JCPenney retools prices, marketing again
HTT Staff -- Home & Textiles Today, 8/10/2012 2:18:32 PM
New York - Only 10 days into a new pricing strategy and revamped marketing thrust, JCPenney executives said they are seeing an improved trend line in sales.
Sales took their heaviest hit of the quarter in July, when JCPenney pulled the plug on its marketing approach and "went dark," ceo Ron Johnson told analysts during a quarterly review here this morning.
"We cancelled the July book, which was in print and ready to mail. We cancelled the preprint. And we turned off the television advertising," he said.
On Aug. 1, Penney pared its pricing strategy from three tiers - everyday, month-long specials and "best price" (clearance) - to two: even lower everyday prices and clearance (no more "best price" labelling). The company also reallocated marketing dollars, shifting emphasis to preprint pieces and dialing back its television ad spend.
For the full spring season, JCP ran 11 preprints. It's running eight in August alone and 30 in the second half of the year, Johnson said. The print pieces focus on product pricing, he added. "No more lifestyle" as the marketing pitch.
Where store traffic had been down 14% to 20% during spring, in the first 10 days of August traffic declines are averaging 7% and sales are roughly 2% better, cfo Ken Hannah told investors today.
"We're encouraged," said Johnson.
He reiterated JCP is not backing off the EDLP strategy and quoted a statement company founder James Cash Penney made in 1920 that begins: "We never overprice our goods. We never have special sales."
Added Johnson: "The every day business model is unique to us. If you have great everyday prices, how can you have month-long sales?"