JC Penney, Stick to Your Guns on Pricing

'No Sales' Has to Be a Business Strategy, Not Just a Marketing Campaign

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When JCPenney announced its radical no-sale "fair and square" pricing strategy at the beginning of the year, comp-store numbers started tumbling soon thereafter. It announced earlier last month that it would backtrack on the plan a bit, having concluded (correctly) that consumers like the word "sale." Then its top marketer abruptly resigned. There's speculation that CEO Ron Johnson will have to cave and return to incessant couponing and sale events.

I hope not.

Consumers aren't stupid. They know that sale prices are more like actual prices, and that real sales are much bolder and less common (like the one flat-screen unit offered a half price as a Black Friday doorbuster, for instance). Otherwise, those consumers who regularly shop for sales aren't chasing better deals as much as trying to avoid bad ones. That's why the word is important to them.

Sure, there are faux benchmarks like MSRP, but variable pricing disconnects cost from value. When no price is "the" price for an item it means that instead retailers engage customers in a constant cat-and-mouse game in pursuit of the truth. No individual store can own sale pricing; each simply participates in a round-robin of discounted offers that its competitors have and/or will again match. Sales hurt retail brands over time.

It's why Walmart's "everyday low prices" positioning has worked for so long (and is so hard for the retailer to move beyond). "Low" is a synonym for "fair" in a way that "sale" isn't, since promoting sale pricing is all but an admission that regular prices are higher than they should be. The company aggressively takes costs out of its offering so that its claim of low prices is often legitimate, if not consistently.

And it's why JCPenney's "fair and square" strategy makes so much sense: An item costs what an item costs, not necessarily less than the competition (it doesn't exert the supply-chain fascism of a Walmart) but instead more consistently over time than a price based on some sliding scale. Establishing what product so-and-so costs at JC Penney should allow it to attach value and benefits to its brand, while giving it the chance, upon occasion, to offer true sales deals a la that loss-leader TV screen during the holidays.

A strategy to tell truth is the basis for any longstanding brand relationship, not to mention the right thing to do. JC Penney's problem has been executional. For instance, its ads have been chock full of agency-creative brilliance and not the authenticity that the strategy deserves, which makes the spots come across as another retailer ploy instead of a brand-changer. I'm not aware that it truly educated and inspired its store personnel to communicate the no-sale positioning. Announcing the plan within the historical context of retailers never really telling the truth made its truthfulness somewhat doubtful.

What could JC Penney do now? Build the buying policies that substantiated the no-sale deal (like constant price-protection, a robust returns policy and meaningful loyalty benefits). Offer neat and engaging gizmos to reality-check its claims. (Where's the smartphone app that lets in-store shoppers locate items on sale at nearby stores, then illustrate the competitors' price fluctuation and lack of service benefits?) Get aggressive on waging a PR war with its industry for fairer and more consistent pricing, prompting a movement in which it could be a leader. Use social media to empower its customers with insights into how products are priced (give them transparency, not old-fashioned branding). Partner with public-interest third parties to validate the approach.

In other words, get the business behind the strategy, not just the marketers. In doing so, maybe JC Penney's customers would embrace the approach, too. It's not too late to do it right. I hope the brand sticks with it.

JONATHAN SALEM BASKIN is president of Baskin Associates, a marketing-decisions consultancy, and author of the recently published "Tell The Truth." You can follow him on Twitter: @jonathansalem..
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