Business

Retailers adjust to price-smart shoppers

Pricing has always been a tug of war between retailer and shopper, with the retailer having more muscle.

No more. Thanks to the Internet and shopping comparison apps, price-wise shoppers are haggling.

If retailers balk, some shoppers walk; there is always Amazon and eBay.

The shifting balance of power has many stores scrambling for pricing strategies that get beyond the time-worn cycle of markups and discounts — and still make them money.

But can they outfox the newly empowered consumers?

J.C. Penney has introduced a streamlined system: daily prices, lower monthlong specials and clearance prices.

Mango, a fashion retailer, has cut all prices by one-fifth. Stein Mart, a specialty chain, has reduced its coupons. Supervalu, a grocery chain, has sworn off heavy promotions and lowered some prices.

Even Wal-Mart has pledged to match competitors’ prices if it sets its own too high.

“The customer knows the right price,” said the chief executive of J.C. Penney, Ron Johnson. “We can raise the price all we want; she’s only going to pay the right price. And why is that? Because she’s an expert.”

Ronald Friedman, the head of the retail group at Marcum LLP, an accounting firm that advises department stores and manufacturers, said, “The shopper knows to wait for the sale. They know the prices are inflated when they first come out.”

The new pricing at J.C. Penney is intended to break that mindset, and the company is betting its turnaround on it.

But history is not on Penney’s side; similar pricing experiments have failed. American Airlines tried a system similar to Penney’s in 1992 — and abandoned it after six months.

Penney’s is not alone in trying to win over the price-smart shopper.

Urban Outfitters and American Eagle Outfitters are reworking prices to get away from too-heavy promotions, while Mango made the move of reducing prices by 20 percent this spring. Supervalu recently cut prices on 200 produce items and says it will be reducing sales and “promoting everyday fair pricing,” its chief executive, Craig Herkert, said.

Stein Mart is simplifying its pricing, saying it will reduce coupons by 50 percent this year and get away from the falsely high price tags.

Cutting coupons may not be wise.

“I think it underestimates what a sport discount hunting is,” said Mark Ellwood, author of “Chasing the Sale,” a coming book on discounting. “They’re like mathletes with credit cards.”

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