top of page
  • Writer's pictureCarolyn Duarte

What can YOU learn from JcPenny's failed pricing strategy?

Believe it or not, JcPenny was one of the first department stores to go virtual. However, they’re not doing so hot now, and let’s see why.

First off, let me explain what exactly their pricing strategy is, before we talk about why it went wrong. JcPenny’s strategy included using the previous years’ sales data to price their products, which is basically a markdown of at least 40%. They do this to justify “every day pricing.” Basically, their pricing is supposed to seem static and low, with everything being priced the same no matter what time of year it is. They also use whole dollar amounts to play with deceptive pricing. When items do go on sale, they receive an entire new tag, labeled as a month long sale. Whatever doesn’t sell after this gets a best price tag, which is even more discounted, and is launched every first and third Friday of the month. This timing is due when the majority of people receive their paychecks.

At first glance, you may not notice anything wrong with their strategy. When in fact, JcPenny simply isn’t listening to their customers. Studies show that customers are more inclined to pay $25 for an item that was originally $50, than paying a “full price” $25. This is due to the fact that even if no one really pays full price, they’re more likely to purchase it if they think they’re getting a good deal, like 50% off. Another issue is not using sales. The retail industry puts time restraints on sales, like “this weekend only” or “for the next 12 hours” to get people into their store. A time limit helps with impulse purchases. Even if you don’t need anything, you’re likely to go in and check out the sale, and more than likely will leave with something you like but didn’t necessarily need.

With all of this in mind, while it’s ok to experiment with pricing, it’s important to stay in tune with your customers. When everyone has been conditioned to pricing done a certain way within your industry, it’s hard to implement such a radical change. Also, people like to believe they’re getting a deal! Another uh oh that JcPenny made was rebranding too much, and even trying to revert back to their old logo. While this can work at times, it requires much thought into the actual implementation, which is something JcPenny lacked. This rebranding caused them to close 14% of their stores back in 2017, and now they’re on the verge of bankruptcy. Cases like these are important to know of in order to learn from their mistakes instead of your own. Want help with your digital marketing to actually implement different strategies? Contact CIL today!


bottom of page