JCPenney model not going away anytime soon

5:09 PM, Nov 9, 2012   |    comments
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MINNEAPOLIS - Despite a disappointing third quarter for JCPenney Co. in which the department-store chain saw revenue plummet 26 percent, a local retail analyst predicts the retailer won't be bailing on its sales-free concept anytime soon.

"They've torn the company's basic model from the ground up and recreated it, but it remains to be seen whether you can pull it off when everybody else is doing these continuous sales," said Dr. George John, a marketing professor at the University of Minnesota.

John said the company embarked on an ambitious reinvention effort that includes introducing several stores within stores and ditching discounts in favor of everyday low prices. Both concepts will take a while to get traction within a competitive retail marketplace, he said.

"Over time, they've taught consumers to wait for sales and buy when it's on sale. Who buys anything from Penney's or Sears at the retail price? It's always dollars off. So how do you break people out of that habit? That's tough," John said, adding that the company will likely wait at least a year to see if the concept eventually sells.

On Friday, JCPenney CEO Ron Johnson announced the store would be making some changes to its pricing strategy, including holding a "Black Friday" sale and changing price tags to show the suggested price and the everyday JCPenney price.

Meantime, customers at Ridgedale were split as to whether the pricing strategy would work.

"The simplicity of it, I think is appealing. I've never liked the 98 cents and the 99 cents, and the false impression that it's actually cheaper than it is," said Jackie Regan of Minnetonka.

"If they're not advertising some types of sales, I think that's going to hurt them in the long run," said Anna Zuehlke of Minnetonka.

(Copyright 2012 by KARE. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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