J.C. Penney’s forward-thinking pricing strategy not working so well

• cause In January, new J.C. Penney CEO Ron Johnson announced an innovative plan to cut back on marketing by trimming overall prices and cutting back on coupons. The strategy was initially lauded.
• effect But … after more than six months of the strategy, it’s proving difficult to show any positives. Sales are down 21.7 percent in the most recent quarter, and revenue is also down by 22.6 percent.
• retreat? While Johnson is sticking behind the basic idea, saying sales will bounce back in 2013, he has done some backtracking in recent weeks — the store will begin using words like “clearance” again. source

» The problem — no coupons? Analysts are skeptical about whether consumers will actually respond to the changes Johnson’s making — particularly because they’ve been trained to use coupons. ”I am very skeptical as to whether he (Johnson) understands that the J.C. Penney customer is looking for value and perceives value only with couponing,” says Walter Loeb of Loeb Associates, who feels that competition with Macy’s is making J.C. Penney’s position tough to keep.

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