JCPenney to Bring Back Sales, Is Sorry Everyone Hated Everyday Low Prices
Last year, JCPenney made the quizzical decision to nix sales in favor of "everyday low prices," leaving many shoppers (and some analysts) scratching their heads as to the logic behind the change. As it turns out, it's a strategy that may go down in history as the retail equivalent of New Coke.
The struggling retailer announced Tuesday that it would put an end to the policy and begin rolling out conventional sales once again, reportedly starting in a few days with discounts on fine jewelry through Valentine's Day. While consumers may be getting their credit cards revved up for deals, the move made shoppers of another sort very happy, too. According to Bloomberg Businessweek, investors rewarded JCPenney after the announcement by sending its stock up 8.3% as of Tuesday afternoon.
Yet, even if JCPenney wins back customers who were irked by last year's marketing decision, CEO Ron Johnson will have some explaining to do, lest he brace himself for some serious shopping of his own (in the job market, to be precise). Coming over from Apple, where he ran the iPhone retail operation, Johnson instituted the no-sales policy because he wanted to wean shoppers off discounts that had hurt profits.
But shoppers balked. JCPenney, after all, isn't Apple, which can count on a fanatical following that will pay anything for its products, even at retail prices. After JCPenney instituted the "everyday low prices" model, sales fell nearly 30% — probably not the kind of discount Johnson had in mind. Moreover, the Wall Street Journal reports that JCPenney sales fell $2.7 billion over the first nine months of the year. That said, it hasn't been all bad news for JCPenney or its shoppers under Johnson's leadership. Analysts have hailed Johnson's other moves, such as revamping stores, including better brands in its lineup, and placing stores within stores.
Despite its unpopularity, everyday low pricing isn't going away entirely, according to JCPenney representatives. However, it still remains to be seen whether the first batch of new sales will mean a return to old form, or a begrudging move that's more about PR spin than shopper satisfaction.
Beyond the issue of sales, JCPenney's woes are far from over. Investor Place reports that the retailer is also facing a lawsuit from rival Macy's over its licensing deal with Martha Stewart Omnimedia. JCPenney was hoping that the domestic diva's brand would bring customers back to stores, but has instead restrained its presence as the lawsuit goes to court next month.
Speaking of court, now the ball's in yours, dealnews readers. What do you think about this return to sales? Were you irked when JCPenney eliminated them a year ago? If so, are you willing to give Penney a second chance? Weigh in and tell us what you think — or if you prefer, a Penney for your thoughts.