Here is a chart of apparel trends sent to me last week by reader Tim Wallace.
Wallace Writes ….
As I have been saying over the past several months there is a tremendous unit drop going on in the import apparel industry, but it is not reflected in reporting because dollars keep going up, at least until recently when they flat-lined.
The attached chart looks at the two criteria together, dollars imported and units imported reflected as meters square. As you can see, the dollars kept going up but the units turned south back in May, yes the very May my petroleum distillates distinctly show the economy turning south.
Things are just starting south like towards the end of 2007. Give it time.
Demand is plummeting.
For Tim Wallace’s latest report on gasoline and petroleum usage, please see Year-Over-Year Gasoline and Petroleum Usage Charts; Shares Decline as Chevron Warns of Weaker 4th Quarter Earnings.
JC Penney’s Slashes Prices on All Merchandise by “At Least 40%”
I had forgotten about the apparel chart from Wallace but was reminded of it today by this headline news story today in USA Today: Penney’s slashing prices on all merchandise
J.C. Penney is permanently marking down all of its merchandise by at least 40% so shoppers will no longer have to wait for a sale to get the lowest prices in its stores.
Penney (JCP) said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. On Feb. 1, the retailer is rolling out a three-tiered strategy that offers “Every Day” low pricing daily, “Monthly Value” discounts on select merchandise each month and clearance deals called “Best Price” during the first and the third Friday of each month when many shoppers get paid.
Penney’s plan comes at a time when stores are struggling to wean shoppers off the profit-busting bargains that they have come to expect in a weak economy. The move is risky because shoppers who love to bargain hunt may be turned off by missing the thrill they might get from feeling like they’re getting a deal.
“The big question on investors’ minds will be how customers react to a single price point versus a perceived discount under the old strategy,” says Citi Investment Research analyst Deborah L. Weinswig.
The plan is the brainchild of former Apple executive Ron Johnson who became Penney’s CEO in November.
How Pricing Strategy Works
- Sale prices become everyday prices. The company will use last year’s sales figures to slash all prices at least 40% or lower than last year’s prices. So, a woman’s St. John’s Bay blouse regularly priced at $14.99 could have the “Every Day” price of $7.
- Fewer sales. The retailer will pick items to go on sale each month for a “Monthly Value.” Items that don’t sell well go on clearance and will be tagged “Best Price,” signaling to customers that it’s the lowest price.
- New tags. The retailer used to pile stickers on price tags to indicate each time an item was marked down. Now, when an item gets a new price, it gets a new tag. A red tag indicates an “Every Day” price, a white tag a “Monthly Value” and a blue tag a “Best Price.”
- Simpler pricing. Penney will use whole figures when pricing items. You won’t see jeans with a price tag of $19.99, but rather $20.
Price Deflation Hits Penney’s
Here is another way of looking at things: Price deflation hits J.C. Penny’s. In turn, this will place pressure on other retailers to do the same.
Those who think Bernanke’s attack on the dollar can stave this off have another thing coming.
Mike “Mish” Shedlock
Click Here To Scroll Thru My Recent Post List