Did JCP's everyday pricing message resonate a little too well?
Furniture Today Staff -- Furniture Today, May 16, 2012
New York - After a multi-media campaign touting its new streamlined pricing strategy resulted in a 20% decline in first quarter sales, JCPenney is shifting its marketing to emphasize month-long specials and "best price" clearance items.
"A lot of people think we're an everyday low price retailer. We're not," ceo Ron Johnson told analysts during a face-to-face meeting here yesterday evening. "We have promotions, but we don't have 590 of them. We have 12 - and they last all month, but people don't know that."
Another misconception, executives said, revolves around "best price" sales, which have been advertised as "Best Price Friday" on the second Friday of each month. Consumers mistakenly believe these are one-day sales. JCP will also work to sharpen its messaging there.
Up against a year-ago quarter that was heavy on coupons and discount pricing, first quarter traffic this year was off 10%. Traffic from Monday-Thursday dropped 6% on average, while weekend traffic - where JCP had been most promotional - fell 12%, coo Mike Kramer explained to analysts.
However, he said, there was some good news. Among customers who shopped the stopped, 21% actually bought something - not far off the 22% conversion rate in last year's first quarter. The average spend was $46, down 2% from the $48 average spend a year ago. And 67% of sell-throughs were at the highest ticketed price - an improvement from last year when 70% of merchandise sold at 50% off or higher.
"The primary issue here is traffic," said Kramer. "We did not realize how deep" the commitment to coupons ran.
Last weekend, JCP began running ROP ads in Thursday and/or Friday newspapers emphasizing its month-long specials. Next weekend it will begin advertising its "best price" items along with full-price comparisons.
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