13 February 2012 Jay Shepherd

Kudos to JCPenney for simplifying its pricing

Can new JCPenney CEO Ron Johnson turn around the fortunes of the ailing department store? He certainly hasn’t wasted any time making changes. The former head of Apple’s retail arm recently announced that Penney was radically restructuring its pricing strategy to make it simpler and less dependent on discounts:

“The customer knows the right price,” Johnson said. “To think you can fool a customer is kind of crazy.”

In the past, only 0.2 percent of sales came from full price items and Penney’s 590 unique promotions a year were confusing and failed to draw shoppers, he said.

Discounts are almost always a bad idea, as it makes it impossible for customers to discover the value of what you’re selling. And complexity in pricing inevitably frustrates customers, and sends them to your competitors. It will be interesting to see if these changes are in time to save JCPenney.

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