JcPenney May Just Change Shopping Habits
In February, JcPenney introduced a new pricing strategy – but it has evolved to be more than just that. It has become a new way of shopping for the avid JCP shoppers. Many people have been criticizing these new changes – however, the future of JCP may look brighter than we think.
JcPenney has started off with three different pricing strategies.
Everyday Prices – These are the prices of last year’s sale prices, plus an additional 40% off.
Month-long values – This is equivalent to a sale price, but they are random.
Best Prices – The lowest prices that always happen on the 1st and 3rd Fridays of every month. Quantities stay while they last.
What I love about this new pricing strategy is that prices last all month. It is simply convenient to not have to wait for a lower price, or come back to see that the blouse you wanted for a long time suddenly became ten-dollars more expensive. With this new pricing strategy, you look at the tag and the reduced price is there on a sticker – with a solid dollar amount.
Von Maur, a high end department store and H&M, a low priced fast fashion store, have no coupons either – and have been successful with a similar approach to what JCP has been phasing in
So, what is the financial benefit of this new system? It costs less for the company, which passes the savings to the consumer. A pricing team is in charge of changing prices constantly –which costs millions of dollars annually – with this new pricing strategy, that cost is eliminated.
Prices are lower than they ever were, and not to mention, no more dealing with all that paper waste for weekend ads, coupon clippings, waking up early, or coming in late. Will there even be a black Friday for JCP this year, and will this be a disadvantage or advantage?
However, there are many problems with this, and it is more along the lines of a psychological obstacle for the customer, “how am I saving without a coupon?” What many consumers do not understand is, coupons are nearly pointless. Prices rise to accommodate coupon savings for many department stores, so customers are not saving that much. This has not “clicked in” to the older generations who have become lifelong JCP shoppers, which is the main obstacle. Older generations are intrinsically tuned to the promotions that include the term sale or discount.
Albeit, if many of you have not noticed – many of the brands targeted to the older generations seem to be phasing out. Brands like Alfred Dunner, Soft Style/hush puppies, and more have decreased their presence on the sale floor.
Another criticism that JCP has been struggling with is the image of JCP, with lower prices – customer may perceive a lower quality as well. However, with the new marketing strategy – I think otherwise. Whilst my visit to JCP, the sales floor looks more ‘chic’ – with sleek fixtures and more designer brands. Instead of the cliché celebrity brands and well known designers, I like how there are different designers I had never noticed before.
Targeting to the younger target market may just be the key to success for JCP. This new marketing strategy may be a high risk approach, but it may come out to be an utter success. Once customers understand the new pricing strategy, it may be an easy ride for both the company and customers.
But there is more, the company is making more changes that we will just have to wait and see.