curtains and valances. They are all made of cheap fabrics and terrible linings (that is if they are lined at all) I felt embarrassed to offer products I knew were of terrible quality. One sheer panel that might have cost $5.00 dollars to produce was retailed for $50-$60.00. The side hems were puckered due to being sewn with to much tension causing them to stretch and be uneven at the bottom.

 

Lower pricing is not going to save Penney's unless they offer quality to go with it.

Jan 25, 2013 4:35PM
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I love the new Penneys and have gotten a lot of great things in-store and online this last year at better prices than before. More selection too in my opinion. Don't understand all the complaining. I think people don't want to compare and see that the prices are really low. Give em a coupon to mess with and they feel better, go figure...
Jan 25, 2013 4:33PM
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JC Penney I rather shop at the dollar store then go to penneys where we can't even find a professional cashier to check us out!  Is almost as if they are barely turning around and not giving there employees the proper turn around!   Forget Penneys!  No cashiers, No proper Price-tags No proper customer service!  Now if you want to check out you have to have a credit card, what a scam!   I am living penneys feels like a Dark Shadow in there!   Bill Ackman Shut UP!   

Jan 25, 2013 4:29PM
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I work at Walmart, and what so many of you complainers don't know is that the price changes come from the manufacturers. Yes, the store can set the prices, but manufacturers can also have a say in what happens to their products, such as placement. I've gotten to the point that the only store I trust is Walmart because I do know how they operate. Penney's and Sears have both raised prices and gotten more expensive than I'm willing to pay for the stuff I remember buying a few years ago and paying a LOT less for. And now we're hearing that they're in so much trouble? And KMart might be on it's way out? I live in a very small town where we have a tiny mall with some small stores, Sears and Penney's, and our Walmart. There are people who come from 40 miles away to shop at this Walmart rather than ones closer to them. I think we just got lucky in that regard, because we have good people and most of the regular customers are nice. I think one of the pluses about Walmart is the consistency. It might be boring, but you know what you're getting. I get tired of all the griping and complaining, but as I stated before, maybe we just have a better store. Our management is even pretty good. I mainly blame the media, anyway, because as soon as there's anything negative in the news they jump on it, and Walmart has been a favorite target, which then seems to get the public jumping on the bandwagon, whether they have reason to or not. I feel like I'm one of very few people nowadays who shows any loyalty to their employer.
Jan 25, 2013 4:25PM
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Our local Penneys has nothing and when you ask they tell you to "Go online and buy it!" When one elderly person replied that she did not "go online" she was told it wasn't their problem.
Jan 25, 2013 4:23PM
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I think 30.00 is a great price for a "Table and Sweaters"!
Jan 25, 2013 4:18PM
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We used to be loyal customers until the change in their morals.
Jan 25, 2013 4:16PM
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This is off the subject but has anyone heard that merchants are starting to charge for making your purchase with a credit card. The transaction fee appears on your receipt. This is bad business!
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