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January 30, 2012

J.C. Penney Drops Phony “Regular” Price Comparisons

Filed under: Retail — Edgar (aka MrConsumer) @ 5:35 am

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 “fake prices” — 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.

*MOUSE PRINT:

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).

• • •

22 Comments

  1. Pretty easy to spot these scams in retail stores. Belk stores do the same thing, using phoeny price tags to try and fool people into thinking they are getting a bargin. Only fools fall for these tactics.

    Comment by Bob — January 30, 2012 @ 7:21 am
  2. They’ve been doing something similar but perhaps even more asinine at Michael’s craft stores for years. Their frames (ready-made–and poorly, at that–not custom,) are always listed as “40% off,” EVERY SINGLE DAY. This prevents anyone from using coupons for them.
    I’ve often wondered…If it’s a sale all the time, can you REALLY call it a “sale?” Evidently the answer is yes.

    Comment by Lana — January 30, 2012 @ 8:25 am
  3. I think the phony “original” prices doesn’t impact loyal customers, they know what’s a good price for the quality you will be getting. However, if you’re a new customer, you might see the “original” price and think that you are getting a deal. For me, this would work once (maybe twice if I’m not paying attention) but then I’ll start to put my own value on the clothing that doesn’t have anything to do with the price on tag.

    I find the practice of not writing the price on the tag and saying things like “everything 40% off” to be much more confusing. I’m perfectly willing to do one calculation to determine the price of a given garment, but I don’t want to guess at the “additional 10%” or to guess which promotion applies (or doesn’t). At least JCP wrote the real price on the item from the begining.

    Comment by Charli — January 30, 2012 @ 8:32 am
  4. Also, was it just chance that the example given showed a price increase of $7? If they are attempting to be less deceptive but are using that as an excuse to raise prices…

    Comment by Charli — January 30, 2012 @ 8:33 am
  5. The shirt example illustrates the problem for JCP: As a consumer, I would still rather pay 18.00 instead of 25.00 (over a third more). Heck, the net price is what’s important to me. Do I really care if the “regular” price is 40 or a hundred, as long as 18.00 is the cheapest price around?

    Comment by Marty — January 30, 2012 @ 8:43 am
  6. Years back, there was a ‘discount outlet’ store in my college town called the Wear House, or something cutesy like that. Students were excited to shop there for the huge discounts on J Crew merchandise. It was all true, really, honestly! How could anyone doubt it? The price tags showed a price called the J Crew catalog price, and below it was the store price that clearly affirmed their “50-75% Off” signage. How could you doubt that? Aside from knowing someone who actually GOT the J Crew catalog in those days to tell you that not only did the catalog never charge that much, but that the normal catalog price was closer to the ‘hugely discounted’ price. Sometimes it was even lower….

    As for JCP, aside from admitting to fake prices, are people really drawn in by ads of nothing more than people angrily screaming? For me, that go real old real fast. After about the second time the ad ran last night, I was seriously considering turning off the TV entirely.

    Comment by Ron — January 30, 2012 @ 9:52 am
  7. I agree with Ron about the screaming commercial. Thanks goodness for DVR’s, the mute button, and fast forwarding. Miserable commercials. And they run them multiple times during one show

    Comment by BobL — January 30, 2012 @ 11:29 am
  8. Yes, I agree with Ron who hates the screaming ads! Whichever advertising company produced these should be fired, JC Penney!
    As for the two shirt ads; well, yeah, I’d rather pay the $18, but one shirt is short sleeves and the other is long- A very odd comparison, considering the short sleeved shirt is more dough!

    Comment by Dennis — January 30, 2012 @ 11:40 am
  9. Have you ever shopped at Outlet Stores? Most people think they are getting a bargain there, when really they are just purchasing last year’s product at a slightly, if at all, discounted price.

    I like the one price model. State the price and have a few sales to make way for the next season’s merchandise. It is much clearer than saying 70% off of MSRP, which usually ends up being at or above the regular price anyway.

    Comment by PC — January 30, 2012 @ 12:36 pm
  10. Does anyone else remember a store called 50 OFF? Around here, they opened next to two Big Lots stores. I never knew if they were co-owned, but if they weren’t, big mistake selecting locations!

    Basically it was Family Dollar-caliber merchandise, but tagged at double the actual selling price. Each tag said, “Take 50% off this price…” There were a few loss-leaders and surprises, like Big Lots, but for the most part, anyone could see through the pricing scheme–just like you could see through the no-name tighty whities, 50% off $16 for a 5-pack. Ha!

    In the stores dying months, everything was retagged, and priced as marked.

    I’ve always enjoyed shopping at JCPenney, gimmicks or not, so I’m interested in seeing how/if this works.

    Comment by Standby — January 30, 2012 @ 1:20 pm
  11. I try not to do business with companies that I’ve caught trying to take adventage of me through dishonest means. I see no difference between what JCP has been doing and short-changing me at the register in the good old days of cash transaction. In my years that’s eliminated a fair number of places. I haven’t bought anything from JCP in over a decade and their making fun of their dishonesty sure won’t bring me back.

