The entire process of marking up merchandise, then marking it down and then even further down, is an expensive one for retailers. That's why some chains prefer to start out with low prices and not offer sales.

This system only works if the retailer earns a narrow profit margin. If volume of customers make up for the narrow profit, or the store has other means of revenue (like Costco's membership cards), this can be a successful strategy. But for most businesses, offering sales and discounts is the way to go.

That's a lesson J.C. Penney recently learned the hard way. The department store stopped offering sales and emphasized its everyday low prices. It quickly lost a lot of customers and has recently backtracked and gone back to the old system.

According to the shrewd analysis of the New York Times, consumers were told they were getting low prices, but they didn't see an advantage to shopping at J.C. Penney instead of another store. The chain didn't guarantee the lowest prices or demonstrate that their prices were lower than other stores, so purchasers had no anchor price to compare against.

J.C. Penney's attempt at an overhaul may have failed for other reasons as well. Fox Business cites the attempt to make huge changes in too short a time and an embarrassing public spat with Macy's. American Apparel CEO Dov Charney was quoted by Business Insider, blaming the failure of the overhaul on the fact that the chain didn't stay loyal to its core brand.

The cancellation of sales may not have been the only reason that J.C. Penney started hemorrhaging money, but it was clearly a major contributing factor. The customer is always right, so if the customer wants to overpay at the beginning of the season and enjoy the thrill of a sale later on, retailers would be wise to play along.