First, a definition of shrouding:

Shrouding isn't the only reason Penney's pricing plan is flawed. The firm is also leaving a lot of money on the table by rejecting a phenomenon known as "price discrimination." Some people have more money than time, and some have more time than money. Some shoppers don't mind spending hours to save $20; others would gladly give a store $20 to escape quickly. Smart retailers get money from both. By killing couponing, Penney has eliminated its ability to satisfy price discriminators.

And as others have pointed out, markdowns serve the age-old retailing trick of "anchoring." For some reason, even very smart consumers feel better paying $60 for something if you initially tell them it costs $100, and then reduce the price.

But the real problem is Penney's ill-fated attempt to cast itself as the only fair poker player in a game of cheats. Shoppers just aren't buying it. However unsophisticated consumers are, very few of them believe a pair of shoes bought at Penney's everyday low price will be cheaper than a pair of shoes bought at Macy's on clearance with a 25 percent off coupon.

Like it or not, hidden fees – and secret discounts – are here to stay.

 

^^
Indeed, we do love our bargains or perhaps even need(!) our bargains. Penny seems to have underestimated the power of our addiction to the "incredible deal"? It just isn't there if you can't discount an item's pricing! :crazy:

 

Excellent post. I'm gonna have to dust of my college econ textbooks to read the Yale paper. Depressing however. Humans are such irrational creatures.

 

Maybe JAB and MW are on to something with the forever sales.

 

Perhaps I'm wrong but I always thought the reason for the big sales was to clear and change stock at the end of a "fashion season". Those who want to be "hip" "cool" and "in" buy whenever the "new" items come out (although I fail to see how many classic men's item are really a seasonal trend i.e. shoes). As these companies need to change stock I fail to see how they would avoid big sales unless they stopped selling seasonally.

 

Maybe JAB and MW are on to something with the forever sales.

Depressing, and true. We even educate some of our customers on the nature of the anchoring - i.e., provided you're willing to buy two suits, the most you will pay will be retail cost of one + $100. One can assume that the "true" retail cost, at least on average, of one of our suits is roughly 55% of what is listed on the tag, or 50%, if one is willing to wait a few weeks for BOGOFree. Despite the fact that most longterm customers should be aware of how these sales function, we still see huge upswings in business during expected sale times.
People expect retailers to offer sales for Memorial Day, so they come in and shop. Save for some emailed deals, our sale is currently BOGO, has been BOGO for two weeks prior, and will be BOGO for two weeks after, but you'd assume that people were worried we were about to run out of products from the way they shop this weekend.

I really admired the new direction for JCPenney's, and I've been looking to find a few casual items I can purchase regularly there to express my admiration. Between their much more transparent pricing, and their staunch support for their new spokeswoman, I hoped they would have a bright year. Maybe they will yet, but this is truly a depressing phenomenon.

 

Something's fishy already.

There have been increasing discounts on JCP giftcards sold by third-party retailers in the last few months. The average discount is 20-30% off the card value. Discount shoppers who utilize coupons are increasingly aware of such deals, and I think JCP is already surreptitiously trying to bring back these customers this way.

On a side note, it's not just that they changed their promotion strategy which led to this. They also dropped brands like Sperry and are ending their partnership with Ralph Lauren. While Dockers and Izod are still making the cut, JCP has pared down their selection primarily to house brands far more than ever before, and I think this is equally dangerous for them. Of course, Penney's was never a high-end department store, but with some disparity in quality between standard fare and the "upper-scale" merchandise (like American Living), there was always eyecandy for shoppers whether they would buy it or not.

When you shop in a store where you can afford everything, you lose the desire to return when you can afford better merchandise; you just move on to another store. I think that's the more dangerous aspect of this for JCP. The pricing scheme seemed laudable, but it can be reversed more easily than ending a deal with Ralph Lauren.

 

This is from the JC Penny's ad in yesterday's paper. Guess they're having a sale off of their "everyday" prices. Perhaps JC Penny's shoppers don't like playing this sort of game? How about honest sale prices like everyone else rather than this "everyday" gimmick? I can imagine someone having paid the "everyday" price and now feeling shafted themselves.

 

I quit going to JCP because of how the store is now arranged, not because of their pricing. No rhyme or reason to how the men's clothing is arranged or placed. Highly irritating.

 

Two days ago I heard a JCP radio commercial (for the first time) touting their new one price marketing scheme. One day ago I read the news that JCP's turnaround plan has been such a disaster that heads have rolled.

That's about as crazy as a sit-com plot. Here's the article:

J.C. Penney Executive Departure: 'News Is Not Good Under Any Scenario'

I like From which I will quote:

"The departure is the latest sign of tumult at J.C. Penney, which last month reported a bigger loss than expected and a 20 percent drop in revenue as shoppers fled in confusion over the new pricing strategy..."

