Penney by the Numbers
February 24, 2012,
NEW YORK - JCPenney's leadership team took to the stage here in late January to lay out a bold vision to transform the 110-year-old department store into a leading edge retail emporium filled with branded specialty shops encirling an interactive "town square" offering as-yet unrevealed services.
Even more eye-opening were some of the numbers ceo Ron Johnson shared about how the company has been operating in recent years:
● The Penney shopper visits the store four times a year
● 72% of Penney's sales are generated on items priced at 50% off or more.
● Penney buyers have been spending 50% of their time working on pricing.
● Penney ran 590 promotions last year at an average marketing spend of $2 million per promotion.
● The Sephora shops inside Penney produce $600 per square foot in sales. The rest of the store averages sales per square foot of $200.
Before introducing those figures as among the justifications for Penney's new non-promotional pricing strategy, Johnson vowed that the company will "leave bad habits far behind."
The new pricing grid the retailer launched on Feb. 1 is being billed as "fair and square" and consists of three tiers:
● Lower everyday prices more reflective of the sweet spot at which goods actually move;
● Month-long specials;
● Best prices, which will be offered on the first and third Friday of each month and are designed to clear out merchandise - although Johnson insisted that "clearance" is over.
By way of example, Johnson pointed to a core Penney towel that now retails at $10, but actually moves out the door, once all the discounts are taken into consideration, at $3.30. Its new everyday price is $4 and its "best" price will be $2.
Where the Cuts Will Come From
|JCPenney plans to “self-fund” the cost of remaking
its more than 1,100 stores by cutting
$900 million in costs. Here’s where it plans to
fi nd savings.|