Ron Johnson: Can he do it?

Kudos to Penney’s Ron Johnson for trying to restore the sanity to retail pricing! Reality check: Penney’s regular price on an item that costs $10 to make has risen 43 percent in the past few years: from $28 in 2002 to $40 in 2011. But due to the ridiculous cadence of non-stop sales and promotions that permeates our entire industry, their actual out-the-door retail rose only 15 cents, from $15.80 to $15.95, during that same period. (See yesterday’s story, Ron Johnson discusses JCPenney’s new strategy.)

Ron Johnson presenting the new strategy in New York

Ron Johnson presenting the new strategy in New York

Can Johnson’s everyday low price strategy prove successful? My feeling is that it can, depending mostly on the merchandise. The right designs from the right names (whether brands, exclusives or collaborations) at realistic and stable pricepoints are indeed likely to excite consumers. Also needed: aggressive marketing, upgraded selling floors and a strong online component. Obviously, getting all this right at once is no simple matter, especially since Johnson is under tremendous pressure to slash expenses.

How will competing stores respond? Can branded vendors work within these new parameters? Are new designers able to produce goods at Penney’s asking price? Time will tell, but how refreshing to have a retail exec with enough courage to defy an extant system that is clearly broken.

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Comments

  1. Karen,
    You are so right. This might be the best thing that has happened to JCP and the retail industry in years. If JCP is successful this will be the best thing that has happened to independent specialty stores in years. Most stores I know can ride off of this and can send a clear message to their customer to support fair pricing. We all know how Jos A Banks marketing has hurt many of them, now it is their turn to fight back with clear markeing messages. I am having my marketing staff working on such a message.
    Gordon Forbes

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