J.C. Penney Aims to Win Trust With ‘Elsewhere’ Prices

J.C. Penney Co., having embraced everyday low prices, is going to great lengths to show customers its house-brand apparel is cheaper than rivals’.

Its latest gimmick in a series of sometimes confusing approaches: compare the price of a T-shirt, say, to ones sold “elsewhere.” And where is elsewhere? It’s not a place. It’s the lowest of competitors’ prices, researched by J.C. Penney’s merchants, on identical or materially similar items from specialty stores, Kate Coultas, a spokeswoman, clarified in an e-mail today.

Chief Executive Officer Ron Johnson is using the new price displays and resuming some sales after the retailer’s shift to everyday low prices led to three straight quarters of sales declines steeper than 20 percent. PVH Corp. CEO Manny Chirico, whose company makes the Izod brand at the department-store chain, said earlier this month that the everyday low pricing strategy was hurting J.C. Penney’s basics business and that the “value message” had to improve.

While it’s unusual to show comparison prices for private-label items that aren’t actually sold at other retailers, the strategy probably will help J.C. Penney, Barbara Kahn, a marketing professor at the University of Pennsylvania’s Wharton School in Philadelphia, said in a telephone interview.

“Customers just didn’t know how to evaluate the value of those goods, so I think what they’re learning is they need to provide some kind of reference price,” she said.

J.C. Penney uses prices at competitors -- such as Gap Inc. or J. Crew Group Inc. -- from the past 90 days in creating the tag, Coultas said. On the Plano, Texas-based company’s website, it shows the store’s price for women’s V-neck cotton T-shirts at $6, compared with $19 elsewhere.

“These are items that our designers developed to be competitive in the market with other core wardrobe items,” she said. The company advertised the changes in an e-mail to customers today.

J.C. Penney fell 1.8 percent to $20.63 at 3:48 p.m. in New York. The shares soared the most in more than a year yesterday after the company said it would resume sales for holidays and other key events.

-- Editor: Kevin Orland

(Company corrects pricing practice starting in second paragraph of story published Jan. 30.)
    Before it's here, it's on the Bloomberg Terminal.