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Focus: RFID and Automated Identification and Data Collection (AIDC)

Feature Article from Our RFID and AIDC Subject Area - See All

From SCDigest's OnTarget e-Magazine

- Jan. 29, 2013 -

 

RFID and AIDC News: JC Penney Backs Off RFID Rollout Pace, as Getting All the Parts Together Proves a Little More Complicated than First Thought

 

Letter to Vendors Tells them to Back Off Broad Tagging Requirements, Focus on Products in Footwear, Bras, Denim

 

SCDigest Editorial Staff

 

JC Penney - and more specifically controversial CEO Ron Johnson - shocked the RFID world a bit last summer when Johnson said in an interview with Forbes magazine that the retailer would be 100% RFID enabled in its stores by early 2013, and that the RFID program was critical to the company's bold new store operations strategy and new customer value proposition.

SCDigest Says:

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SCDigest's view is that the explanation offered by the Penney's vendor make sense, the Johnson's accelerated roll out was probably unrealistic

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Johnson has been controversial since he came to Penney in 2011 from running Apple's retail store operations, changing the model from the usual US department store approach of high list prices followed by big sales and discount coupons to take the prices back down for consumers.

Johnson thought that model was a bad one, and vowed to break its hold by using everyday low pricing and few if any sales or coupons. But in the first year under his helm, store sales and the stock price tanked, putting a lot of pressure on Johnson from shareholders to show the model could actually work.

While Penney's had already been rolling out RFID capabilities in store in several product categories for the usual benefits in inventory accuracy and reduced store labor, in August Johnson told Forbes that JCP would be virtually 100% RFID capable by Feb. 1 of this year - and that RFID-enablement was essential to realize his vision for the new JC Penney retail experience.

During the interview, Johnson announced that in parallel with the RFID rollout, Penney's was installing very high speed WiFi networks and mobile POS systems in store.

So, he said, "By the end of 2013 [our goal] is to eliminate the cash [payment] route. So you think of a physical store without a cash routing."

He observed that "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," adding that about 10% of its labor spend in store, or half a billion dollars a year, is involved in processing transactions at traditional POS terminals.

"That's going to all change, because of how we use WiFi, RFID, mobile checkout," Johnson said. "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."

He added RFID will have big benefits for the consumer over bar coding: "You don't have to scan an item. You just throw it down and there's the price," Johnson said.

RFID was needed to make this strategy possible, as the self-checkout approach wouldn't work if customers had to navigate different pricing based on discounts and coupons. Ergo, RFID was critical to Johnson's overall company strategy of everyday low pricing.

After all of that, news this week from several SCDigest readers that Penney's is slowing down that tagging rollout, meaning the company will be far from fully RFID-enabled by Feb. 1.


(RFID and AIDC Story Continued Below)

 

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The letter, dated Jan. 21 and obtained by SCDigest from several vendors to JC Penney this week, said that "JCP is modifying the rollout schedule of RFID tagging for merchandise categories. Until further notice, only the below merchandise sub divisions will need item level RFID tagging/labeling", and then lists 41 separate product areas across three larger categories: footwear, bras and denim.

That is a small fraction of total product categories within a JC Penney store. See full letter below:


JC Penney Changes Tagging Requirements for Now

 

 

See Full Size Image

 

So why the pull-back?


"I think JC Penney was just caught in a sort of Rubik's cube in terms of merchandising, store layout and product tagging," one Penney's vendor told SCDigest this week.

"They are changing the merchandise plan, so there is no need to tag products that may be eliminated soon. Store layouts are also changing, being done in conjunction with the merchandise plan, and which include the "stores in store" concept for things like Levi's jeans and more. There are just too many moving and inter-connected parts to go forward with a full RFID rollout."


A request to JC Penney to clarify what is happening here was not answered by press time.

SCDigest's view is that the explanation offered by the Penney's vendor make sense, the Johnson's accelerated roll out was probably unrealistic, and that all new technologies take longer to adopt than expected, as Walmart's original case-level RFID tagging program evidences in spades.


Any thoughts on the JC Penney RFID slow down? Was the timetable Johnson set doomed to begin with? Let us know your thoughts at the Feedback button below (email) or the Feedback section (web form).





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