CALL7 Investigators find jcpenney raises prices to create illusion of markdowns throughout store

DENVER - A CALL7 hidden-camera investigation finds the discounts at one major national retailer may not be as significant as shoppers would think, after finding prices on tags were marked up so the item can then be placed on "sale."

When it comes to shopping, everyone loves a bargain. And at "jcpenney" employees say, if shoppers want a sale, that's exactly what they'll get. (The chain has adopted an all-lowercase jcpenney logo).


"Here at the store, we call it a drug! They always look for the signs that say sale," one sales associate told CALL7 Investigators.

"People like their coupons. They like knowing something has been marked down," another sales associate said.

But when CALL7 Investigators took a closer look at the mark-downs at jcpenney stores across the Denver metro area, as we peeled back sticker after sticker, we were surprised at what we found.

At the Northfield Stapleton jcpenney, a pair of earrings a marked with a $26 sticker, and on sale for $18.20. But peeling back the sticker, we found the original price was $16 -- meaning we paid $2.80 more than the original price.

Call7 Investigator Keli Rabon asked the sales associate about the price discrepancy.

"Because we are doing what the consumers have asked us to do and go back to the sales, we have had to do our repricing," the employee said, adding that the markups can be found in every department.
 
At the Park Meadows jcpenney, we found the exact same purse marked with two different prices: one for $40, the other marked up to $55. The sign said the purses were on sale for $39.99, but that's just one penny below the original price, making the discount seem bigger than it really is.  

When asked if people were really only saving a penny, the employee said, "Yes, but they like sale signs!"    
 
And in Westminster, a denim button down shirt was priced at $34, on sale for $24.99. But under the sticker, marked out in black ink, we found the original price -- $24. That's 99 cents less than what we paid. So we went back to ask the manager about the price difference.

"It says $34, but it used to be $24. And I was charged $24.99," Rabon asked.

"Ok, yeah. This is the price now. The price went up," the store's manager said.

The more we shopped, the more examples we found. The reason? A change in the company's strategy, we were told.

"We had a pricing strategy. We changed the pricing strategy. So, everything that was in here at the old pricing strategy, we had to mark the prices up to sell them," the manager told Rabon.

After eliminating coupons and sales for more than a year in favor of lower-base prices, jcpenney's profits plummeted -- nearly $1 billion in 2012. So earlier this year, a new corporate strategy called for raising prices, even on items already in store.  

"Don't you think that's deceptive to the customers?" Rabon asked.

"Well, that's what the people want," the manager said.

"That's what the people want? Is to pay more?" Rabon asked.

"Well, yeah. They wanted coupons and sales. You know when you have coupons and sales, you have to have, the price has to be higher," the manager replied.

But that strategy doesn't sit well with some customers. Terelya Coneal has enjoyed shopping at jcpenney since she was a kid. After we showed her the price stickers, she's thinking twice about going back.

"As a customer, someone who spends their money at jcpenney, that makes me feel passionate about not going there," Coneal said. "I've never purchased earrings from jcpenney, but now I'm thinking maybe my pantyhose are not worth $10."

Others say they're not buying the new strategy either.

"From now on, I'm probably going to roll the price back when I do shop at Penney's," Ogden Banks said.

"I don't see why anyone would want to pay more," Toni Cruz said.

As merchandise is sold, jcpenney says eventually the price stickers will go away. But the higher prices -- and illusion of discounts -- are here to stay.

Representatives from jcpenney refused to interview with CALL7 Investigators about this story. The company issued the following statement:

"Last year we implemented an everyday low pricing structure that was ultimately rejected by jcpenney's core customer. We learned that our customers are motivated by promotions and prefer to receive discounts through sales and coupons applied at checkout. As such, we have returned to the promotional pricing model employed often in the retail industry. This shift requires us to make pricing changes on much of the merchandise to remain competitive. In addition, under this promotional pricing model, any time an item is put on sale the item must have been previously sold at its original or regular price for a reasonable period of time. While we understand this transition back to promotional pricing may cause some temporary confusion, the Company remains committed to delivering the quality, price and value that customers expect from jcpenney."

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If you have a news tip, or follow-up to this story, e-mail Keli Rabon. You can also connect with me on Facebook or through Twitter @KeliRabon.

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