JCPenney CEO Ron Johnson is going all in with his bid to remake the customer experience at the century-old department store retailer. A mobile POS deployment beginning this fall is just the first step in an ambitious plan involving storewide use of RFID to eliminate traditional cash wrap stations, allowing anywhere, anytime checkout, including self-checkout, by 2014.
“JCPenney will be moving to a 100% [item-level] RFID implementation by February 1, 2013,” said Johnson, speaking last week at the Fortune magazine Brainstorm conference in Aspen, CO. “We’ll be doing something that no other retailer has done completely. Most retailers use RFID for internal operations and inventory management, but we’re going to jump right to the customer. My goal is to eliminate the cash wrap by the end of 2013.”
Johnson also defended the retailer’s controversial move to its coupon-free “Fair and Square” pricing strategy earlier this year, saying it’s aligned with the move to self-service. “We’ll roll out RFID-based self-checkout, which will allow customers to just throw the product down and see the price,” he noted. “We couldn’t do this with a promotional business strategy or with coupons. It’s all linked by our pricing strategy.”
Confusion on Pricing
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Johnson admitted that JCPenney’s communications about its new three-tier pricing strategy implemented in February were confusing to many customers. The retailer was moving from an environment with 590 unique sales during a calendar year to a system that included “month-long values,” which JCPenney has since eliminated.
The retailer’s rebranding campaign, which also began in February, got a mixed grade from Johnson. “We knew that at some point we needed to modernize JCPenney; it had a great heritage but it was seen as your mom’s or your grandmother’s store, not a part of the consumer’s everyday life,” he said. “What I learned in my time at Target and Apple was that mind share precedes market share, so we had to get people thinking.” The campaign did accomplish that goal, but it “didn’t really communicate with our core customer in the way that we needed to.”
The retailer has experienced rough going in this initial phase of its transformation: net sales for the quarter that ended April 28 declined 20.1% compared to the same period the previous year, with comp store sales dropping 18.9% and online sales sinking 28%. In June, president Michael Francis, who had been responsible for executing the retailer’s marketing plan, left after only nine months in the job.
At the conference, Johnson reminded the audience that the retailer’s turnaround has been planned as a four-year process. “Transformation takes time; it’s a sprint, not a marathon,” he said. “You can judge how well a sprinter will do right out of the blocks. With a marathon, each runner has his own strategy” that is revealed over the length of the race. Johnson said the retailer has a precise vision of how it will reach its long-term goals, “and we’re going to stick to our plan.”