J.C. Penney: No-Holds-Barred Discounting For Holiday Sales

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The chips are down for struggling retailer J.C. Penney Company, Inc. (NYSE:JCP) in the countdown to the forthcoming holiday shopping season, but the company is firing on all cylinders to make a go of it.

J.C. Penney: No-Holds-Barred Discounting For Holiday Sales

New agencies, robust promotions

Under Debra Berman, brought in from Kraft Foods Group Inc (NASDAQ:KRFT) to head its retail strategy, it has rehashed the marketing strategies that were a legacy from fired CEO Ron Johnson and appointed new advertising agencies Doner (integrated marketing, including TV and radio), EVB and Victors & Spoils (social and grassroots marketing). J.C. Penney Company, Inc. (NYSE:JCP) will have a “robust promotional schedule” and there is “no pressure on the marketing budget,” says Berman, according to this October article in Business Insider.

Retailers likely to face toughest holiday season since 2008

Berman will need all the budget leeway she can get, because it is likely that this season could post a piffling growth in sales of just 1.6% – way below the 2.2% growth clocked between 2009 and 2012, according to analysts at Morgan Stanley (NYSE:MS). Morgan Stanley’s expectations are based on the responses received in surveys of shopper sentiments that indicate lower shopping budgets and pessimistic views on economic conditions. Compounding this will be a shorter shopping season with six fewer days.

As a result, retailers are likely to go all-out in pushing promotions to attract customers into stores, says Morgan Stanley. They expect that J.C. Penney Company, Inc. (NYSE:JCP), in particular, will offer heavy discounts to generate sales revenue. “We predict J.C. Penney Company, Inc. (NYSE:JCP) will offer extremely deep discounts early in the season…putting pressure on other retailers to do the same.”

Latest promotions from J.C. Penney

So what is J.C. Penney Company, Inc.(NYSE:JCP) really doing in the stores, right now? Deutsche Bank Market Research analysts Paul Trussell and Matt Siler give us the details in their Retailing Promo Watch of November 5:

“We have seen incremental promotional activity in an attempt to drive sales of seasonal apparel, accessories, and footwear in recent weeks. Gift items and Holiday decor are now on the shelves of most Department Stores, leading to relatively heavy inventory levels and the likely scenario in which deep discounting will continue on Fall/Winter goods as we head toward Black Friday specials,” say the analysts, referring to the overall store conditions on the ground.

On J.C. Penney Company, Inc. (NYSE:JCP) specifically, they say its promo levels are aggressively ahead of 2011 and 2012.

Here are its current promotions:

– J.C. Penney Company, Inc. (NYSE:JCP)’s ad campaign highlighted its ‘Cash Days’ event, which featured 25%-50% discounts storewide, complemented with Night & Day Doorbusters;

– Offered coupons for $10 off $25 purchases of apparel, shoes and accessories, and $25, $50 and $100 off purchases over $75, $150 and $250, respectively, on home items, valid 11/1-11/2;

– Offered extra 20-50% discounts on Home merchandise (10/28-11/5), online-only coupons for extra 15% off purchases of up to $100 and an extra 20% and 25% off purchases over $100 and $200 respectively (10/31-10/6);

– Coupons for $20-$25 valid for haircuts (11/1-11/14);

– 3 days of extra 15% off coupons that started during the previous week.

By all indications, this holiday shopping season will likely see a bruising discount war amongst retailers.

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