J.C. Penney Sets New Course With Major Markdowns
Retail icon J.C. Penney is revamping its strategy and retooling stores. Instead of having literally hundreds of sales throughout the year, the retail giant will mark down merchandise dramatically and simplify promotions.
J.C. Penney Chief Executive Ron Johnson said that Penney’s previous strategy of rampant promotions created confusion among shoppers, who then took a wait-and-see mentality.
In 2011, the retailer ran 590 unique promotions, while the average customer visited a Penney store 4 times in that year. The result was that nearly 73% of revenue was made from products sold at a discount of 50% or more, while less than 1% of revenue came from goods sold at full price.
The lesson was simple, Johnson said, “The customer ‘knows the right price.’” The new strategy at Penney will be “fair and square.” Look for lower prices across the board and updates to the stores will take place soon as part of the chain’s makeover.
Johnson, formerly an executive at Apple Inc., took over at J.C. Penney in October. No more getting up early for “doorbusters” or waiting for items to go on clearance. Penney has lost customers to retailers like Macy’s and Target. Time will tell if they can win them back.