Strategic lessons from two department stores.
By Amber Hudson and Luke Sklar
Did you happen to see the latest JC Penny here’s-our-pricing-strategy-in-your-face campaign? The one with Ellen DeGeneres that’s all about “honest pricing”? The ads…a little funny. The strategy…a big fail.
So what happened? Things were on the up and up: they hired retail guru Ron Johnson (the guy behind the successful Apple retail stores) as their new CEO. He came up with this idea of no-gimmick pricing – open and honest pricing, no need to walk in clutching your coupons. Sounds good, no? It went over like pot roast as a vegan convention. Little Suzie Homemaker was pissed! She loved the thrill of the hunt, finding those great deals. RonJon ruined her fun. On top of that, we all know JC Penny, but not what it’s about. And trying to overtly differentiate on pricing in a land of EDLP, low-lower-lowest, roll back, rock bottom prices…honest pricing ain’t gonna win it.
Who is doing it right? The Bay. You don’t hear Bonnie Brooks’ on the radio proclaiming Now Fewer Scratch & Wins! No, she’s always talking about the product: styles, designers, exclusive offers while at the same time weaning people off the scratch & wins. Without telling them. And it’s working.
So, say it again with me people: You’ve Got To Start With Your Product. When it comes to things like pricing strategies don’t talk about it, just do it. Delight your consumers in your own, nice way. Price is an outcome of what you earn, not a strategy.