J.C. Penney Gets Greedy, Lets High Prices Spoil Mango
J.C. Penney (JCP) looked like it was giving life to its dream of capturing young, fashionable consumers with its fast-fashion MNG by Mango line, but the prices it's asking for the collection could choke it to death.
Mango offers J.C. Penney some real advantages. Developed by a Spanish retailer that has successfully opened hundreds of stores outside the U.S., it has a fashion pedigree coming into the deal, which J.C. Penney sorely lacks. Fashionistas have criticized the American retailer's traditionalism when it comes to style and even decried its arrival in New York as some kind of threat to haute couture. Yet, as it pushes to become more competitive with department stores, J.C. Penney has been determined to improve its fashion standing, and Mango was part of that initiative.
And Mango could put the lie to style-related jibes directed J.C. Penney's way, given its positioning as a hot Euro brand that the retailer was bringing to the masses. Online, anyway, as it's only rolling out to a limited number of stores. What was critical about the initiative was that Mango is the kind of brand that could convince younger, stylish consumers that J.C. Penney was ready to offer a unique fashion purchasing opportunity.
Yet Penney seems determined to undermine Mango's virtues by pricing the product line at an unreasonable disadvantage. Mango is a fast-fashion brand, knocked off from the latest seasons runway designs debuted in Paris, Milan and New York. But fast-fashion is supposed to be fresh, lively and cheap. As such, it has proven popular with consumers around the world and in this country particularly at outlets like H&M (HMB).
The formula isn't complicated, but J.C. Penney has taken a pricey turn on it. The retailer is featuring women's pants for $64 on markdown at a time when H&M is featuring pants for $13. In fact, Mango is priced above I Heart Ronson, another youth-oriented J.C. Penney brand that's still a little pricing when it comes to competition with H&M. What's worse, the Mango pant, to use it as an example again, is priced above the full-ticket being charged for the new Black Pant line at Gap (GAP).
The Black Pant line isn't supposed to be conspicuously inexpensive, and Gap hasn't been doing so well lately. In its latest competed quarter, it has experienced declining or negative comparable store sales results, those at locations in operation for at least a year, across its business. Results there and at teen retailers, which have been discounting slow-moving jeans in the back-to-school season, suggest that casual fashion isn't enough of a priority for consumers to purchase without good reason. These days, good reason usually translates into low prices.
It's not that H&M doesn't have some pricey products, but with items such as $10 tops, it represents a bargain and a base price in the market. Given their similar approach to fashion, why would a consumer pass up H&M -â€" sometimes located within walking distance of J.C. Penney stores â€"- to purchase Mango? H&M doesn't do e-commerce in the U.S., at least not yet. That should offer Mango an advantage. Unless, of course, a consumer clicked over to see the examples of store-stocked products and prices on H&M's website. The exercise might cause a frugal consumer to think twice about a Mango purchase, even with the convenience of online shopping.
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