I could see this being hugely successful. The only question is whether people have been conditioned for the sale season. Growing up in a household full of women who buy clothing and accessories all the time, they particularly save up for when holidays approach.
Johnson pointed out that last year, JC Penney had 590 promotions, which made it seem that everyone was always on sale in some form or another. Honestly, that's tremendously confusing for consumers, as you basically can't keep track of what's on sale. The net result is they were selling everything at such a low price, that a 40% cut puts it only higher than the average sale price with those near-600 promotions.
"“So customers ignored us 99 percent of the time,” he said. “At some point, you, as a brand, look desperate if you have to market that much.” He will move to monthlong promotions, on which Penney will spend $80 million a month, he said, which is a decrease from Penney’s current marketing spending level, which is more than $1 billion a year. And instead of mailed fliers, the company will send shoppers a 96-page catalog each month with a more magazinelike presentation."
72% of JC Penney's revenue came form products sold at a 50% or higher discount. So a 40% across the board reduction on SKU prices still increases their ASP. Apparently from between 2002 the 2011, their average cost per item sold stood around the same, yet even as the average price tag rose from $27 to $36, JC Penney's margin never increased due to the 590 promotions a year. "Now most things are on 60 percent markdown, and every time we do that, we're discounting Penney's brand".
So less trickery around pricing, far fewer promotions at regular schedules with long intervals that consumers can actually respond to, and an attempt to increase the overall ASP of products. Sounds like a good change from their promotion-driven, brand-devaluing death spiral.
Johnson pointed out that last year, JC Penney had 590 promotions, which made it seem that everyone was always on sale in some form or another. Honestly, that's tremendously confusing for consumers, as you basically can't keep track of what's on sale.
I agree. I wanted to buy a sports jacket at Macy's, but their continuous sales made me wait for a long time. Every time I would just peek into the store; and then convince myself to wait till the next big "sale" came along.
The teaser ads that JCP is running on TV show people getting mad and screaming at piles of coupons as they fall out of mailboxes, newspapers, clippings, etc and then missing the sale when they get to the store, or after the fact:
Just yesterday I was looking for shirts at a top3 US retailer and encountered something I'd never seen before:
- there were six rows (shelfs) and about 7-8 columns
- there was a maybe 14x10" "70% OFF" sign at eye level
- HOWEVER, there were two qualities/brands contained in the cells
- one brand had the clearance 70% off marked on their tags
- the other brand DID NOT and was marked full price
- the clearance and full price cells were randomly placed
It probably wouldn't work everywhere but JC Penny's is a little weird with their sales, it generally seems like at any given time about a third to a half of their stock is "on sale." I don't know about the everyone else but at this point in my life sales at JCP don't even register.
