Ron Johnson Makes Second Attempt at Pricing Coup (JCP)
Tweet
Share
E-mail
Get Alerts JCP Hot Sheet
Join SI Premium – FREE
According to reports J.C. Penney (NYSE: JCP) will once again modify its pricing in an attempt salvage customers lost during an unsuccessful attempt to introduce everyday low pricing. Instead of luring in customer, the new pricing puzzled them, leading to a massive drop in same store sales.
The latest maneuver appears to take a two pronged approach. On the one hand, in order to enhance the appearance of everyday lower pricing, JC Penney will mark products with manufactures suggested retail price. Johnson thinks this will give consumers a better reference point.
The second prong of J.C Penney's approach will focus on special event and holidays. During these times, consumers are especially sensitive to pricing and are on the lookout for deals. As an illustration, over Valentine's Day JCP will be selling half carat diamond heart pendants on sale for $96, below Penney's everyday price of $120. Presumably during sales customers will see three prices: a manufacturer's price, an everyday price, and a sale price.
Critics are already calling Johnson's pricing plan a ruse, but he defended his manufactures suggested retail price scheme as a way to help customer make informed decisions. He also said his new strategy was not a deviation but an evolution of his previously announced pricing strategy. Some would say this is a stretch. Regardless, it is clear J.C. Penney's CEO is back to thinking outside the box, and this has a few on Wall Street optimistic. However, considering his last attempt was a fiasco, Wall Street probably has him on a much shorter leash this time around. Another botched pricing scheme could spell disaster for both J.C. Penney and Ron Johnson.
Shares of J. C. Penney are down 0.6 percent Monday to $19.24, up 23 percent from recent lows.
The latest maneuver appears to take a two pronged approach. On the one hand, in order to enhance the appearance of everyday lower pricing, JC Penney will mark products with manufactures suggested retail price. Johnson thinks this will give consumers a better reference point.
The second prong of J.C Penney's approach will focus on special event and holidays. During these times, consumers are especially sensitive to pricing and are on the lookout for deals. As an illustration, over Valentine's Day JCP will be selling half carat diamond heart pendants on sale for $96, below Penney's everyday price of $120. Presumably during sales customers will see three prices: a manufacturer's price, an everyday price, and a sale price.
Critics are already calling Johnson's pricing plan a ruse, but he defended his manufactures suggested retail price scheme as a way to help customer make informed decisions. He also said his new strategy was not a deviation but an evolution of his previously announced pricing strategy. Some would say this is a stretch. Regardless, it is clear J.C. Penney's CEO is back to thinking outside the box, and this has a few on Wall Street optimistic. However, considering his last attempt was a fiasco, Wall Street probably has him on a much shorter leash this time around. Another botched pricing scheme could spell disaster for both J.C. Penney and Ron Johnson.
Shares of J. C. Penney are down 0.6 percent Monday to $19.24, up 23 percent from recent lows.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Germany: Why is wage growth lower than in the Eurozone?
- Amundi surges as on bigger-than-expected profit, record AUM
- Can Boeing overcome struggles? Analysts see 'path back to normal' after earnings
Create E-mail Alert Related Categories
Insiders' BlogSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
