News / Retailer News

JCPenney To Work On Private Label Pricing Strategy

February 28, 2013

JCPenney CEO Ron Johnson told analysts Wednesday that as part of the retailer’s next transformation, it would pay special attention to promotions and pricing in its private label products.

Johnson said that the stores’ heavy renovations to its home department would help serve as a draw for other areas of JCPenney.

“As customers come in to shop for home, they’ll discover Joe Fresh and Sephora and MNG by Mango and more, and many will see for the first time the irresistible style and unmatched value we deliver through our great own brands such as Arizona, Liz Claiborne, Worthington, JCP and St. John's Bay,” he said on a conference call announcing quarterly earnings, according to transcripts from Seeking Alpha. “Our promotion will be targeted almost exclusively within our private label brands and with select national brands who choose to run their business this way.”

Johnson said the company already has begun promotion of its value items, such as men’s and women’s T-shirts for $5 and silk shirts for $30, in its latest Compare commercial campaign.

“That has performed exceptionally well,” he said, according to the Seeking Alpha transcripts. “In fact, we're out of stock on many of those and chasing them and we've actually had to reduce our marketing until we catch up on our inventory.”

Seeing that success rate, Johnson said the store will focus on finding the right pricing target for its own brands rather than searching for sales to draw attention.

“So those items we sold at the everyday price. Our national brands will primarily be sold at an everyday price, but using an MSRP,” he said. “Where we will make a small change to our pricing is in our own brands, because we're going to promote them more aggressively to get customers in the store.

“We think that savings of 20 percent or 25 percent are hitting a great price point will drive traffic to our store and give that savvy shopper the savings that she wants to help her family. So we'll be tweaking our own label pricing as we move through the year to make sure we can still deliver on our promise to deliver 40 point gross margins in the long run.”

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