JC Penney adopts new lower price structure

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Updated: February 3, 2012 12:06PM

JCPenney permanently marked down all of its merchandise by at least 40 percent on Feb. 1 so shoppers no longer have to wait for sales to get bargains.

According to Yahoo Finance, the retailer’s goal is to offer a simpler approach to pricing by getting rid of the hundreds of sales it offers each year. They are rolling out an “everyday” pricing strategy with much fewer sales throughout the year.

The new CEO of JCPenney, Ron Johnson, came up with the plan. He moved from an executive position with Apple to head up the retailer in November. His first big move is to offer customers more predictable pricing.

“Pricing is actually a pretty simple and straightforward thing,” Johnson told the Associated Press during an interview. “Customers will not pay literally a penny more than the true value of the product.”

It’s a risky move, though, because shoppers who love to bargain-hunt may be turned off by the absence of sales. But it may help a shopper decide to buy rather than sitting around waiting for that next sale.

Here’s how Penney’s pricing strategy will work:

— Sale prices become everyday prices. The company will use sales data from last year to slash prices on all merchandise at least 40 percent or lower than the previous year’s prices. So, a woman’s St. John’s Bay blouse regularly priced at $14.99 could have the “everyday” price of $7.

— Fewer sales. The retailer will pick items to go on sale each month for a “Month-Long Value.” For instance, jewelry and Valentine’s Day gifts would go on sale in February, while Christmas decorations would be discounted in November. Items that don’t sell well would go on clearance during the first and third Friday of every month when many Americans get paid. Those items will be tagged “Best Prices,” signaling to customers that’s the cheapest price.

— New tags. The retailer used to pile stickers on price tags to indicate each time an item was marked down. But now each time an item gets a new price, it gets a new tag too. A red tag indicates an “everyday” price, a white tag a “Month-Long Value” and a blue tag a “Best Price.” (Yes, the tags are red, white and blue)

— Simpler pricing. Penney will use whole figures when pricing items. In other words, you won’t see jeans with a price tag of $19.99, but rather $19 or $20.

— New advertising. Ads began airing Jan. 25, with a shopper screaming “No” to discounts as they look in their mailboxes, a pile of coupons and big sales signs. The company also has Ellen DeGeneres as their new spokeswoman and a new logo featuring a red outline of a box that features JCP in the corner. And a 96-page catalog will be mailed each month to 14 million customers.