One of my favorite aspects of that is that they're actually going to make a ton more money while making us feel like they're treating us like adults. Don't kid yourself: it'll be $20 rather than $19. So they make an extra cent, which isn't much, but if you multiply that by all the product lines and each sale every day ... at JCPenney's scale, that's significant.
I'm not criticizing it at all: I think it's better all the way round.
this is the kind of confused reasoning that has people thinking that if they "just do a little" then "it will add up to a lot". the basic problem is that you forget to shift frames when evaluating the significance of the sum.
for example, you might have heard that if everyone would "just" unplug their phone chargers (when not in use) then we'd save millions (or whatever it works out as) of watt-hours a year and so help avert global warming. and it is indeed true that if everyone does something tiny and trivial (relative to a household's total consumption) like that it will add up to an amount that is much more than one household's consumption. yay! but to estimate the significance you need to compare it to the total energy consumption of the entire country. and then it becomes tiny and trivial again, and will clearly make no significant difference to global warming.
similarly here - the total is way more than $20. gosh. but if you compare it to total turnover then it is a tiny percentage, which makes no real difference to the company.
in short: big changes on a global scale require big changes on a local scale.
.0005% difference in margin. People's brains interpret $19.99 as significantly cheaper than $20, but as a marketing iniative, whole digit pricing may intice people looking for honest, straight forward pricing.
But don't kid yourself, adding a penny per transaction is not going to benefit the bottom line in the way your thinking.
"People's brains interpret $19.99 as significantly cheaper than $20"
Is this really true though? Is there some study that supports this? To me it seems simpler for the brain to round up to $20 when thinking about the price. I certainly wouldn't remember if something was $18.99, $19.95, or $19.99. They're all just $20 to me.
Yes, there are a ton of psych and neurological studies that back up this practice. It is one of those blind-spots in your brain. You peg on the $19 part of $19.99. If you stop to rationally consider things then $19.99 and $20 are effectively the same, but for most casual purchasing decisions you do not actually apply a significant amount of intellectual rigor. You may think that you consider $20 and $19.99 to be the same, but study after study shows that what you think that you are thinking about and what your brain is actually doing are not the same.
Interesting, I always feel like 19.99 = 20, but that is probably because of how my Dad taught me to add and multiply quickly by doing so rounding first then backing off from there.
I'm not criticizing it at all: I think it's better all the way round.