Monday, May 21, 2018
Business

JCPenney prices: dollars and no cents

Prices at JCPenney stores are losing their "cents" and being rounded to the nearest buck.

Dropping the 99 cent finish from most price tags is one part of a new pricing strategy the department store chain will unveil this week as it tries to steer away from the tricky mind games of promotional pricing.

It's just the first chapter of a highly anticipated new vision for moderately priced JCPenney, shaped by new chief executive Ron Johnson, a onetime Target merchant who ran the Apple Stores for Steve Jobs.

Old-school merchants for decades have used pricing stunts like $19.99 or $29.99 to fog up what shoppers are really spending. In many bay area JCPenney stores, recently printed price tags say $20 or $30.

The retailer isn't talking yet, but Dow Jones reports JCPenney will also announce an everyday low pricing strategy that's supposed to wean customers off a "wait for the sale" mentality taught by apparel stores' endless series of heavily advertised promotional sales, coupon deals and "special purchase" offers.

Typically stores like JCPenney and rivals Macy's and Kohl's price an item at say, $70, then promote it over and over for 40 percent less to generate traffic. Instead JCPenney would just price the item at $42 (40 percent off of $70) all the time. JCPenney would continue to mark down prices for clearance of unsold merchandise.

It's a tactic ripped from the discount store playbook, although Nordstrom and Neiman Marcus use variations, too. In return for price credibility, experts think JCPenney will lose customers driven only by deep discounting.

Dial a drink Those touch screen Coca-Coke Freestyle vending machines that pour 128 choices of soft drinks are spreading. Add Five Guys, Moe's Southwest and all 850 company-owned Burger Kings to the list of chains.

For those who use a Freestyle to customize their own drink blend, Coke is working up a smart phone app. It would store a customer's favored mixture and transmit the recipe on command.

Meantime, in a nod toward sustainability, Coke is replacing all wood racks it uses in convenience stores with recycled paperboard. "Some stores are concerned our new racks look like cardboard," said Justin Honaman, a vice president of Coke Refreshments. "We want them to look that way, so people know we're recycling."

Fashion for rent Rent the Runway has turned fashion industry heads by leasing designer fashions for that special night out.

After all, renting worked for tuxedos, trash bins and Netflix.

About 10,000 young fashionistas weekly have been paying the 2-year-old website about a tenth of the purchase price to rent a constantly changing selection of designer dresses, jewelry and handbags that are overnighted for a four-day rental. Pricing starts at $10 for a handbag and runs from $40 to $200 for a dress from this startup, which is bankrolled by Bain Capital.

It's an answer to younger women today who yearn for Jimmy Choo shoes, Chanel gowns and Birkin bags they cannot afford, explained Rent the Runway co-founder Jennifer Hyman. "We offer her an affordable way to have Cinderella night memories," said Hyman, a Harvard business grad. The inspiration came after her sister, Becky, complained of nothing to wear to a wedding because the new outfits in her closet were "obsolete" once she wore them in photos on her Facebook page.

Mark Albright can be reached at [email protected] or (727) 893-8252.

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