Now, J.C. Penney is changing its pricing — again — to add back more sales. Among other changes, the company began eliminating last month its monthlong sales and instead is increasing its clearance sales to every Friday. Mr. Johnson acknowledged that J.C. Penney made some mistakes, but he’s vowing to stick to the everyday pricing plan.
“Withdrawing from our promotional model to a more everyday model has been harder than we anticipated,” he told investors in August. “But it doesn’t change our conviction that the promotional model had run its course, and we have a far better path forward.”
J.C. Penney isn’t the only retailer finding that everyday pricing is a tough sale to shoppers.
Like Wal-Mart, Lowe's, the nation’s second-largest home improvement chain, built its business around “everyday” low pricing. But then the company strayed away from that and started offering more sales when the housing market tanked in 2006. Shortly after, the company’s performance began to lag behind its bigger rival Home Depot, which never veered away from its everyday pricing strategy.
Since last summer, Lowe's flip-flopped. It has been permanently cutting prices on a wide variety of items to better compete with Home Depot. But the strategy hasn’t worked. Lowe's posted a 10-percent drop in net income amid a 0.4 percent decline in revenue at stores opened at least a year in the second quarter.
Lowe's is still sticking to its everyday price plan, but it’s re-evaluating to find the right balance between everyday low prices and temporary promotions.
“We knew it was going to be difficult,” CEO Robert Niblock says. “But we may have been overly optimistic.”
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