Photo courtesy of Dravecky
By now, you've no doubt heard the news that JC Penney has fired their new CEO Ron Johnson after only 17 months on the job, and reinstated their old CEO Mike Ullman.
I've been following this story about JC Penney with interest, because I was actually very heartened by the changes Johnson instituted. Rather than artificially inflating prices so the store could have sales and send out coupons to customers, Penneys had decided to go to a "fair and square" pricing system, where they just kept their prices reasonable and consistent. That meant you could stroll into a Penneys on any old day with no coupons whatsoever and know you were getting a good price.
That, to me, seems like a great innovation.
Unfortunately, I seem to be in the minority.
What Ron Johnson didn't take into account was the fact that shopping is very rarely just about purchasing goods. For the bargain-hunting types who thrive on sales, coupons, special deals, and the like, shopping is actually a game, wherein you can "win" if you save more money than some other sucker who's paying full price. For many shoppers, scoring the cute blouse for just under $10 is more about the thrill of the hunt, and less about the blouse itself. This hardly makes sense if you're looking at shopping rationally--which I try to do and Johnson clearly did--but considering what we see once a year on Black Friday, it's probably safe to say that "rational" and "shopping" are not necessarily two words that can be uttered in the same breath for many American consumers.
Basically, Johnson was under the impression that Penneys was selling consumer goods, when in actuality, they're in the entertainment business. By changing the pricing system to reflect the true cost of the items for sale, Penneys took out the entertainment value of bargain hunting, and completely eliminated many shoppers' reason for shopping there.
As they're new ads have proclaimed, "Oops!"
For me, I'm disappointed that things have gone the way they have for Penneys. (I'd like to think that if I had spent any time thinking about the new pricing system, that I would have had an inkling over a year ago that it wasn't going to work--but I don't think I'm nearly that smart). I would love to see shopping become a more straightforward transaction: you need a particular item, you search for said item and potentially compare prices, you purchase said item. End of story. But considering the fact that shopping (and even bargain shopping) is something of a national pastime, it's unlikely these kinds of games will be ending anytime soon.
Too many of us enjoy the game for companies to start replacing it with rational pricing.
What did you think about Penney's "fair and square" pricing strategy? Were you pleased or disappointed that bargain hunting was no longer possible? Are you more likely to shop there now that you can take advantage of sales and coupons again?