On February 1, 2012, J.C. Penney is revamping its pricing strategy to one where it offers everyday low prices, and only runs sales a couple of times a month.
This is a huge departure for a company that, along with Kohl’s, historically advertised huge discounts from inflated “regular” or “original” prices that they rarely if ever charged. In a New York Times article, JCP’s new CEO even admitted that those regular prices were phony:
Though retailers use promotional pricing to attract shoppers, even if they often vow to move away from it when it gets too pronounced, Mr. Johnson said the method used what he called â€œfake pricesâ€ â€” artificially inflated prices that are on near-constant markdowns.
In newly released commercials, J.C. Penney, makes fun of its old pricing strategy including endless sales and coupons (and impliedly makes fun of Kohl’s for continuing those practices):
Penney’s new pricing strategy is to reduce regular prices by 40% or more, and makes those the prices customers pay most of the time.
This page from their website reveals how inflated the old “regular” or “original” prices were compared to the everyday selling price now.
It will be interesting to see if consumers, who have been conditioned to only buy things on sale, will respond positively to no longer seeing sales every week with deep discounts along with coupons for additional savings (even though those savings were illusory).