Lesson Learned: Will “Comparison” Prices Revive JC Penney?

OK, I’ll freely admit it. I love JC Penney. Always have. Probably because it’s where my mom took me for get “new clothes” when I was growing up near Holton, Kansas.

As an adult, I continued to shop JC Penney, liking a place that seemed to have it all. As an career advertising guy, I appreciated their devotion to branding, bold and clean typography for signage and the overall values I found there.

So, like everyone from retail business gurus to JC Penney devotees like me, I was curious about the revamped business plan for JC Penney stores unveiled in 2012. Gone were the continual “sales” events, replaced by “lower everyday” prices and “month-long price reductions” on specified items. 

CEO Ron Johnson’s plan was to bring an EDLP (everyday low pricing) model to the giant retailer, in the mold of Wal Mart. They called it “Fair and Square Pricing,” and used a red square in tandem with the company name. Logical, right?

For the fiscal year ending October 2012, JC Penney reported an overall sales drop of 23.1%. Ooops. What happened?

I believe it’s pretty clear JC Penney thought way too logically and forgot about the psychology behind “sales events.” People love getting deals (real or perceived), and 10- 15- or 25% off, clearly stated within the stores, is a powerful incentive to buy. But what about Walmart, you say? Remember that Walmart’s pricing model has always been in place since its beginning. The Walmart brand means rock-bottom prices (real or perceived.) JC Penney’s brand history is linked to sales events. 

Is it surprising American consumers balked so dramatically on JC Penney purchases?

Well, everyone likes a good American come-back story, and perhaps the re-tooled marketing strategy being employed by JC Penney will also bring customers back. New TV commercials for JC Penney are now running, touting “comparison pricing” between items found “elsewhere” and at JC Penney. 

The spots don’t say “sales event,” but the psychological link is clear. Here are two examples: Men's Jeans: Price Comparison and Same Swagger, Lower Prices.

Go to the JC Penney web site to see the re-positioning message in customer language: JC Penney: Comparison Positioning. 

Now, JC Penney hasn’t abandoned its three-year plan to get to an EDLP pricing structure, and the effort to bring “name brand shops” within a store continues. Sales reports for the next two fiscal years will reveal just how successful the company truly is in its strategy.

The over-arching message here is this: it’s essential to have a fiscally smart, long-term business plan for your company and to let it guide your mission. But to the customers you depend on to make the cash registers ring, keep the human need for value in dollars spent at the forefront of your advertising.