    Comment by Bob@thenest — January 30, 2012 @ 1:32 pm
  12. I don’t really care about the “original” price, and don’t pay much attention to it. What I care about is the price I’m going to actually pay, and if that is higher than what would have been the sale price, seems to me I lose.

    Comment by Noël — January 30, 2012 @ 4:08 pm
  13. I have already been in contact with JCP customer service about the horrendous TV commercial. It is the worst TV commercial ever made and it does a great disservice to JCP as a company that I would want to do business with. I hope they pull this ad and fire the ad agency. What kind of message does this send to our children….bad behavior in public is okay?

    Comment by Scarlet — January 30, 2012 @ 4:24 pm
  14. I absolutely agree about the inappropriate ad! The executive that made the decison to air that ad should also be fired! Let’s teach children to yell and scream to get their way. Back in the late 80′s Sears tried the “one price” approach. It backfired. Customers left the store as quickly as they enterd and NEVER came back. Good luck JCP, you will need it

    Comment by helen march — January 31, 2012 @ 1:59 pm
  15. I agree with Helen. This won’t work. And if that screaming commercial keeps airing, it will turn people off to JCP so much that no one will care what they do. It has to be the worst commercial of all time.

    Comment by Jannette — January 31, 2012 @ 2:43 pm
  16. Did everything really get a price cut????
    [broken URL omitted]
    Although I see a bonus item included now the 200 buck online price was same as it was when they came out with the new price plan…

    Comment by Richard Ginn — February 1, 2012 @ 12:19 pm
  17. HMMMMM Maybe I was looking at this model instead that was 200 and dropped to 180…

    http://www.jcpenney.com/jcp/X6.aspx?GrpTyp=PRD&ItemID=1cb66e1&DeptID=70755&CatID=83111&SO=0&Ne=4294957900+5+586+1028+18+1545&PCatID=70755&CatSel=4294930721%7ccookware&NOffset=0&N=4294930721&CatTyp=RLE&Dep=KITCHEN+&Pcat=KITCHEN+&Cat=Calphalon&Nao=0&PSO=0&bcCat=3&CmCatId=70755|83111&sa=1

    And one last thing if everything gets at least a 40% cut in price then what price are they really using then???

    http://store.calphalon.com/calphalon-simply-calphalon-enamel-10-pc-cookware-set/237158

    The suggested price listed on this link is 260, but it includes no bonus item…

    Comment by Richard Ginn — February 1, 2012 @ 12:36 pm
  18. Have you been to JC Penney since the change? I have and I haven’t found anything that is 40% off. I had my eye on an electric blanket that was $120 before the big change. Should be $72 now, right? ($120- $48). Well it’s $100. What kind of math are they using?

    Comment by Kelly Evans — February 10, 2012 @ 12:27 pm
  19. I was buying the cartoon tee shirts, adult ones, the ones with Dr. Suess, pillsbury dough boy, etc. They have been 9.99 for the past year or so. On sale from 20. Now with the new discount lowest prices they are now 12.00. It will be a long time before I ever go to a Penney store again

    Comment by David — February 13, 2012 @ 12:51 pm
  20. It sounds like a good idea, but I remember when Sears tried everyday low prices back in 1989, it flopped. Many of their products actually cost more than their previous “sale” prices, which were in effect much of the time. Lawsuits were filed because of this, and soon Sears abandoned the strategy.

    Comment by Kumar — February 13, 2012 @ 10:20 pm
  21. Have you tried to buy anything since it changed? You try to add it to your cart and it’s not available. I have tried about 25 different items at their special low price, and they cannot be purchased. I’m not shopping there any more.

    Comment by Lorrie — February 20, 2012 @ 9:17 am
  22. I have to say though, Kohl’s discounts were not all bad. I’m a single mom, and I HAVE to know what’s a good value. There were times I’d go in at the end of season, and buy clothes clearanced for 90% off (on average), and then they would allow a coupon (given to cardholders) for an additional 10-30% off to be applied to that, and if the promotion was running, would even give you their “Kohl’s cash” or whatever they called it in addition, giving you another 20% or so to apply to future purchases. The merchandise I bought there was always pretty good quality as well, far above the “dollar store” type quality. I haven’t shopped there in several years, so I can’t say for sure if it’s still like that or not, but everything I bought there years ago is still in good shape. One year I bought a whole new wardrobe (enough for me … several dresses, pants, skirts, quite a few blouses, undergarments, and a few pairs of shoes) all of good quality and for a grand total of $95 charged to my Kohl’s card (you did have to put it on the card to get the discounts), and I did get the additional Kohl’s cash for a future purchase as well. I’m sorry, but that can’t be beat. Of course, I would NEVER have paid the “regular” price on anything … I just assume it to be overpriced in most places that run specials like that. But I’m smart enough to find a good deal regardless of the “original price” … and I very RARELY if ever bought anything “on sale” there for “only” 50% off anyway. Just had to toss that in as well. :)

    Comment by Trish — March 10, 2012 @ 5:43 pm

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