When it comes to pricing, J.C. Penney is taking a different approach than most retailers. The company has rolled out a new pricing strategy that it calls “Fair and Square.” Under this plan, all items in the store are priced at exactly $1, $5, $10, or $25. This flat-price structure makes it easy for shoppers to know exactly how much they will be spending on an item, without having to decipher any sales or discounts.
J.C. Penney is hoping that this new pricing strategy will appeal to shoppers who are looking for a simple and straightforward shopping experience. The company is also betting that the flat prices will help it compete with other retailers who are known for their low prices, such as Walmart and Target.
So far, the response to J.C. Penney’s new pricing strategy has been mixed. Some shoppers say that they like the simplicity of the prices, while others find the lack of discounts to be frustrating. Only time will tell if the “Fair and Square” pricing plan will be successful for J.C. Penney, but it is certainly an interesting experiment in retail pricing.
Johnson’s goals were to change JC Penney from a regular department store into a retail powerhouse. Johnson, coming from his experience with Apple and Target, started creating approximately 80 high-brand stores inside of JC Penny locations – for example, a Martha Stewart boutique. In addition to this, he offered services such as promotions and free food in July to gain customer satisfaction..
However, all these changes did not work as expected. In order to increase sales during the holiday season of 2012, JC Penney rolled out a new pricing strategy called “Every Day is Sale” which eliminated coupons and discounts in favor of low “fair and square” prices. This novel pricing strategy was developed by Ronald Johnson, who served as the company’s CEO from November 1, 2011 until April 8, 2013.
The goal of this new pricing strategy was to get shoppers to visit JC Penney more frequently and spend more when they were there. To do this, JC Penney needed to find a way to simplify its pricing so that shoppers would know exactly what they were getting when they came into the store. The “Every Day is Sale” pricing strategy did just that. Under this new pricing strategy, JC Penney eliminated all sales and discounts in favor of low, “fair and square” prices that were the same every day.
This change was a drastic departure from the way that JC Penney had been doing business for years. In the past, JC Penney would run sales and offer discounts on a regular basis. This created a lot of confusion for shoppers who never knew when the best time to buy something was. With the “Every Day is Sale” pricing strategy, JC Penney aimed to provide more clarity and simplify the shopping experience for its customers.
Unfortunately, this new pricing strategy backfired. Instead of attracting more shoppers, the “Every Day is Sale” pricing strategy actually caused JC Penney to lose traffic. Shoppers were confused by the lack of sales and discounts, and many of them decided to take their business elsewhere. As a result, JC Penney’s sales and profits took a nosedive, and Ronald Johnson was ultimately ousted as CEO.
While the “Every Day is Sale” pricing strategy was a failure, it does provide some lessons for other retailers who are considering simplify their pricing. First, it’s important to make sure that your pricing strategy is aligned with your overall business goals. In JC Penney’s case, the goal was to increase traffic and spending, but the “Every Day is Sale” pricing strategy actually had the opposite effect. Second, it’s important to communicate your pricing strategy clearly to your customers. JC Penney’s shoppers were confused by the lack of sales and discounts, which caused many of them to take their business elsewhere.
If you’re considering simplify your pricing, it’s important to keep these lessons in mind. By aligning your pricing strategy with your overall business goals and communicating it clearly to your customers, you can avoid making the same mistakes that JC Penney did.
The new plan’s main strategy is to offer three pricing strategies instead of relying on deep discounts to lure customers: Daily, month-long value (events such as back to school), and best prices (big sales). J.C. Penney’s everyday prices won’t be as low the steep discounts from before; in an attempt to get customers not wait for a sale, the company slashed prices of select items by up 40 percent during a trial run .
The changes in J.C. Penney’s pricing strategy is a result of the ousting of former CEO Ron Johnson, who was hired to turnaround the then-struggling retailer. Under his leadership, J.C. Penney ditched coupons and sales in favor of every day low prices, but the move alienated customers and sent sales plummeting. New CEO Mike Ullman has since reversed many of Johnson’s changes, and is now focusing on bringing back customers with more aggressive pricing.
Time will tell if J.C. Penney’s new “Fair and Square” pricing strategy will be successful in attracting customers and boosting sales, but the company is hopeful that it will help to turnaround the retailer.
The majority of products are indistinguishable from one another. In contrast, Apple designs and sells its own products that can contribute to buoying sales; this is likely why such a strategy has been effective for them in the past. Discounts have always been an effective way of selling low-cost items; however, J.C Penney’s cannot reduce prices any further because they have already established fixed pricing.
J.C. Penney’s “Fair and Square” Pricing Strategy was introduced in 2012. The strategy is based on three simple pricing principles:
– Everyday low prices
– Month-long sales
– No more discounts
The goal of the “Fair and Square” Pricing Strategy was to create a simpler, more transparent shopping experience for customers. J.C. Penney hoped that by getting rid of the constant sales and discounts, shoppers would know exactly what they were going to pay for a product at any given time.
However, this new pricing strategy backfired and led to a massive decline in sales. In 2013, J.C. Penney reported a net loss of $985 million, and by 2014 the company had lost over $5 billion in value.
J.C. Penney has since abandoned the “Fair and Square” Pricing Strategy and gone back to their old pricing model of sales and discounts.