The Re-Birth of J.C. Penney

J.C. Penney's has unveiled a new pricing plan that might help them make a comeback.


As I'm sure you know, J.C. Penney has been struggling to stay profitable for a few years now. They have closed a few stores and had been considering cutting even more jobs. In fact, I have to admit that I haven't shopped there in years. I'm not exactly sure why, but I think it has to do with the constant sales. To me, it has felt as though everything in the store was on clearance because when I walk through the mall, I always see huge sale posters outside of Penney's. Although I love a good sale, I am always worried that I'll buy something only to find it at an even bigger discount a week later. Not only that, but I can't bring myself to pay full price for an item because I think that I might be able to get it for 50 percent off before the weekend. To me, it seemed that Penney's was well on their way to becoming an upscale version of Burlington Coat Factory or Marshall's.


With sales down, the 110 year old department store is fighting back. Recently, the company's CEO, Ron Johnson unveiled a risky new plan to transform the struggling company into a retail powerhouse. Johnson, whose previous experience was with Target and Apple, aims to re-create the store into 80 to 100 differently branded "stores within a store". The goal is to have something like a Martha Stewart boutique, a kids clothing store, another for teens and so on. In addition, the store will have its own "Town Square" to offer customer service and free promotions and events.


The riskiest change, however, is the new "Fair and Square Every Day" pricing strategy. The plan began when Johnson realized that a little over three-quarters of everything sold at J.C. Penney is sold at a 50 percent discount. The idea is that instead of using the lure of deep discounts, which can be confusing to customers, they will offer three pricing options, "Every Day", "Month Long Value" and "Best Price". Also, all of the prices will end with ".00" instead of ".99".


The "Every Day" price will still be at a discount, but without a special sale. Customers can feel confident that they are getting the best price and the items aren't going to be offered at a deep discount next week. The "Month Long Value" will feature month-long themed sale items, for example back-to-school sales in August and Linens in January. The "Best Prices" will be used for all clearance items instead of confusing signs listing a percentage off.


The pricing plan is risky, but it just might work. For customers like me, even though the Every Day prices aren't as discounted as they might have been during one of the store-wide sales, they would still be good prices that I could count on staying the same. On the other hand, the problems with J.C. Penney aren't just the sale price versus full price. They also don't carry products that I typically buy. To me, it seems that they have a great selection of children's clothing and their housewares are pretty good, but all of the clothing and accessories are targeted toward baby boomers or young tweens. There really isn't much of anything to pull in the Gen X'ers, who are now in their mid-thirties.


Another problem is that with the Every Day pricing structure, they aren't able to adjust their sales as needed. For example, if another retailer cuts prices on certain brands, Penney's can't cut their prices to compete, because they will have to adhere to their "Every Day" price.


The restructuring of J.C. Penney is exciting and I hope that it works. The problem will be getting people, especially those in my age range, to come back into the store and see what they have to offer. If they don't, I can't imagine that the revamped look and pricing plan will make much of a difference.


What do you think about Penney's new look? Please share your thoughts in the comments.