JC Penney proves why simple pricing is not so simple.

We so want it to work.  But it just never, ever does.

Ok, here’s the back story:

JC Penney is sucking sales wind.  JC Penney hires former Apple retail chief Ron Johnson as CEO to revitalize the company.  Johnson changes everything, and implements a “month-long value” pricing model, removing the word “sale” from Penney’s vocabulary.  At the end of Q1, Penney missed its sales estimates by almost 300 million dollars.

Or, in other words, after all that . . .

JC Penney continues to suck sales wind.

You can read the non-bullet pointed version of the story in this article from MSNBC.

So what really happened?

JC Penney proved that simply lowering prices doesn’t solve your sales problems.

There is a population of people out there that just pay full price and that’s it.

But, there is a huge and ever growing population of people who like discounts, who want discounts, who feel entitled to discounts.  And if these people don’t get what they want (even if it’s shrouded in complicated pricing strategies that are better for the seller), they won’t buy.

Bargain hunting, extreme couponing, even the Living Social and Groupons of the world have proven that shopping for the best deal is a game that many people like to play.  And when you take the game away, you end up losing.

We’ve seen examples of Penney-type simplified pricing in our biz a bunch of times . . . including this Previews Only price that popped up a few years ago, and, well, sucked sales wind too.

If you’re one of the hottest products/shows on the street, then you can do without discounts.  (Sometimes I think Ron Johnson forgot he went from hawking Apple iPhones to halter tops.)

But if you’re not, then in today’s consumers-have-control economy, discounting must be part of your strategy.

You just have to be smart about it.

 

 

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