JC Penney getting promotional again
The struggling retailer gets back to basics and revamps sale efforts.
When former Apple (AAPL) executive Ron Johnson was hired as CEO of struggling retailer J.C. Penney (JCP), he outlined a strategy that spurned the company's previous highly promotional approach in favor of more straightforward pricing.
To that end, the company implemented a three-level selling plan and scrapped its numerous sales and promotional events. The new approach was announced in January.
In the first leg of the strategy, J. C. Penney cut prices on all of its merchandise compared to last year's regular pricing and called this "Every Day" low prices. Additionally, the company implemented sales that last a month, called "Monthly Value" discounts. J.C. Penney also holds sales on certain merchandise marked for clearance on the first and third Friday of each month. These sales, known as "Best Price" deals, coincide with many consumers' paydays.
At the time of the announcement, Johnson was firm in his conviction about the change in strategy at the retailer. "We have made the decision to change our pricing strategy, and we're going to stick to it," Johnson said in January. After a disastrous first-quarter, however, it now appears that J.C. Penney is looking to revert back to a more promotional stance. The company held a Memorial Day weekend sale and is reported to be planning a Black Friday event. In all, the retailer has planned an additional five Friday sales this year, expanding its "Best Price Friday" program.
The catalyst for the move appears to be the company's dismal first-quarter where total sales plunged 20% and same-store sales fell 19%, helping drive a steep operating loss in the period. The results sent JCP shares down nearly 20% on May 16 and have raised questions about whether the brand is fundamentally broken. In light of the new information from the company about additional sales, it is clear that Johnson and his management team are feeling the pressure.
The company told Charles Grom, retail analyst at Deutsche Bank (DB), that it would be holding five extra strategically timed "Best Price Friday" events this year, including one on Black Friday, according to the Wall Street Journal. The other special Friday sales may be held during the Christmas and back-to-school seasons, the Journal speculated. According to Grom, the change -- occurring so soon after the implementation of the straightforward pricing approach -- could backfire.
He described the move as "a change in strategy that is an admission the company's existing three-tiered pricing strategy has flaws -- less than 120 days since Ron Johnson's new model took course," Grom said. "We believe the move could confuse its shopper base even more, with some Fridays now 'Best Price' and some others not."
In any event, investors continue to sell JCP shares amid the confusion and terrible operating environment at the company.
JCP opened Thursday at $26.86 and is currently trading at $26.07, down 26% year-to-date.
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As opposed to best price Friday, why not try the best price weekend...Too often, people don't have time to shop on Friday, even if they think they are getting an amazing deal...but if it was carried through the weekend (Friday through Sunday), you may see more sales and people coming out....Also, the every day low prices are not low enough for what JCPenney customers are used to, especially without the amazing sales...The prices match that of other department stores now and therefore, people will shop at the other department stores if they will get a better deal. Know your customer base and expand on it, but don't alienate them to obtain new customers.
My opinion: It is not about the sales, it is about the quality of clothes. I used to be able to walk into JCP and find just what I was looking for in my petite size for my age group (70+) at a reasonable price, quality material, well-made, MADE IN THE USA! Now, that is not the case.
Size doesn't mean anything anymore. I have to try on sizes from small to x-large to find a size that fits me! Could it be because foreign countries don't know how to size for American women? I didn't used to have this problem! Just sayin'
PLEASE BRING BACK USA MAKE PRODUCTS, AND I WILL BUY FROM YOU AGAIN!
Haven't shopped there since the change, very dissappointed...This was my favorite store, looked forward to catching a sale regardless of the day of the week...
Need better clothing choices for the middle age women. Cuter/fun styles and for ALL sizes.
JCP has been my go-to place to buy clothes for years. I really don't mind the new pricing strategy, and I don't miss the coupons because now I don't have to remember to bring them with me (I drive two hours to go shopping as our JCP is very small and has NO selection). Also, I like that there isn't a time limit on 'door busters'--again, because I would have to leave early in the morning to make it on time.
However, I think the new catalog is a huge waste. I thumbed through the first one I got; now, they go straight to the trash without even looking at them. They are pointless.
Also, I don't like the layout of the store with all of the different designer brands. I still go there, but I buy less because it takes me so much time to wander around and try to find what I want. There's about a dozen different sectiong of women's dress slacks, seriously? Maybe I'm in the minority, but I don't shopy by brand name. I just want to go look at several different pairs of pants and buy the one that fits the best. I don't care what the tag says.
I am all for the new pricing strategy but I wish they would reconsider the store layouts.
I used to shop at JCP all of the time, since the BIG change I can no longer find the quality merchandise JCP was famous for and the new co-ed fitting rooms are just not for me. Being in my mid-fifties I prefer not to try on clothes with a teenage boy prancing through the fitting room and carrying on with teenage girls. JCP you have taken the new shopping experience just a tad too far.
JCP has lost its appeal.....My wife and I have been JCP card holders for over 40years...Have not made a significant purchase in 2 or 3 months...Quality and style is not to be found in the ladies dept. at all...
Local store has just closed the catalog counter, now everything has to be ordered by computer...Just because Mr. Johnson came from Apple don't mean that everyone has a computer and not everyone shops with a computer, some people like to order from the book and the BIG catalog should be back on the shelfs, all these little catalogs that are mailed out is only costly to the company. My wife puts them in the trash.
Maybe Mr. Johnson will get the BIG CEO lay-off bonus when the stock holders get tired of losing money....
I used to find some good deals at Penny's all through out the store, not anymore not for a long time even before the new strategy. I have worked in retail for a long time. Customers want to see a discount, not a set price. They want to know that, that $50.00 dollar item is going to come up an extra 50% when they take it to the register plus whatever discount they may get for being a charge holder. Some stores used to be fun to shop at not anymore, they've taken the fun out of it.
Boy do I miss Mervyn's!
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The solid report comes a month after the retailer closed all of its Canadian operations.
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