Changes are brewing at two well-known stores where many of us shop. Both Target and JCPenney are making changes in an effort to better compete against other retailers, both brick-and-mortar… and online.
Amazon’s new shopping app may have precipitated the changes at Target. The shopping app allows a user to browse the shelves at a Target or other brick-and-mortar store, scan an item they are interested in, and, if they are motivated by price or another reason, buy it from Amazon. Right there, while they’re standing at the brick-and-mortar store looking at the product.
With the app, Amazon has basically turned brick-and-mortar stores around the country into show rooms for Amazon products. This is putting increasing pressure on physical stores, who often have higher cost of doing business and less volume than Amazon, to match Amazon’s online prices.
Last week, Target sent out a letter to its vendors asking them to help the company either match prices that are being offered online, or to provide certain items that are unique to Target only. The letter to venders, signed by Target Chief Executive Gregg Steinhafel, went straight to the point.. “What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands.”
At the same time that Target is pleading to its vendors for help, JCPenney is reported to be preparing for changes as well. According to Forbes, the company is considering a change from a High/Low Pricing (HLP) model to an Every Day Low Price (EDLP) model. JCPenney is not as concerned with being a showroom for online retailers, as just getting more people in the door, period.
With their current HLP model, items are priced high and then promoted with discounts through sales, coupons, or by being placed on clearance. According to Forbes, JCPenney’s new CEO, Ron Johnson, plans to discontinue the HLP model. He’ll be switching to something more in line with the pricing model that Walmart and Target use, EDLP. Prices will start lower from the beginning.
Of the two stores, JCPenney’s changes will be the most apparent to shoppers.