J.C. Penney’s Pricing and Merchandising Strategy is Too Little, Too Late

Jan 27, 2012 12:12 AM  By

J.C. Penney announced its plans to transform its shopping experience yesterday. But is unveiling a new logo and slashing prices enough to save the struggling retailer?

Robert Passikoff, president of loyalty marketing firm Brand Keys, doesn’t think so.

“It’s better than doing nothing at all,” Passikoff said. “They’re constantly trying to play catch up and they don’t seem to do a very good job at that. The (department store) category has shifted dramatically. The things they’re focusing on they should’ve been focusing on 20 years ago.”

J.C. Penney was the third-ranked department store in Brand Keys’ 2011 Customer Loyalty Index, Behind Dillard’s and Kohl’s, which tied for first, and Macy’s.

On Feb. 1, J.C. Penney will roll out its Fair and Square Pricing plan. A 40% drop in current prices highlights the strategy, as does a three-tier pricing structure. The retailer is also looking at adding new merchandise on a more-frequent basis.

But Passikoff doesn’t think the pricing and merchandising strategies will work.

“When you’re talking about anything to do with value for a dollar, it’s less leverageable today than five years ago because everyone is doing it,” Passikoff said. “They say they’ll be selling exciting new merchandise. They will sell the same thing everyone else is.”

The value proposition idea is a difficult thing to be able to leverage, Passikoff said, given the kinds of real information consumers have today, such as a price check being done on a smartphone. The three-tiered pricing approach of low, lower and lowest also won’t fly, Passikoff said.

So how does Passikoff view J.C. Penney’s transformation strategy? He thinks it’s a sign that the retailer, which is struggling to keep up with Macy’s, Kohl’s and others, is in trouble, and has been for a while.

“This isn’t a recent fall from grace,” Passikoff said. “It’s at least a decade’s worth of erosion in brand equity and reputation. It’s not a quick fix. I don’t see whatever it is.”