Clothing retailers appear to have perpetual sales that do nothing but mislead customers about the value of the deals they’re getting. As we’ve previously covered Ron Johnson wanted to try to change that and implement a system of fair pricing. The initiative has been an abject failure and has seriously damaged J.C. Penney’s sales. What happened?

• Coupons and false ‘sales’ are a drain on retailers. It makes supply difficult to project, and leads to uncertain profit margins.
• It’s not that great for customers either. They don’t really get a discount when they go to stores – instead the retailers inflate the original price and then pretend to mark it down to make it seem like a good deal.
• In theory then getting rid of coupons and facetious sales is a good deal for both parties.
• Yet human beings seem hardwired to look out for deals – even if they’re fake. The thrill of the hunt is half the fun of shopping.
• Part of the problem is that J.C. Penney couldn’t promise the lowest prices the way that chains like Walmart do. All it was claiming was ‘low’ prices but what was ‘low’ was being defined by J.C. Penney and consumers had no reason to trust it.
• Thus J.C. Penney’s initiative failed and its CEO Ron Johnson was replaced.

Read more about the struggles that other companies have had with honest pricing, the merits and drawbacks of honest pricing, areas where it may work, and more over here.

Source: The New York Times