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.
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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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What Do You Say?
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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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