J.C. Penney Denies Tricking Customers With Phony 'Suggested' Prices


The centerpiece of CEO Ron Johnson's makeover of J.C. Penney (JCP) has been the idea of "fair and square pricing" -- eschewing discounts, coupons and other promotions in favor of everyday low prices. But a new report suggests that the company's pricing isn't as fair and square as it might appear.

James Covert wrote in the New York Post Thursday morning that Johnson is pushing vendors to make up suggested retail prices for their clothing so that its own prices seem even lower by comparison.

The Post's sources emphasized that the retailer isn't asking manufacturers to artificially inflate their sticker prices -- a practice Johnson himself once condemned. Rather, the sources say that J.C. Penney is asking manufacturers to invent suggested prices where none previously existed, even asking them to put those suggested prices in writing.

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If true, it becomes the latest point in a pattern, the outline of which suggests that the floundering retailer is moving away from its revolutionary new pricing strategy in the face of falling sales and fleeing customers. In October, Penny's blasted out a $10 coupon to email subscribers, but insisted it was a "gift," not a coupon. Then over the holidays, it got in on Black Friday with what it called its "only sale of the year" -- which was followed not so many weeks later by an end-of-year clearance sale.

In an emailed statement to DailyFinance, company officials acknowledged a new effort to display MSRPs on select brands, but denied fabricating suggested prices. Here is the statement in full:

"We began showing the MSRP last fall on national brands including Izod, Alfred Dunner and Levi's to illustrate how jcpenney's low every day prices compared to the manufacturer's suggested price. Customers appreciated having a reference price so they can better understand the value we offer. Because it successfully resonated with customers, jcpenney plans to expand this effort by showing the MSRP comparison on additional national branded items -- which was previously shared during our Q3 earnings presentation last November.

"As is common across the retail industry, national suppliers determine the MSRP. We would never insist that our suppliers falsify their MSRP to create the illusion of value. We remain committed to delivering value to our customers with integrity."

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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