J.C. Penney’s Fair and Square Pricing Strategy

J.C. Penney’s Fair and Square Pricing Strategy (2012) Harvard Business School Case (Elie Ofek and Jill Avery)

It was August 2012 and the release of second quarter earnings was looming for CEO Ron Johnson. Johnson had intimated to Wall Street that the retailer’s second quarter results were likely to miss expectations again, following dismal first quarter results. These results were particularly disheartening given the company’s radical repositioning of its business model and its brand in February 2012. The heart of the repositioning strategy was a switch from J.C. Penney’s traditional high-low pricing strategy, in which the retailer ran frequent sales to offer customers discounted pricing off of its higher day-to-day list prices, to a new pricing strategy the company dubbed “Fair and Square” pricing. “Fair and Square” pricing attempted to simplify J.C. Penney’s pricing structure and make it more straightforward for customers, offering them great prices every day, with less frequent price promotions. But by mid-summer 2012, customers and shareholders appeared to be voting with their feet, leaving the retailer in droves as it struggled to implement its innovative redesign. Was his new pricing strategy misguided or was it just a matter of time before customers fully embraced it? Johnson was under enormous pressure to turn things around quickly as the all-important back-to-school and holiday shopping seasons were imminent.

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