J.C. Penny (JCP) will slash merchandise prices by 40% permanently as part of a price overhaul. However, in exchange, JCP will have fewer sales and promotions during the year. The price overhaul comes as an attempt to get more everyday foot traffic rather than only when there is a sale. This sounds like a good idea since sometimes one-day sales and promotions lead to short spikes in revenue and don’t guarantee foot traffic in the long run. Although, promotions have proven to be beneficial for retailers in a weak economy people seldom purchase merchandise that isn’t on sale. This will be the first big project for Penney’s new CEO, Ron Johnson, who joined the company from Apple in November.
Here are some other details of his strategy, courtesy of HuffPo:
Sale prices become everyday prices. The company will use sales data from last year to slash prices on all merchandise at least 40 percent or lower than the previous year’s prices. So, a woman’s St. John’s Bay blouse regularly priced at $14.99 could have the “Every Day” price of $7.
- Fewer sales. The retailer will pick items to go on sale each month for a “Month-Long Value.” For instance, jewelry and Valentine’s Day gifts would go on sale in February, while Christmas decorations would be discounted in November. Items that don’t sell well would go on clearance during the first and third Friday of every month when many Americans get paid. Those items will be tagged “Best Prices,” signaling to customers that’s the cheapest price.
- New tags. The retailer used to pile stickers on price tags to indicate each time an item was marked down. But now each time an item gets a new price, it gets a new tag too. A red tag indicates an “Every Day” price, a white tag a “Month-Long Value” and a blue tag a “Best Price.”
- Simpler pricing. Penney will use whole figures when pricing items. In other words, you won’t see jeans with a price tag of $19.99, but rather $19 or $20.