JC Penney's New Pricing Strategy J.C. Penney Essay

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JC Penney's New Pricing Strategy

J.C. Penney was founded in 1902 by James Cash Penney, and by 1907 he had purchased full interest in three locations, moving his company headquarters from Wyoming to Salt Lake City in 1909. By 1912, there were 34 stores in the Rocky Mountain State areas. By 1928 Penny's had opened 1000 stores and by 1941 had 1600 stores in all 48 states. Penny's began national advertising in 1956, offered in-store credit cards in 1959, and acquired The Treasury discount stores in 1962. By 1963 it issued its first catalog, expanded to Alaska and Hawaii, acquired Thrift Drug and by 1969 was a major feature in most American cities. By James Penney's death in 1971, the company had revenues of over $5 billion and peaked with 2,053 stores in 1973 jcpenney.com; Mattioli, 2012).

Retailing in the 21st century demands far different strategies than ever before. Retailing has changed, both because of globalism and the changing desires and expectations of the consumer. Stakeholders, the media, and the government have caused retailers to be more transparent in their production and manufacturing techniques, and demand more moral and ethical behavior, more sustainable and eco-friendly practices and technology. Today, the market is such that retailers grow only by taking away from competitors, not usually by growing their own brands.

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This has resulted from a shift in retail thinking from "The Consumer is King," to "The Consumer is Dictator," with market power ingrained in almost every marketing channel globally (Reingold, 2012).

With a new CEO, tightening belts on acquisitions and personnel, on February 1, 2012 Penny's began a new pricing strategy, "Every Day" prices on most days reflecting what used to be sales prices, "Monthly Value" for certain items in place of sales, and "Best Price" the first and third Fridays of each month -- tied to typical paydays. Prices would not end in a 9 or 7, but in whole figures (e.g. $15.00 rather than $14.99) (D'Innocenzio, 2012; Reingold).

In addition to new pricing, Penney's will created 80-100 branded stores within stores (Martha Stewart, etc.) and offer complimentary services and promotions. The central focus of the new strategy was the realization that about 75% of everything sold at the store is usually sold at a 1/2 off (50% SALE). This is, however, different than everyday low pricing via Wal-Mart. The prices will not be rock bottom discounts, but will try to convince customers that there is no need to shop for the closeout or absolute least expensive shopping experience when there are "pretty good prices".....

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