CEO Ron Johnson's plan for JC Penney replaces standard pricing with a model that treats customers like rational beings.
The retailer does away with frequent sales in favor of everyday low prices. It also rounds prices to the nearest dollar, pricing at $20 rather than $19.99.
But irrational customers are longing for the old system, reports NYT's Stephanie Clifford:
“I really, really miss my coupons,” Robyn Anderson-Beard wrote on the retailer’s Facebook page. Bobbi Cada wrote: This “is not a change at all, there has never been a day in all of my shopping at JCP where ANYTHING has been full price.”
And visiting a J. C. Penney in Florida this month, Michelle Clark, a Morgan Stanley analyst, took note of “sales associates that had difficulty explaining the new pricing strategy,” along with a lack of shoppers.
Rafi Mohammed, a pricing consultant, said Penney’s merchandise was not unusual enough to draw customers into stores without significant markdowns. “A lot of people feel good about saving money and having a notion of, ‘I saved X percent,’ ” he said. “Consumers do code a $19.99 very differently than a $20.”
Johnson may be learning that Penney customers are a different breed than Apple customers. The question is whether he can train them to be rational.
