Why JCPenney's No-Coupon Experiment Is a Bust

JCPenney’s new plan—stop offering huge markdowns on inflated, “fake prices” in order to offer “fair and square” pricing—sounds good in theory. Prices start at least 40% lower than they had been, with no need for customers to take advantage of sales or coupons to get the lowest price. But, though CEO Ron Johnson insists that “customers love the new JCP,” first quarter results show that sales are way down. “The consensus … seems to be that the JCPenney makeover is shaping up as a major flop,” writes Brad Tuttle in Time.

Why? Shoppers like coupons and sales. Johnson thinks this problem can be solved by “educating” shoppers about the new, fairer pricing strategy, but they don’t want to be educated, Tuttle writes: They want “that ‘Wow! What a deal!’ high” that only markdowns bring, and that high can usually be found at an establishment right next door to your local JCPenney. “While shoppers may like the idea of predictable pricing in theory, in practice anything that’s predictable becomes boring,” Tuttle concludes. “However contrived and manipulative, coupons and flash sales build excitement.” Click for his full column. (More JCPenney stories.)