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Posted: 6:00 a.m. Wednesday, April 10, 2013

J.C. Penney fires CEO, company is on the ropes

Sales junkies cautioned to know how to spot a real sale



By Clark Howard


We are addicted to sales to the point that sometimes we conspire against ourselves and actually miss out on deals.

J.C. Penney has fired CEO Ron Johson, a refugee from Apple, after a series of failed experiments aimed to boost sales at the struggling retailer. But sales are down 25% in a year, which amounts to losses of $4 billion.

"Johnson announced a series of new initiatives -- including overhauled prices, redesigned store layouts, and even free haircuts for kids -- in an effort to revitalize the company," CNNMoney reports. "He ditched older brands and announced plans to to eliminate checkout counters in favor of mobile and self-checkout."

Was Johnson wrong in his approach? Not really! Look at a company like Wal-Mart that can make an everyday low price strategy work because what they sell is very easily comparison shopped at other stores. Not so with J.C. Penney. In the world of clothing, it's so hard to comparison shop.

Everything in clothing is about 'Sale! Sale! SALE!' The only companies that have been able to break away from that model are Zara and H&M, because they're all about fashion forward disposable clothing. Zara, in particular, spots trends and gets them into stores in less than two weeks. They're not necessarily cheap, but you get fashion forward at high speed. It's a business model that works.

The failure at J.C. Penney just goes to show you've got to know your market. Penney was offering real deals every day. But nobody believed them.

That's the thing, just because something says "sale" doesn't mean it is. You have to know what you're buying and what it usually sells for to know when something truly is "on sale."