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J.C. Penney cuts sales, starts new pricing system at Galleria

Darlene Todd, manager of the J.C. Penney store at the Rock Hill Galleria, searched for the right word.

"Is 'overpromotional' a word?" she asked.

It might not be in the dictionary, but it fits for the 110-year-old retail chain. Last year J.C. Penney had 590 promotions - 590 times Todd and her staff had to change signs and sales tags, and more than 590 times for them to tussle with, set up and tear down or fold and refold the merchandise.

"We got confusing to our customers," Todd said.

Confusing and often exasperating, especially when customers forgot to bring the direct-mail card for discounts. Unlike other store promotions, the only way to get that discount was to have the card, Todd said.

On Wednesday, J.C. Penney took what many are calling a bold step. It was the first day of J.C. Penney's strategy of consistent prices and consistent days for deals.

Nationally, the new, simple pricing, coupled with a new logo and some physical changes, are designed to shake up what some considered a dowdy retailer.

Locally, the changes will combine with an expansion that will double the store's selling space, allowing it to add more cosmetics, clothing, sportswear and home goods merchandise. Demolition on the new space is almost complete, with construction set to start Feb. 15. Todd hopes to have everything done in time for back-to-school shoppers.

Some of physical changes J.C. Penney is making at its stores nationwide will be delayed locally as the Rock Hill store expands. A new sign with a new logo won't come until later. But already some sales racks have been removed, as have sales tables. Store signage has been reduced by about 70 percent.

In place is the new three-tier pricing and tag policy.

"Red" is for everyday pricing that, on average, will be about 40 percent less than the previous year's price.

"White" is for month-long values. February values include jewelry and other Valentine's Day gifts.

"Blue" is for best-price items, the cheapest price J.C. Penney will offer. There will be some best-price items in the store at all times, Todd said. On the first and third Fridays of the month, additional items will be given a blue "best-price" sale tag.

The red-white-and-blue system is by design. CEO Ron Johnson hopes J.C. Penney becomes America's favorite store.

In addition to the pricing, J.C. Penney has implemented a new return policy. If you bought something at J.C. Penney and have the receipt, you can get your money back. If you got the merchandise as a gift and have a receipt, you can get the price paid for the gift on a J.C. Penney gift card. If you don't have the receipt, you can get a J.C. Penney gift card for the current price of the merchandise.

As for promotions, there will be one a month - each month with a different color and theme. A 98-page catalogue will be mailed to customers, the only time J.C. Penney plans to send promotional materials.

Johnson, who helped make Apple Inc.'s stores successful, is trying to repeat that success at J.C. Penney by shunning discounting and focusing on selling products and offering good customer service.

Todd said the changes should result in her colleagues spending less time on physical labor and more time with the customers.

Industry skepticism

Analysts aren't sold on the changes.

Deborah L. Weinswig, an analyst for Citi Investment Research, told the Associated Press that the question on investors' minds is "how will customers react to single price point versus a perceived discount under the old strategy."

Charles Grom, a retail analyst at Deutsche Bank, told the Associated Press it will be difficult for J.C. Penney to change buyers' habits. Macy's, for example, cut back on coupons a few years ago, only to reverse that decision when sales fell.

The start of the changes did not create a rush of customers Wednesday; shopping at the Galleria was sparse all over. But Todd said initial feedback on the pricing changes and expansion has been positive.

"Everyone is excited about the expansion," she said. "People can't wait to stay here and shop and not have to go to North Carolina."

On the new pricing policy, Todd said the message customers need to remember is "you don't need coupons to get a great value and a great price."

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