Age ain't nothing but a number — J.C. Penney may be nearly 110 years old, but the retailer is embarking on one of the most drastic and innovative rebranding strategies, led by its new CEO Ron Johnson (of Apple fame). The brand is rolling out a new "fair and square" pricing and promotional strategy driven by the belief that the customer "knows the right price," accompanied by a new logo, new spokesperson, new in-store presentation, and new positioning.
In 2011, J.C. Penney ran 590 unique promotions; only 0.2% of revenue came from full-priced sales. Now, the retailer is embracing a simplified pricing model, expecting to save $900 million in the next two years. As of February 1:
Prices reduced by at least 40% are the new "Every Day" price.
Sales will be limited. Each month, certain products will go on sale as a "Month-Long Value."
"Best Price" Fridays occur on the first and third Friday of every month – the traditional American "pay days" — during which certain products will be at clearance prices.
Citi Investment Research analyst Deborah Weinswig points out that there are questions concerning "how customers react to a single price point versus a perceived discount under the old strategy." Will customers miss the urgency and excitement of getting a great deal when everything is always a deal? J.C. Penney believes that customers are actually frequently frustrated by complex sales, and the new simplified model will alleviate that. As Johnson explains, "We want customers to shop on their terms, not ours...By setting our store 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.”
J.C. Penney's new President Michael Francis explained the rebrand: "This will start by freeing consumers from the barrage of promotions and undifferentiated shopping experiences they have become used to and replacing it with something entirely fresh and new that is evident in every aspect of our store... It will be a breath of much-needed fresh air and give them reasons to visit jcpenney more often than ever before. Our objective is to make our customers love to shop again."