JC Penney plans big price cuts

In yet another apparent strategy shift, the retailer is reportedly looking at significant markdowns to win shoppers back.

By Kim Peterson Jul 26, 2012 2:07PM
JC Penney (JCP) is changing its prices again, hoping this time that deep markdowns will finally resonate with shoppers frustrated with the company's policies.

The company is dropping the month-long special discounts that cut prices of certain items by as much as 29%, The Wall Street Journal reported. Instead, starting in August, Penney plans to cut prices permanently on a broad swath of items.

There will be just two kinds of prices: everyday low prices and clearance prices.

Post continues below.
Will this finally turn Penney around? The company has seen sales and profit drop amid consumer confusion about its prices. Shares are down 37% this year to just $22.14, and investors -- and shoppers -- are running out of patience.

It's been a rough road for new CEO Ron Johnson, who joined Penney to much applause after his work at Apple (AAPL) and Target (TGT). JC Penney took on some Target-like qualities after Johnson joined, offering simple, well-designed catalogs and a cleaner look. The transition is just beginning, the company says.

Johnson joined a company in trouble. It over-discounted and over-promoted to the point where shoppers were mainly waiting for the next big sale to come along before buying. In fact, nearly 75% of its products were sold at at least a 50% discount, the Journal reported. Penney could not continue that model and thrive.

Johnson responded with aggressive changes, including a three-tiered pricing structure based on everyday low prices, month-long markdowns and, on two Fridays a month, a "best price" clearance sale to get rid of inventory.

The new structure was confusing to shoppers, but Penney insisted things would turn around eventually. Meanwhile, sales began to fall sharply.

It will take years for Johnson's dream to be realized fully. He's planning major changes to inventory and the store's offerings. He is asking investors and suppliers for patience, but how long will everyone wait?

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297Comments
Jul 26, 2012 3:33PM
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Instead of these alienating new pricing "schemes," perhaps the CEO should focus on fundamental retail basics: Offering a quality product at a fair price with decent customer service in a clean and organized store.  I don't know why these MBA geniuses feel the need to justify their exorbitant salaries by "re-training" the customer with these unduly complicated sales structures that defy human buying patterns.  The money-spending customer is not the issue here...the overall JCP shopping experience is.  Give us a product we want at an affordable price. Why not cater to the customer instead of condescendingly implying that the company is failing because us lowly buyers are not enlightened enough to understand these tactics?  Oh, we know what we want and we're voicing it with our wallets.  We don't want to be tricked, suckered or marketed to, we will shop where the customer is valued, in pricing and service.  Right now, this overpaid CEO is putting a whole lot of "best price" lipstick on a pig.  Cater to the customers and the shareholder value will follow. 
Jul 26, 2012 3:21PM
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JCPenney no longer carries the brand of clothing I have been purchasing there for YEARS.  I have had to go elsewhere.  Lesson to JCP, it is not just the prices, but also the products you carry.  Get back to the JCP of old.
Jul 26, 2012 3:37PM
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I too have been to Penney's only a handful of times this year and each time, I leave disappointed and without purchasing anything.  I live 1 mile from the store and have been a frequent shopper for years.  Not any longer!  The Sephora Dept. takes up almost the middle of the store.  No one ever purchasing anything in there.  The quality of merchandise seems to have gone down.  Lady's  clothing department is awful.  Cheap clothes!


Jul 26, 2012 5:15PM
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For the love of God if they want to stay in business and make some money .....

 

GET SOME CLOTHES THAT LOOK GOOD AND WILL LAST!!!!!

 

GET RID OF THE CHEAP, UGLY STYLE, UGLY PRINTS, UGLY COLORS!!!

 

If they want to get people in and buy, go back to the basics with clothing that can be worn in many situations,  not those low cut, pregnant looking, trashy poly blend, pieces that I would not be caught dead in.

Jul 26, 2012 3:11PM
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not waiting any longer....have been to pennys only 3X this year and either didn't have the color or the size I wanted. Of course the price was higher than I've paid for the same items in the past....personally always liked the stafford brand of clothes but if they're not stocking inventory then its a waste of my time going there
Jul 26, 2012 5:37PM
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What :Pennys fails to understand is most of their products are made in China. The items are no better than what Walmart carries. They need to QUIT SELLING ITEMS THAT ONLY LAST ONE WASH.

 

Jul 26, 2012 8:32PM
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Instead of lowering their prices, they should incread their quality.  I've shopped at JCP for 20 years, but for the past year or so I've shopped elsewhere.  I'm tired of all their low quality imported crap.  I want more clothes that are made in America, and when I wrote to them and told them this, their reply was that they're giving their customers what the customers want.  I can't believe anyone would write to them asking for low-quality, over-priced anything.  So, I responded that I will simply shop elsewhere, and that's what I'm doing - shopping elswhere and the heck with JCP.
Jul 26, 2012 5:20PM
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Bring back the $10 coupons and I am back there in a flash!  Love those!
Jul 26, 2012 5:21PM
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The clothes are ugly, cheaply made and the prices are still ridiculous.  I once was a big JCP shopper, no more. They now carry trashy clothes.
Jul 26, 2012 7:55PM
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America is on a path that may be to late to stop. It started during the Nixon administration and the Chinese trade relationship that began from this era.  

 

We have shipped way too many jobs overseas to increase the profitability of companies and wall street to the point where there is not enough domestic income to sustain a consumer driven economy. Adding to the fire is $3.50 per gallon gasoline (sell our domestic oil off shore to increase profits) and you have the beginning of the perfect storm.

