JCPenney overhauls pricing

New JCPenney CEO Ron Johnson unveils the retail chain's strategy for taking the crazy out of discounts and promotions.

Kai Ryssdal: It's hard to imagine two companies that are more different than JCPenney and Apple. Consider the Apple store: Sleek, artsy, cool -- not a sale sign in sight. Or a sale, for that matter. Then, Penney: Packed with merchandise, sale signs stuck to half the racks -- 60, 70, 80 percent off.

The two come together, though, in the person of Ron Johnson. While Johnson was at Apple, he helped invent the Apple store. Today, as the new CEO of JCPenney, he rolled out his new retail strategy in New York: Low prices everyday, way fewer markdowns and way cooler stores.

Marketplace's Stacey Vanek Smith has more.


Stacey Vanek Smith: JCPenney’s new ads feature people freaking out as they open their mailboxes to a tidal wave of coupons.

Woman in commercial: Ahhhhh!

The idea is that constant sales are making shoppers nuts. Penney alone had almost 600 sales last year. Under the new plan, Penney will cut everyday prices by about 40 percent and have just two sales a month.

Alison Lipson is a retail analyst with Mintel International.

Alison Lipson: Rather than thinking, 'Okay, I have to wait until two weeks from now when they’re having a big sale, the hope is they’ll feel better knowing that if they go into the store, they should be faced with lower prices.

The discounting arms race has been hard on stores bottom lines, but shoppers are addicted to sales. Retail consultant Burt Flickinger says Penney is taking a big gamble.

Burt Flickinger: It’s an inspired initiative, but carries real retail risk. Coupon usage is the highest it’s ever been in the U.S.

To give customers something in return, Penney is offering a little atmosphere.Stores will have special areas where they offer promotions, like ice cream in the summer and free haircuts before school starts -- trying to create a place where people hang out. You know, like the Apple store.

Sucharita Mulpuru: Can JCPenney capture a little bit of that magic? That’s the billion dollar question.

Forrester retail analyst Sucharita Mulpuru says revamping Penney's 1,100 stores may not be enough.

Mulpuru: They have a CEO who has a history of being able to grow businesses by opening new flashy stores and he doesn’t have experience growing flashy stores in really bad real estate locations.

And Penney has plenty of those.

In New York, I'm Stacey Vanek Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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