Twice in the recent past I have written about the pricing
strategy of J.C. Penney and its attempt to shirk the 'pricing for
idiots' strategy. First, I wrote about how a new CEO, Ron Johnson, chucked the old strategy of deceptive sales pricing and moved toward a model of 'true value' pricing. Shortly thereafter, I wrote that Johnson was fired because
this strategy failed to appeal to the catatonic masses who insist on
being deceived with deceptive pricing strategies. Not that any of that
was surprising.
In my first post, I even noted that Kohl's had the worst deceptive pricing practice on the planet. Back in 2010, a lawsuit was brought against Kohl's for
its price promotions, or "false advertising," on the part of an
ignorant shopper who apparently saw an opportunity to cash in on his
ignorance. This blockhead blamed Kohl's for his excessive purchases.
In the ongoing case in California, Antonio S. Hinojos of
West Covina claims that those types of purported savings led him to buy
more than $500 worth of luggage, shirts and shorts at a Kohl's
Department Store in suburban Los Angeles in May 2010. In fact, Hinojos
alleged, the prices of the items had not been reduced as much as Kohl's
had advertised.
The case was dismissed in
2010 by a U.S. District Court. Last month, the 9th Circuit Court of
Appeals reversed the decision, which will allow the wayward spender and
his lawyers an opportunity to pursue a class-action claim.
“Price advertisements matter,” Judge Stephen Reinhardt
wrote for a three-judge panel. “When a consumer purchases merchandise on
the basis of false price information and when the consumer alleges that
he would not have made the purchase but for the misrepresentation, he
has standing to sue.”
Shoppers chasing deceiving markdowns is, in part, due to the fact
that the cheap-and-easy credit era helped to fuel this ignorance because
the abuse of credit has been justified by folks who believe that there
is an upside to all the debt: they are buying value because goods appear to
be listed at bargain prices. In reality, they are overpaying for
products and getting sucked into buying things they didn’t plan on
buying, and the end result is more stuff, more debt, and a skewed
perception of value. Thus the retail marketing folks adjust to the
current political-monetary environment and market to the perception of
the times.
If consumers perceive they have wealth
(debt + stuff = wealth in the bubble era) and that markdowns are
bargains, they will spend in order to increase their perceived wealth.
Additionally, inflation and artificially low interest rates increase
time preferences, thereby feeding the modern culture of instant
gratification. Marketing folks are only doing what they have to do to
survive in an era of government intervention leading to bubbles, booms,
busts, and malinvestments.
Appellate Judge Stephen Reinhardt, who wrote the opinion reversing
the decision, stated that a product's "normal price is significant in
the same way a false product label would be."
But what exactly is a "normal price," and how is it the same as a
false product label, which is akin to fraud? Who can determine what any
price should be for any product, knowing that price is subjective to the
individual engaging the transaction? There is no objective unit of
measurement because prices of goods are subjective to each individual based
on his assessment of goods, the value of those goods, and his
subjective taste. The fact that the establishment recognizes "normal
prices" points to the belief that goods in the marketplace have a value
that can be objectively defined and applied to each individual by
authoritative measures.
Kohl's pricing strategy is inane, and the catatonic masses will bite
on it. But the strategy aligns with the current times and perceptions,
and no one can blame a for-profit business for pursuing profits based on
its leaders' knowledge of the best way to conduct business within the
current economic environment. But inane is not criminal, and the scheme
can easily be ignored and rejected by savvy consumers whose subjective
valuation tells them that a $30 rug marked up to $60 with a "half off"
price tag is no markdown. But then again, the buyers of that $30 rug
have determined that the rug is more valuable to them than the $30. So
where is the "normal," and where is the crime?
If there's a crime of perception, the crime is committed by the
government-bankster-financial-industrial complex that has defrauded
consumers, investors, and entrepreneurs with its sleazy monetary policy
and corrupt financial system.
