J.C. Penney Adds Promos to Drive Store Traffic
A RetailWire poll taken last month, shortly after J.C. Penney announced its quarterly financial results, found that 66 percent were somewhat or much less optimistic about the retailer’s prospects than they were at the beginning of the year. At the time, the company reported that its new pricing and promotional programs had failed to generate the type of response the department store chain was seeking. Visits during the quarter were down 10 percent and market baskets fell five percent.
Since then, the company’s biggest investor Bill Ackman, who runs Pershing Square, told CNBC, "There are some extreme couponing customers, who we probably lost money on, who may not come back, but the people who are focused on quality and value, and ultimately product, we should do very well. … Time is your friend because eventually people will get it."
Well, J.C. Penney may have time on its side (or maybe not), but management has apparently decided it’s better to act now than wait. According to an article on the Advertising Age website, Penney has added five "Best Price Fridays" to its promotional calendar. The first ran last Friday and the last is scheduled for Black Friday in November.
"The change in strategy is an admission that the company’s existing three-tiered pricing strategy has flaws — less than 120 days since Ron Johnson’s new model took course on Feb. 1," Deutsche Bank analyst Charles Grom is quoted by Ad Age. "We believe the move could confuse its shopper base even more, with some Fridays now ‘Best Price’ and some others not."
Best Price Fridays in Penney’s scheme are held on the first and third Friday during a given month. Prices on select products are marked down and the lower price remains in effect until the item has sold out.
- Fair and Square – Penney’s Stock Plunges – RetailWire
- Ackman: JCPenney Sales Have Hit ‘Bottom’ – CNBC
- JC Penney Ramps Up Promotions in Wake of Dismal First Quarter – Advertising Age
Discussion Questions: Are ramped up promotions the answer to J.C. Penney’s traffic problem? Are more “Best Price Fridays” the right promotion to achieve the chain’s goals?