As you may be aware, JC Penny has had some tough times of late. When new CEO Ron Johnson joined the company last November, he rolled out a new pricing strategy in February that did away with frequent sales in favor of a simplified “best price” model. According to the Wall Street Journal, more than 60% of JCP sales are apparel, and many shoppers use sales as the driving reason to buy. Take that away, and watch what happens. It’s not pretty. The company’s stock has tumbled, they fired their head of marketing, and recently announced they were going to revamp the revamp.
What can Main Street business owners learn from this? First, look at others who have gone before you. Macy’s, which has sales on top of sales it seems, tried to get out of the frequent sales game when it merged with the May Company in 2005. What did they learn? People stopped coming. It was a shock to the system. So, they brought the sales back. Not that history repeats itself every time, but there may be something instructive there.
Second, these things take time. The bigger the change, the longer it takes. JCP used to run over 500 sales a year. Now, they’re down to 3 pricing levels. That’s going to take some getting used to by the consumer. Unfortunately, JCP is on Wall Street’s clock which doesn’t like to wait around for success.
Finally, we’re in an era of clarity over creativity in advertising. No shuck and jive, no sleight of hand, what works now is honest, straight ahead advertising we can trust. (Thus, the frequency of consumer-created content). JCP did an admittedly poor job of explaining to the consumer what they were doing when it came to pricing. The pricing didn’t seem better; it seemed more expensive because it wasn’t on sale.
There’s an old adage in the car business: It’s not the deal you got; it’s the deal you think you got. JCP would do well to keep that in mind as they revamp the revamp.