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Consumer Bewilderment Bedevils J.C. Penney Pricing Strategy

J.C. Penney’s new pricing strategy, based on everyday low prices and the elimination of couponing and other deep-discount promotions, continues to erode. On March 25, the retailer circulated a $10 off a $25 or more purchase coupon for use online or, printed, in store, and throughout this week, more reports circulated about fresh exceptions to the new JCP pricing concept.

The coupon drop, part of an email-based promotion, linked to a range of J.C. Penney departments, including home. The email blast did support another of the retailer’s recent initiatives by promoting exclusive brands and products. Consumers who clicked on the Home link in the email faced a web page headed by an invitation to Meet Sir Terrance Conran Only At JCP. The text appeared over photography of Conran-designed furniture. It was part of a revolving page topper that also offered invitations, these to Meet Happy Chic By Jonathan Adler Only At JCP and to Meet Michael Graves Only At JCP.

This week, the Reuters news service reported that the retailer had returned to a pricing tactic of raising then lowering the price of private label merchandise to create the perception of a discount. Reuters quoted a J.C. Penney spokesperson as stating that consumers are prompted to purchase by promotions including sales and coupons, methods that the retailer tried to avoid as it sought to institute what CEO Ron Johnson characterized last year as a more rational “fair and square” pricing system.

J.C. Penney ran into trouble when it instituted the pricing policy, having a hard time getting many customers to understand it. In a March study by BIGinsights, just over 58% of consumers polled as part of the market research firm’s What’s Hot and What’s Not query characterized Fair and Square pricing as not. In June, the not figure approached 65%.