Thus far, the dramatic makeover of JCPenney has hardly been smooth sailing. The overhaul, in which coupons and nonstop sales have been replaced with lower everyday prices, has resulted in confusion among customers and months of subpar sales, as well as the recent ouster of a top executive for the company. Nonetheless, JCPenney CEO Ron Johnson is sticking with the plan to revolutionize a tired old brand—and perhaps retail at a whole.
For instance, considering that America’s fastest-growing retailer is Amazon, and that online retail is booming compared to brick-and-mortar shopping, it’d be better to be a purely online operation going forward, right? Not so, according to Johnson. “If I had to pick today, would I rather be an online-only retailer trying to compete ten years from now, or a physical retailer trying to compete ten years from now?” he said. “Knowing that the digital and physical worlds come together, I’d take the physical retailer in a heartbeat.”
Johnson explained that physical retailers should be able to do everything an online-only retailer like Amazon does and more—including face-to-face customer service and options such as in-store pickup.
Most noteworthy of all, Johnson announced JCPenney’s plans to completely change the checkout experience at stores. Using advanced Wi-Fi networks, mobile checkout, RFID (radio-frequency identification) tracking systems for goods, and all sorts of self-checkout possibilities, JCPenney will get rid of cashiers, cash registers, and checkout counters, the staples near the exits of virtually every store, as soon as 2014.
“Think of a physical store without a cash rep,” Johnson said. “About 10% of all the money we spend, half a billion dollars a year, goes to transactions. Well that could be done through technology.” The money saved could then be used to help bolster customer service.
Will consumers embrace a cash-less, cashier-less, checkout counter-less store? Investors seem to like the idea. After Johnson’s statements made news, JCPenney’s stock jumped to over $21 per share, after trading for around $19 early on Wednesday.
Yet, considering that many JCPenney shoppers have been grumbling about the disappearance of their beloved coupons, and their general confusion about the retailer’s new pricing system, getting rid of something as traditional as the checkout is likely to elicit even more complaints from plenty of customers.
Many customers remain unconvinced that JCPenney’s new “fair and square” everyday low prices are actually better than the days of old, when sales and coupons were ubiquitous—as were dramatically inflated original retail prices, of course. As the Wall Street Journal reported a few weeks ago, even though sales have been poor, JCPenney isn’t changing its pricing system, nor the core components of its overhaul and message to consumers. Instead, the message is merely being tweaked. In response to shoppers who feel like they’re no longer getting the deals they once were, JCPenney seems to be saying something along the lines of, “No really, we swear these are better prices. Trust us.”
Some shoppers, though, can’t see how they’re getting a good deal if there are no coupons or dramatic markdowns. Likewise, it may be hard to convince shoppers that they’ll be better off without a checkout area. Many customers are likely to view the concept of a store without a checkout area with skepticism, if not annoyance, perhaps even hostility.
Then again, perhaps even more customers — younger ones who embrace technology, who hate checkout lines, and who could be loyal shoppers for decades to come — will love the idea.