JCP reverses course (again) on its pricing strategy

JCP has become a favorite topic among RetailWire panelists, and no wonder: The missteps involved in the execution of its “reinvention” strategy will be fodder for textbooks and case studies for years to come. Today’s discussion concerns the reversal of Penney’s pricing policy at least for its private-label goods. (The company is marking these goods higher in order to run them on sale.) Here’s my take on the latest JCP change in tactics:

Based on my reading of JCPenney’s announcement earlier this week, the chain plans to raise prices on private brand goods (such as JCP, Worthington, Arizona and so on) in order to put them on sale. Meanwhile, it plans to continue its strategy of comparing branded goods’ prices to their MSRP. This is a “half-pregnant” pricing strategy that will only confuse the bargain-hunting consumer even further. And if JCP jacks up the prices of private label merchandise too far (for example, pricing a $6 tee at $10 in order to promote it at 40% off), its credibility goes out the window.

Is this enough to turn the tide? It’s hard to tell, but clearly the volume drop in 2012 made the original strategy unsustainable in terms of driving sales and margins. Even though the comp-store comparisons ought to be a walk in the park during 2013, it really depends on whether the new shops and merchandise content resonate both with the core bargain-hunter and the Millennial trend consumer that JCP wants to attract.


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