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Posted Date: 7/9/2012
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JCPenney Pays a Price for Its Pricing Strategy
By Vincent Quan
The appointment of JCPenney’s new CEO on June 14, 2011 heralded the dawn of a new era. The subsequent game-changing decision by JCPenney (JCP) to offer a “best price” strategy was meant to shake things up. It’s done just that, but at what cost?
A visit to a New York City JCPenney store in early June revealed a sterile shopping environment, devoid of discount signage as well as customers. It was apparent that JCP’s ‘Fair and Square” pricing strategy was not working. Many customers, looking for a deal, were disappointed to find nothing on sale but only what JCP calls a “best price.”
In April 2012, I was notified by two of my undergraduate students (I teach Fashion Merchandising Management at the Fashion institute of Technology) that their offers to join JCPenney’s executive training program in the summer of 2012 had been rescinded.
To their dismay, these two bright young ladies, who had been offered terrific, executive trainee positions during the fall 2011 semester, were now jobless and bewildered. They had accepted offers with JCP in good faith, but during the spring semester they were forced to scramble for interviews.
Something appears to be amiss at JCP. Sterile stores. Rescinded executive training. External executives hired to undertake JCP’s revival numbered 24 at last count, and a large number of veteran executives were let go.
With mass changes in senior personnel, JCP’s culture has also changed. Industry sources have stated that the decision-making process has been severely hampered. The normal dialogue between vendor and buyer is now a relentless pursuit of chasing one’s tail. Is a culture of fear now permeating the organization?
With a precipitous 28% sales drop from February through April of 2012 and speculated declines in the last two months, JCP decided to have a big Fourth of July SALE. Or was it? Rather than promote the big “SALE,” JCP is displaying “Best Price July” signage in stores and on the website. Fireworks or dud?