JCPenney (NYSE:JCP) has joined Kohl's (NYSE:KSS) as the target of lawsuits complaining about "mark up to mark down" practices, ABC News reported on Wednesday (June 5). There's a particular irony to the complaint against Penney's, though: In the time since the lawsuit was filed, the chain has dropped the practice, lost truckloads of money because of that, and reinstated it.
The lawsuits actually come in two varieties. Some complain that a retailer did start out with a higher price, but it was so unreasonably high that no one could be expected to pay it. Others insist that the retailer actually is changing price tags to higher prices so they can later be reduced. (An ABC affiliate in Cincinnati investigated a local JCPenney store and claims it found that practice.)
It's the first variety of lawsuit that a California woman filed in 2011, after buying "over $200 in private branded and exclusive branded apparel and accessories." Her lawyer wants it become a class action.
Kohl's was hit by a similar lawsuit in 2010, filed by a California man. That case was dismissed by a judge who said the man had suffered no damage, but was reinstated last month by an appeals court that said a jury should decide that question.
That's probably baffling to anyone who didn't grow up in a American-style chain-store culture, where prices are fixed and haggling is met with incredulity. (In most of the world, they're incredulous if you don't haggle.) But it's even more baffling to anyone who realizes that even big U.S. retailers expect haggling—they just expect it in slow motion, over weeks instead of seconds. That's what mark-ups, mark-downs, sales and clearances really are.
In any case, this is clearly not a new legal trend for retailers to be concerned about—with cases filed in 2010 and 2011, it qualifies as a relatively old trend. But it's going to hang over the heads of the whole retail industry until there's some clarity—and that, unfortunately, is going to require a few trials.
- See this ABC News story
California Stores Can Be Sued For Markdown Fakery, Appeals Court Says
JCPenney Reverts To "Mark Up To Mark Down"
Fake Prices At JCPenney? Why Not Real (But Rigged) Price Comparisons?