Fake Prices At JCPenney? Why Not Real (But Rigged) Price Comparisons?
Who actually believes in MSRP, anyway? On January 24, the New York Post breathlessly reported that JCPenney was asking (or maybe just planning to ask) suppliers for a "fake" list price, even if they don't have one, so the 110-year-old chain could display that price along with JCPenney's own lower price. The Post was shocked, shocked to find that pricing gimmicks were going on in retail.
The chain denied any fakery, but the real shock is that JCPenney bothered. Customers don't care about the Manufacturer's Spurious Retail Price. They care whether JCPenney's price is lower than Macy's or Kohl's, and they can get that information online. Why isn't JCPenney doing the same thing?
According to the Post, JCPenney CEO Ron Johnson was personally pushing suppliers who haven't provided a suggested retail price to give one to the chain in writing, so the list prices can be used in in-store signage. JCPenney responded on Monday (Jan. 28) that it has been using list prices on signage for Levi's and Izod since last fall and is just expanding that program to most merchandise, but the chain "would never insist that our suppliers falsify their MSRP to create the illusion of value."
All this is silly, especially because JCPenney is trying to get younger, more affluent customers in the door—the kind of customers who have smartphones and aren't afraid to use them to compare prices. It's the street price that matters, not a fictional list price.
So why isn't the chain doing that, too, with a two-pronged strategy? For shoppers addicted to online comparison sites, JCPenney could push any price drops to the price-comparison Web sites proactively and not wait for the comparison spiders to discover price changes. (Yes, we know JCPenney said it wasn't going to have sale prices like that anymore. The chain changed its mind about that on Monday, too.)
As for in-store, why isn't JCPenney comparing its prices to real competitors instead of fictional prices? And why not apply a little automation to update those price-comparison signs daily? How about a little automated daily Web searching to grab the prices from selected competitors for each product, a bit of cherry-picking to select competing prices that all happen to be higher than JCPenney's price, and then a new set of signs electronically sent and automatically printed fresh in the store each morning, complete with a date stamp for shoppers who read the small print?
Yeah, that's a pricing gimmick, too, but it's not the type that a tabloid jumps on. Better still, it's the type that feeds off what price-crazed customers are actually doing. Pure-play E-tailers are both helped and hobbled by the fact that they can compare (and change) prices almost instantly in response to the competition. Nobody expects that in-store, but giving the impression that you're responding to competitors' prices on a daily basis probably can't hurt.
And these days, with or without tabloid headlines, JCPenney can use all the help it can get.