Why did J.C.Penney’s stable pricing not work ?

An article in the New York Times (April 14,2013) describes the consumer experience at retailers such as J.C.Penney and the need to enjoy the sale and anchor the value of product sold. J.C.Penney’s attempt to reduce sale items, reduce average prices and stabilize volumes and thus inventory management was expected to impact performance. But customers could not value the products objectively in the absence of a reference price against which prices we being compares, thus sales dropped. Does this suggest that stable pricing should dropped as a apparel retailing strategy? Is it only suitable for high volume low price items ? Why does it work for WalMart and not J.C.Penney ?

About aviyer2010

Professor
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One Response to Why did J.C.Penney’s stable pricing not work ?

  1. Penney’s lost billions with this idea, and I think an appropriate comparison is to Zara. Zara minimizes sales because their brand is hip, they have low volume, and their lead time is short. Penney’s has none of these advantages. If I miss an item today, it will still be there next week. With a fashion item, if it isn’t isn’t popular quickly, it won’t become popular. Holding onto it by maintaining an above market-bearing price is a fool’s errand.

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