you're reading...
CPG Sales

RetailWire Discussion: Penney to Switch to EDLP?

Penney to Switch to EDLP?

By Tom Ryan

January 23, 2012

According to reports, J.C. Penney will shift from a high-low pricing model to something closer to everyday low pricing (EDLP) as a central thrust of its reinvention under new CEO Ron Johnson.

Discount signs for in-season merchandise will be eliminated, staff at some of Penney’s New York stores told Dow Jones Newswires. Instead, price reductions will have been made before the items are placed on the floor. Also, the department store operator is expected to shift away from cents on price tickets in certain cases as part an overall push to provide a simpler way for customers to determine exactly how much each product costs. For example, an item that cost $19.99 under the old system will now be $20. Clearance items are still expected to carry J.C. Penney’s “Red Zone” designation and will have signs on top of the racks clearly highlighting the percentage off, staff told Dow Jones.

Mr. Johnson, who formerly led Apple’s retail division, is expected to announce the program to investors at a meeting Jan. 25. The pricing method is said to be similar to the one used by Target, where Mr. Johnson was vice president of merchandising before joining Apple. In October, Michael Francis, Target’s marketing chief, was appointed president of Penney.

Retail observers told the Chicago Tribune that Penney will have to make its shopping experience more exciting and further increase its portion of exclusive merchandise or continually face price wars against its high-low pricing rivals such as Macy’s and Kohl’s. Its recently-announced deal to build boutiques for Martha Stewart was seen as one step in this direction. Penney may also alienate its core clientele of price-conscious shoppers who expect mark-downs, observers said.

“If Penney moves to an everyday low price concept, they’ll lose a portion of those customers who only respond to price,” said Roger Goddu, a former Target executive, told the Trib.

Charles Grom, an analyst at Deutsche Bank, called the move “radical,” but necessary. He told Dow Jones, “Today’s shopper is more savvy than ever and retailers need to transform in order to compete more effectively — potentially discarding old habits to drive traffic.”


About Bob Innes

Who am I and what I do best! I am a skilled Sales and Marketing team player known for performing behind the scenes miracles that increase base distribution, improve customer relationship management, exceed annual sales volume,and profitability for Consumer Packaged Goods companies. And I've been doing it for over 15 years. My successful contributions include such clients as Kraft Foods, Mars, Bumble Bee Foods, Unilever, Johnson and Johnson and SC Johnson, and JM Smuckers.


No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Connect on Twitter

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 41 other followers

RSS Daily Consumer Smart Brief

  • An error has occurred; the feed is probably down. Try again later.
%d bloggers like this: