J.C. Penney fires employee for revealing truth about deceptive pricing

Friday, April 11, 2014 by: J. D. Heyes
Tags: J.C. Penney, deceptive pricing, fired employee

(NaturalNews) Apparently, one of the country's oldest retailers has about as much tolerance for whistleblowers as does the federal government.

J.C. Penney, which just recently announced the closure of 33 stores and the lay-off of 2,000 employees in an effort to "remain profitable," is lashing out at a former worker who dared to point out some of the retailer's questionable discounting policies.

In a practice in which J.C. Penney is most likely not alone, the whistleblowing employee, Bob Blatchford, said the retailer was dramatically hiking prices on some items, cutting back on them and then advertising them as gigantic "discounts." Blatchford spilled the beans on NBC's Today show last July, The Huffington Post reported.

In one instance, the website said, a "rack of $7 shorts became $14, and then they were 50 percent off," a separate J.C. Penney employee told the Today show.

"I saw a lot of pricing teams going through the store, raising the prices, mostly doubling -- towels and clothing," Blatchford told the Today show. "Then they would go on sale, and they wouldn't always go on sale for 50 percent off. Not only was it a fake sale, but they were actually paying more than they would have been previously."

Blatchford added, "I don't think Penney's will survive if they keep doing this."

Old becomes new

For now, though, Blatchford is the one fighting for survival. A couple of days after his Today show appearance, he was fired from his J.C. Penney job in St. Petersburg, Fla., where he was a custom decorating studio coordinator. He filed for unemployment benefits, but the retailer contested his claim. In addition, Penney's has also filed an arbitration petition, seeking to have Blatchford return any company documents he may have. Blatchford says he believes the arbitration is punitive -- the retailer's way of just getting back at him for speaking out.

J.C. Penney declined to comment on Blatchford's situation or its pricing strategy, HuffPo reported, adding:

The fight between Blatchford and J.C. Penney belies an open retail secret: Discounts, sale prices and big promotions are largely a game of smoke and mirrors. But until J.C. Penney ousted its CEO last year and his successor reinstated old pricing strategies, it was a largely unconfirmed open secret.

Retailers use the sly tactic to manipulate customers' minds, said Mark Ellwood, author of Bargain Fever: How To Shop In A Discounted World. Once customers are taught to crave discounts, it becomes addictive, and they keep coming back for more. "We are chemically programmed to respond to sales," Ellwood said.

The retailer's sale pricing trouble began when CEO Ron Johnson pledged in 2012 to end "fake prices" -- those that are inflated all over the retail industry to convince buyers that they are getting a fantastic bargain. Johnson eliminated sales, discounts and coupons all across the Penney's brand.

Deceptive pricing

But shoppers who are used to such "deals" and amenities essentially revolted, resulting in sales that nosedived an amazing $4.3 billion in the first year of the "turnaround" plan implemented by Johnson. That led him to admit in a 2012 conference call with investors and retail analysts: "Coupons were a drug. They really drove traffic."

In the spring of 2013, Johnson was fired, but before he was, the retailer began increasing its "everyday prices," then discounting them to unsuspecting customers, which gave shoppers -- once again -- the false impression they were pulling in bargains.

Mike Ullman regained the CEO spot in April 2013, and he re-implemented mass sales and coupon campaigns in an aggressive attempt to lure shoppers back into stores.

And that is when the real scrutiny began. According to reports, consumer groups began looking into the practices of discounting J.C. Penney wares. Many released a number of examples of where they had found the retailer baiting and switching customers and prices. Sale prices discovered were actually higher than original price tags, in many instances.

Read the full report here.

Sources:

http://www.huffingtonpost.com

http://www.reuters.com

The federal government's guide against deceptive pricing:
http://www.gpo.gov