Will Consumers Respond to “Fair and Square”?

The retail world is buzzing over the changes at J.C. Penney. Led by new CEO Ron Johnson (the former head of Apple retail), the department store recently announced a simultaneous brand overhaul and an entirely new approach to product pricing. As of February 1st, J.C. Penney now boasts a new brand logo, a big-name spokesperson (Ellen DeGeneres), and a suite of refreshed commercials and marketing materials aimed at communicating the retailer’s updated brand philosophy of “fair and square.”

At the heart of this philosophy is a bold pricing strategy. According to Johnson, despite the myriad promotions and discounts offered at J.C. Penney—590 unique promotions in 2011 alone—these deals were largely ignored by the customer. Instead, a clear “price brand” emerged, revealing the price range in which the J.C. Penney customer prefers to shop. With this price band in mind, J.C. Penney now offers just three price levels: an “everyday” price, “month-long value,” and a “best price” for clearance items.

Since announcing the changes underway at J.C. Penney, Ron Johnson’s plan has been met with skepticism by some industry analysts who claim that his pricing strategy is premature, and simply too risky. While Johnson undoubtedly has a tough road ahead of him, his introduction of head-turning branding and pricing strategies must be applauded in an industry beset by increasingly tough competition.

Eventually, J.C. Penney stores will be updated for the modern shopper. By the close of 2015, every store location will feature approximately 100 unique “mini-stores” featuring brands like Martha Stewart, Sephora, and Izod. Nonetheless, these changes take time. The transition is particularly difficult for department stores—a retail model that relies heavily on outside merchandisers. For now, J.C. Penney’s greatest challenge will be the inevitable lag between new pricing and store renovations.

Small changes are already underway at J.C. Penney, where stores have been updated with the refreshed branding and price offerings. The question now is: will the shopper see a difference? Innovative ideas aside, it is ultimately the customer who decides the success of J.C. Penney’s new pricing strategy. In a perfect world, price changes would coincide with a full renovation of every J.C. Penney location. Of course, such transformation takes time in the real world and may affect customer receptivity of the new “everyday” price.

What are your predictions for the future of J.C. Penney?