Where was the test marketing and the staged implementation plan? I wonder why these problems weren't caught when they tried out the new concept in Peoria and Boise, before implementing it system wide.

According to this article, the ousted executive was compensated $10 million for the nine months he worked at JCP. Anybody know what level of payment that will qualify him for when he applies for unemployment?

 

Funny because when they started this "one price marketing scheme", my wife who used to be an avid JCP shopper predicted that heads will soon roll because it will not work. :frown:
Hope they go back to what they used to be. Humans love feeling like that they got a good deal when shopping.

 

I really admired the new direction for JCPenney's, and I've been looking to find a few casual items I can purchase regularly there to express my admiration. Between their much more transparent pricing, and their staunch support for their new spokeswoman, I hoped they would have a bright year. Maybe they will yet, but this is truly a depressing phenomenon.

And yet, according to, the average shopper in JCP is buying more than ever before so just possibly the new policy may work out after all.

 

Something's fishy already.

On a side note, it's not just that they changed their promotion strategy which led to this. They also dropped brands like Sperry and are ending their partnership with Ralph Lauren.

I think brands have a lot to do with it, at least at the Penneys located nearby. I rarely go into a Mall, let alone a Penneys, but before this past Memorial Day, I traveled to the local Penneys to look for some Levi shorts. Penneys no longer carries Levi shorts at this local store (they do have their own brand, at a price much higher than mail order name brands such as Levis or Lands End). Very large jean department, but again, their own tepid brands or some Lee's. I was also looking for new Sperry Topsiders (got the last pair at Penneys). Again, no dice for Sperrys, but they did have their own brand (looked like crap, even at their so called "fair" price).

Maybe the pricing concept would have had a better chance with brands of the past few years???

 

I think brands have a lot to do with it, at least at the Penneys located nearby. I rarely go into a Mall, let alone a Penneys, but before this past Memorial Day, I traveled to the local Penneys to look for some Levi shorts. Penneys no longer carries Levi shorts at this local store (they do have their own brand, at a price much higher than mail order name brands such as Levis or Lands End). Very large jean department, but again, their own tepid brands or some Lee's. I was also looking for new Sperry Topsiders (got the last pair at Penneys). Again, no dice for Sperrys, but they did have their own brand (looked like crap, even at their so called "fair" price).

Maybe the pricing concept would have had a better chance with brands of the past few years???

This. On the occasions that I have been in Penneys, my reasons for not purchasing anything have been less to do with their pricing and more to do with the fact that there's not much I'm interested in buying.

 

According to this article, the ousted executive was compensated $10 million for the nine months he worked at JCP. Anybody know what level of payment that will qualify him for when he applies for unemployment? [/QUOTE]

In California, $450 a week!

 

This. On the occasions that I have been in Penneys, my reasons for not purchasing anything have been less to do with their pricing and more to do with the fact that there's not much I'm interested in buying.

Bingo. No matter how 'fair' the pricing, if people don't want it, it won't sell. IMHO, JCP stocks Walmart-caliber products but tries to compete on the Macy's level - which is just incompatible.

 

Bingo. No matter how 'fair' the pricing, if people don't want it, it won't sell. IMHO, JCP stocks Walmart-caliber products but tries to compete on the Macy's level - which is just incompatible.

Bingo!

 

This is a discouraging news issue. I lauded JCP for their effort and had high hopes. Not for me, as I don't really shop there. But there is one in my mall, and I always felt it was a shamble of poor merchandise, pricing, odds and ends, etc. So I was excited (for them) in how they chose to address it, in a way that I thought made sense. I even went in there and bought something nondescript and felt ok about it. For it to fail then means that we are stuck forever with stupid sales, coupons, gimmicks, etc. Thats too bad. Maybe they can pull out of the nose dive. I recall a second part of the grand plan was to completely change the layout of the stores. Will that be shelved now, for lack of funds? That again, would be too bad.
Tom

 

In California, $450 a week!

LOL

 

Somewhat germane to this thread:

https://www.theatlantic.com/busines...usiness/archive/2012/07/the-11-ways-that-consumers-are-hopeless-at-math/259479/

 

In the second time of less than 3 weeks, I had to go into a local mall in search of several items. I again went into a JCP and left nearly as quickly as I entered. Same house brands as in years past, but with prices significantly higher than name brands (whose prices were also higher than available elsewhere).

In this edge of the market (think JCP and the like), with basically commodity priced goods, I would contend that on-line shopping has taken a very exacting toll. Take, for example, Best Buy and what they have tried to do (with great failure). Their efforts in presenting a "big box store" turned out to be nothing more than a showroom for Amazon shoppers. If you're going to go into a JCP to buy off the rack, why not just be an Amazon Prime member, and order on-line, and saving quite a bit of change? Only downfall is having to wait 2 days to receive your goods.

I for one, would think JCP should return to what it was 5-10 years ago.