 

It does not matter what company you are reviewing they are all in trouble (JCP, Sears, Best Buy, Macy's, to name a few) and they are all suffering from the same thing. Lack of customers with enough income to sustain the consumerism that built the American economic machine.

 

Yes all of the corporate heads are making millions (Mr. Johnson at JCP 57 million a year) but the consumer that has to live on a shrinking budget and higher cost of living simply does not have the resources to sustain economic growth.

 

Sale pricing, gay spokespeople, and all of the other excuses being thrown around as the reason for the problems are simply the smokescreen the media wants you the public to keep buying. Meanwhile Wall street, Corporate executives, Washington Fat Cats, Bankers, Oil Companies continue to suck the life blood out of the economy for their own benefit.

 

We have all been sold a bill of goods and the spiral continues. All of these retailers will go out of business because there is simply not enough income in the US to sustain the economy, and the jobs are not coming back (even though Politicians tell you that is their main objective to be elected).

 

Funny as they are the ones that perpitrated the problem to begin with over 40 years ago.  

Jul 26, 2012 3:55PM
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I'll tell you guys at JCP what your problem really is.  Kohl's has the same prices as you do.  But I just got a 30% coupon good for 10 days of shopping in mail.  Guess where I'll be spending my money.
Jul 26, 2012 8:20PM
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I ABSOLUTELY hate their clothing lines these days.. I am 36 yrs old, middle class, mother of 5, I DO NOT want polo shirts, collars and or stripes for Summer wear. And our local JCP now has Less to choose from, If I want more choices I have to travel over an hour an a half to another JCP store in the Next city over. I will Not pay $10 for a Thong when I can get one From Wal-mart at half that price. I will Not pay $16 for 1 Baby Pj's when I can get a 3-pack from Wal-mart for $15. I will look for coupons and sale Racks every single time. I used to LOVE JCP but these days I always look elsewhere first.. Sad, Sad !!!
Jul 26, 2012 10:41PM
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They need to have items Made in America. Then I will shop there.
Jul 26, 2012 4:32PM
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I don't go near Penny's since they changed everything. I used to always shop there, but the clothes and brands have changed, and it's nothing that fits right, or that I like. The sales and coupons were great before. Who was the "loser" that changed everything that worked??  Who are your buyers who think people should be wearing tight fitting disco clothes to work in a bank?

--> Stop trying to force the 20-something brands and unwearable styles on us!

      BRING BACK THE OLD PENNY'S!

Jul 26, 2012 4:57PM
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Like it or not, agree or disagree, a big part of their problem is that they were focused more on pushing a social agenda than on selling their products to their main customer base - families.  I never saw the infamous Father's Day ad, but I know the Mother's Day catalog I received in the mail featured a lesbian couple.   Ads like that may get them some applause in certain circles, but its NOT going to bring in alot of NEW customers.  They had to know this.  They also had to know that a large number of their already establish customers were going to greatly offended and jump ship. 

 

It doesn't matter if you agree or disagree with their social views, the fact is that they will not recover from this mistake unless they dump the dingalings, make amends with their customer base and never agian let their political correctness trump good business sense!

Jul 26, 2012 3:29PM
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My wife used to shop at our local JC Penney store all the time.  Now she never goes.

 

Penney would send her something in the mail almost every day.  Sometimes two or even three mailings in a single day.  Like the article said, she always wait for the best deal before shopping.

 

It took Penney a long time to get to where they were and although that situation may have been untenable in the long run, Johnson should have reversed course and implemented his changes much more slowly.

 

Make the mailings less frequest gradually over time.  Add in mailings that introduce changes and make those changes little by little.  Why the big rush?

 

Johnson was just way too impatient.  He was used to dealing with Apple fan boys who'd line up to buy a heifer if it had an Applo logo on it.

 

The "boutiques" within JCP stores was another mistake.  Our local JCP has a Sephora store in it, right next to the men's department.  I'm not going to shop for shirts when I'm nearly choking on perfume fumes.

 

RIP, JCP.

 

Jul 26, 2012 7:56PM
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I've shopped at JCP for over 40 years and my parents before that. I shopped there recently for the first time since the price overhaul and was shocked and sadden by the products offered and the prices. The store had the appearance of a rummage sale and whoever their buyer is; should be fired. That said, JCP was a nice middleclass store where you could purchase dependable and elegant clothing at a decent price. Since shopping on this last visit and it will be my last as long as this particular 'new' way of pricing and selling goes; it will be a wait and see.
Jul 26, 2012 4:06PM
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JC Penney is a really good store, as was Mervyn's; why the heck are they having so much problems when their quality is certainly a step up from Kmart and Target, and their prices are a step down from the fancy stores. Is this a proof of the death of the middle class - can you only make money selling ridiculously expensive things to the 1%,  or selling cheap Chinese crap to the 99%?
Jul 26, 2012 6:32PM
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You have an ex-CEO from Apple.  Do you really think he ever shopped at JCPenney?  What did he have in common with the average JCPenny customer before he made these massive changes all at the same time?  JCP picked somebody to run the show that probably was not a JCP customer and has little in common with the average JCP shopper.  That is what is missing from his "makeover" for JCP. 
Jul 27, 2012 8:38AM
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Send me the sale catalogs, put a coupon in it and I will start shopping there again. I've bought all my curtains and bedding there for over 30 years. Put it back the way it was. If it ain't broke don't fix it.

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