The headline tells the story in JCPenney to get rid of check-out counters and clerks, use self check-out machines and RFID chips (hat tip, Mish).
TAMPA - Struggling retailer JCPenney is making some big changes that will affect customers and its clerks. The store is getting rid of its check-out counters.
CEO Ron Johnson said it will remove check-out counters in stores and replace them with a system that won't require clerks. It's all part of an effort to return the department store chain to profitability.
Shoppers will be able to use self check-out machines, similar to those found in grocery stores.
JCPenney is also planning to replace traditional bar codes on price tags with high-tech radio frequency identification, or "RFID" chips to make purchases faster.
Johnson told Fortune magazine he hopes to phase out check-out counters by 2014.
CEO Ron Johnson went to JCPenney from Apple, which is where he got this clever idea. Let's get the details from the Fortune interview.
JENNIFER REINGOLD — So can you give some examples? Will we be able to pay the way we are in the Apple store?
RON JOHNSON — Yeah. I'll give you a couple of examples. We're rolling out right now WiFi networks, really advanced WiFi to all stores. We'll have mobile checkout, you know, rolling out now and in the fall. But we're also doing something that no retailer has done completely, is we are going 100 percent RFID with ticketing this fall.
So February 1st next year, the entire Penney's platform will be on RFID tickets. Now most people use RFID for internal operations inventory management. We're going to jump right to the customer, and my goal in 2013, by the end of 2013 is to eliminate the cash route. So you think of a physical store without a cash routing.
Can you imagine a Target store without a place to checkout? You think of a Macy's store. But what it does is we currently, about ten percent of all the money we spend, half a billion dollars a year, goes to transactions. Well that can be done through technology.
So all of that investment in people goes into service, and that's part of the redesign of the platform, because you go to the Apple store, you feel the people, the connection. You go to most retail stores, all you see is people doing work to execute the retail strategy. It's stocking shelves and transacting business.
That's going to all change, because of how we use WiFi, RFID, mobile checkout. You'll be able to check out anywhere anytime, from anyone including yourself, because we're going to roll out self checkout to our stores next year, and it's really cool and it's really easy because it's RFID-based.
You don't have to scan an item. You just throw it down and there's the price. You couldn't do that if you had coupons, and you couldn't do that in a promotional business strategy, because the customer has to figure out that every item had this unique price and was it right for this hour, you know.
So all of the strategy we're doing are linked together by a high integrity pricing strategy, and it's really complicated to see the future. But you know, people will discover as time goes on.
JENNIFER REINGOLD — So the way you roll it out, it sounds like, you know, why doesn't everybody do this? Wal-Mart has tried and struggled with RFID. It's very expensive; correct, right?
RON JOHNSON — Yes.
JENNIFER REINGOLD — I mean I understand you're saying that on the back end, you're going to end up saving if it this works. But why do you think everybody else hasn't done this?
RON JOHNSON — You know, I don't know. I can't talk for someone else, but RFID clearly is a technology that's been waiting for prime time based on the cost of the ticket. You know, I believe the ticket cost, the increase in the ticket cost versus UPC label is now at a point where the benefits way outweigh the cost of doing it.
The reason JCPenney is "struggling" is because few people in their traditional customer base have spare cash to spend at their stores. Ron Johnson's brilliant move will—
- eliminate cashiers and other job positions because, magically, you (the customer) will be able to check out anywhere anytime, from anyone including yourself.
- cause far more problems than it solves, and the likely result will be that you (the customer) will often have no way to check out accurately or at all, anywhere anytime, from anyone including yourself.
The alert reader has also noticed that item #1 will have the happy side-effect of reducing the potential JCPenney customer base in so far as they will be laying off many employees. Eliminating service jobs is of course the tried & true method of raising corporate profits and increasing worker productivity.
Regarding their dwindling customer base, Ron Johnson is introducing the "shops" concept.
J.C. Penney is garnering more attention for the debut of its "shops" concept this week. On Wednesday, the company opened branded Levi's, Arizona Jeans and i Jeans by Buffalo spaces within 700 of its stores. If all goes according to plan, J.C. Penney will eventually recruit 100 brands to open such mini-boutiques, transforming cluttered department stores into modern "main streets" with myriad shopping experiences. The company will also eliminate cash registers, arming staff with iPads and other mobile devices to check out customers.
But J.C. Penney is transforming only its best 700 stores. The remaining 400, mostly located in small towns, will receive limited selections of new merchandise. Although the company built its empire on small-town America, many of those stores are becoming burdens as the company attempts to rebrand.
Some loyal shoppers at those locations are also frustrated by the edgier fashion and end of coupons, two changes that Johnson has implemented since starting at J.C. Penney in November. In the early months of the rebrand, sales at J.C. Penney stores open at least a year declined 18.9 percent.
No doubt the JCPenney "strategy" here is to target upper crust shoppers because they are the only ones who have any spare cash to spend. And they will screw the poor by closing small town stores, as they recently did in San Fernando, California (follow the "shops" link above). That store had been serving customers since 1953.
This is obviously another Planet Stupid story, and beyond that I have little to add. The Technology Dream goes on and on, and on and on and on, and on and on and on and on...
Bonus Video — Ron Johnson speaking at Fortune's Brainstorm Tech conference (from CNN Money)