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What's the Deal with JCPenney's New Pricing Plan?

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By Laura Heller, dealnews contributor

There's been a lot of talk, and confusion, about the new pricing policy announced by JCPenney a few weeks ago, which entails more structure and (gasp!) fewer sales. If you're worried about potentially higher prices or radically reduced merchandise quality, we've got the lowdown on what the changes may actually mean, what we've seen so far, and what you can expect from future JCPenney deals.

Although the store has seemingly been transitioning to a slight name change by spelling "jcpenney" in all lowercase (there hasn't been an official statement about the change, and it's inconsistently used throughout the site), the chain's new pricing policy is getting the most attention. When Ron Johnson, JCPenney's new CEO, took over in November 2011, he set about shaking things up. Turns out the retailer had been running more than 500 sales annually, a costly endeavor that frustrated sales associates and shoppers alike.

Rolling Out a New Pricing Strategy

So Johnson launched the "Fair and Square" pricing initiative, a three-tiered pricing policy meant to deliver the best prices consistently throughout the year, so a customer knows what to expect. There will be "Everyday" regular prices, which are reportedly at least 40% off from the get-go; "Month-Long Values," or special promotions on seasonal items that hold for the entire month and are labeled as such on the product page with the month in question (seen on this Christian Audigier shirt, for example); and "Best Prices," or the absolute lowest price that occurs during clearance sales on the first and third Friday of the month to coincide with most salary schedules.

JCPenney's new pricing plan is similar to the "Every Day Low Price" strategy practiced by retailers like Walmart, with a few variations, as this tiered strategy is meant to meet shoppers needs on a more consistent basis, thereby making erratic sales, coupons, and promotional events unnecessary. Deal seekers can breath easy, though: coupons and incentives will still be sent to JCPenney rewards members (which entails registering your card) and credit card holders. There will also be sales, but they'll last an entire calendar month.

"Rather than inundating the customer with a relentless series of sales, coupons, rebates, and retail gimmicks, JCPenney will host 12 promotional events each year, on a monthly calendar," reads the company's announcement.

"We want customers to shop on their terms, not ours," said Johnson. "By setting our store [sales] monthly and maintaining our best prices for an entire month, we feel confident that customers will love shopping when it is convenient for them, rather than when it is expedient for us."

Efforts to Revamp the Image, Merchandise, and Experience

The new pricing policies went into effect on February 1, and for two weeks leading up to the change, JCPenney ran ads featuring frustrated shoppers screaming "NO" at the tops of their lungs. (See: the frightening woman to the right.) While annoying, these ads certainly got people's attention. The screaming, like the numerous sales, is now gone and JCPenney hopes to impress shoppers with its merchandise and steady low price policies.

The revamping doesn't stop there, as there are more merchandising changes in store. Over the next two years, JCPenney stores will begin to house affiliate brands and partners (similar to the Sephora, Liz Claiborne, and Sportsfan shops) and will develop "Town Squares" to offer constant customer support much like a Genius Bar. (Did we mention that Ron Johnson is a former Apple exec?) And coming soon to JCPenney is Martha Stewart: the 10-year agreement with Martha Stewart Living Omnimedia will not only bring more exclusive products to JCPenney, but entails the media company co-developing websites with the department store.

These aren't just cosmetic changes or rhetoric meant to yank Wall Street's chain. The store transformations are scheduled to be completed by 2015, and the new e-commerce site co-developed with MSLO in February 2013, but changes are already on display in both the pricing policy and the look of the new catalog website layout.

Will the Pricing Policy Ultimately Work?

The theme here is simplicity, from its evolved logo (pictured) and name, to its clear-cut tiered pricing structure. But will shoppers buy into "everyday pricing" and see it as good value? Time and again, pricing studies reveal that consumers who shop at stores that practice everyday low pricing, like Walmart, will save money on a consistent basis when averaged out annually. Only the most extreme couponers do better. What's more, JCPenney's proposed twice-monthly clearance sales should help satisfy the most thrifty of shoppers. Or will they? Do you think JCPenney's new pricing policy is a boon or a bust?

And for that matter, what's in a name? As a site that reports on deals, our writers are all too familiar with the constant sales and price-shifting that JCPenney used to employ. But do these new, defined names actually mean anything?

We took a look at some of the deals we listed in January, to see what price they're available at in February, post-transition, and what "name" they've been given under the new tiered system. Several of the deals from January are available at the same price now, and are labeled "best price," which, according to the glossary above, means that it's on clearance. Since it didn't go up in price, this seems consistent. There are a few items however that have gone up in starting price, yet feature that "best price" label, like these Mickey Mouse Fleece Pajama Pants. (Before the coupon, they were $5 when we listed them; they're now sold for $8.) Other items went up in price but feature the "everyday value" title.

This inconsistency might be chalked up to the shuffle of transition; after all, we're barely a week into the new pricing system. But dealnews will of course keep an eye on JCPenney prices to see how the new tiers fair.

Photo credits: Design Buddy and 30 thousand feet


Laura Heller is a freelance writer based in Chicago who specializes in mass market retail trends and consumer electronics industries. You can follow her on Twitter @lfheller. You can also sign up for an email alert for all dealnews features.
Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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8 comments
mach5jeep
This is a scam. Remember when GM tried to convince people they were getting a better deal buying a Saturn because of the "no haggle pricing?"  Well the customers were actually paying more than a comparable Chevy, Pontiac, or Buick.  I used to shop JCP pretty hardcore and I haven't seen any "great everyday bargains" yet.
Deanswifey
I've been shopping at JCP for 30 years. I've watched the quality of their clothing decline as well as some hideous styles. When I shop I want a sale or at least feel like I'm getting one.  The new pricing system leaves a lot to be desired. If anything they needed to change the clothing styles.  I guess I'll be heading over to Kohl's and Macy's.
blueii
I left Penneys after 42 years due to their incompetence or fraud concerning Black Friday online rebate sales.  Got one, but screwed out of two for $20 where they claimed I didn't purchase them during the required period---duh!   I will never purchase ANYTHING from these crooks again.
williamhmcdaniel
I will miss the $10 off $10 cooupons.
88prelude
I know there's naysayers out there, but I'm a fan of the new, less-confusing pricing.  As a typical male shopper, I go in, get what I need, and try to get out before I get distracted.  I also appreciate they seemed to carry over the strategy to their website right away. Now I don't actually have to fight the crowds to shop...
blessinghome
i priced one item before February 1 and it cost $300.  After I heard their prices would be lower on an everyday basis, I checked out the item again after Feb 1.  It was still $300.  I think it is just a grand advertising scheme. 
jplipp
Much ado about nothing. JCPenney or jcpenney, however you want to spell it, still spells overpriced. This new pricing mechanism won't last. People like the concept of  sales even if they're really not getting a great deal. Penney's will go back to their same old ways of marking stuff up 10 to 15% and then slapping a 20% off sale sign on it. There's something about those little signs that we can't resist, "Up to 60% off."
Harrkev
This is a good thing.  My wife used to buy from there ONLY when she had good coupons.  If you paid regular price at Penny's, you paid too much.  Now, you do not have to wait for coupons, by getting prices almost as good all of the time.  This way shopping is not a "game" with winners and loosers.
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