The idea, from new CEO Ron Johnson, was to make it less stressful for the shopper, who wouldn’t have to worry about whether there was a sale on that particular day, or whether to bring coupons, etc. Johnson came to JCP from Apple, where there are no sales, of course.
Anyway, it seemed like a good idea at the time, but we found out an interesting thing about American shoppers: We LIKE sales! We like to hunt for a bargain, and brag about it later to friends. We enjoy the big score. Must be the old hunter-gatherer in us, but it turns out that a lot of the fun in shopping for many is the act itself.
Now JCPenney is going back to the drawing board. Here’s where I think it gets a little weird: The retailer is going to RAISE prices 40 percent on its own brands so it can LOWER them again for sales and promotions. Huh?
I asked consumer research psychologist Dr. Kit Yarrow, chair of the Psychology Department at Golden Gate University, what she thought of JCP’s latest move. She said she thinks JCP made a big mistake a year ago in not talking to consumers before the pricing structure changed. She said, “Many of us feel like JCPenney’s is part of our culture, but when it comes down to spending our money, we’re not going to spend based on heritage. It has to make sense.”
As for the strategy of marking up prices in order to
discount them, Dr. Yarrow had harsh words for CEO Johnson: “It’s like he’s
mocking consumers.” [UPDATE 4/9: Ron Johnson was replaced as CEO on Monday, April 8, by the man he replaced, Mike Ullman. Around and around they go.]
“I think consumers are a little bit dizzy right now,” she says. “They don’t know what to expect from Penney’s.” She said she thinks they ought to go out with a marketing blitz that says, ‘We made a mistake, we didn’t listen to you, and we’re going to fix it. We’re going to go back to being the Penney’s you’ve always loved.’ She’s not sure, though, that they will.
So the JCP failed to account for the psychology of shoppers. People are motivated to shop by different factors. In a recent Psychology Today blog, Dr. Yarrow explains that people are motivated by lots of things when they shop: the fear of missing out on something, the competition with other shoppers, the perceived value of an item (why a $400 pair of shoes reduced to $150 is perceived to be a better deal than a full-priced pair at $80), and other factors. (Her blog goes on to explain how to counteract those factors, by the way, if you find yourself overly vulnerable to sales!)
So, JCP will try again to get back the consumers it lost over the last year. What about you? Did you continue to shop there? Did you stop because of the no-sale policy? Will you go back now that it’s back to its old policy?