What we can learn from JCPenney's loss

A sign displays a new pricing strategy at a JCPenney store in the North Riverside Park Mall February 1, 2012 in North Riverside, Ill. JCPenney's sales were down 22 percent last quarter -- blamed in large part on the company's new pricing strategy. What's next for the retailer?

Jeremy Hobson: We'll start with JCPenney, which said this morning its sales were down 22 percent last quarter. That's the second straight quarter of steep sales declines. And it's being blamed in large part on the company's new pricing strategy, which is in a nutshell -- no more special sales, just the same low prices everyday. Wendy Liebman is CEO of WSL Strategic Retail and she joins us now to discuss. Good morning.

Wendy Liebman: Good morning.

Hobson: So is this pricing a strategy just too confusing for consumers?

Liebman: I think two things. One is shoppers of JCPenney have shopped a certain way for a very long period of time, so that's very difficult for shoppers to get their head around. No. 2 is it begins to raise a question -- are these really the lowest prices or should I wait for a deal somewhere else?

Hobson: What do you think they're going to do now? Will they just take this away and go back to the way they were doing things before?

Liebman: I don't think so. I think they will indeed become more promotional again. I think they can't go cold turkey. There's already been some change and I think there will be more change. I don't think they will go back to their old ways, however.

Hobson: Does it make it more unlikely that stores like JCPenney, which have been around for a long time, will take big risks like this?

Liebman: In some ways, taking big risks at retail is very, very hard. This may make people a little wary. I think the other piece to this is that a lot of JCPenney merchandise is actually unique. It's private label, so there's not always been a basis of comparison. I think this won't stop other people from making big change, I think it's just a very good learning of how you deliver that change, how you execute it.

Hobson: Wendy Liebman is CEO of WSL Strategic Retail, thank you so much.

Liebman: Thanks.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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