A Store Without a Checkout Counter? JCPenney Presses on with Retail Revolution

JCPenney's dramatic makeover has led to customer confusion and subpar sales, but the company is sticking with its plan to revolutionize its brand.

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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.

Speaking at the Fortune Brainstorm Tech conference, Johnson—a retail superstar who spent years building up Target and the Apple Store—made one eye-opening comment after another.

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.”

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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.

(MORE: More Troubles for JCPenney: Top Executive Departs Amid Sales Slump)

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.”

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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.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

38 comments
TheLe
TheLe

So... people who only use cash are screwed. Alllrighty then.

naggingmoose
naggingmoose

I grew up with pennies but I really don't recognize it anymore. I think I pass on shopping there and their clothing is not very desireable. Good-bye

Anonymousse
Anonymousse

It'd be a hassle.  Self-Checkout sux.  At JC Penney, 10% of items ring up incorrectly already.  So you'll have to wait.  Longer.  For help.

Good thing is my wife doesn't go there anymore.  Why?  She only went when they had coupons.  She's still waiting. 

No coupons + No sales = No purchases

FranziaKafka
FranziaKafka

Americans must be dumber than I thought if replacing prices ending in ".99" with whole dollar amounts is confusing.

I was just in Penney's and like it just as much as ever - perhaps more,

because of their consistently great sales. It's too bad American

consumers are more concerned with how things look than with getting a

great deal.

Brian
Brian

Try getting some modern clothes and maybe I'll shop at JCP. Their clothes are so dated. And for their prices, I was at my local store and noticed a price hike of 10 dollars on all the jeans in the men's section. Um... charging more for a product doesn't mean I want it more.

Rachael Newman
Rachael Newman

I can already see the long lines at the returns counter, for all the people who were over charged for their merchandise. Or will I have to put things back on the racks myself in order to get a refund? God forbid I leave the store and come back in -- twice -- and get charged and recharged to my credit card. This is gonna be a hoot!!

RobertSF
RobertSF

We can expect all kinds of retail work disappear within the decade as self-checkout achieves 90% use. It's as inevitable as the rise of the ATM.

wandmdave
wandmdave

Sweet.  The faster we go to a cashless society the better I say. Cash is such an annoyance to me. If I don't see a visa or mastercard sign in a store window I don't bother going in.

TucsonTerpFan
TucsonTerpFan

Their new marketing plan has been a failure.  The glossy brochures too often try to project an image and do not inform the prospective shopper what's really on sale.  The concept of "this is our everyday price" does not motivate anyone to make a trip to JC Penney. 

Like it or not, their subtle promotion of  "diversity" in these same brochures has also alienated some of their usual customer base.  Sorry, but members of this small "diverse" base are not regular Penney's customers.

This move to "high tech" will most likely only confuse and annoy more customers and that will not improve their bottom-line.   Trying to entice younger shoppers into the store because it's believed "younger ones who embrace technology, who hate checkout lines,...could [become] loyal shoppers for decades" is just another risk that the store can't afford to take.

Hoping for new, younger customers while you drive away most of the former JC Penney shoppers shows a lack of reality as to what the current economy will accept.  Now, young shoppers have a host of stores that cater to them.  (Those stores are also not doing well in today's economy.)

The concept of the store, "the golden rule concept"  was first displayed at Penney's first store in Kemmerer, Wyoming many, many years ago.  That idea worked for decades. 

Penney's should get back to basics, stop the fads before it's too late, or it will be the next Montgomery Wards.

JuliaDeSotoRossi
JuliaDeSotoRossi

"The money saved could then be used to help bolster customer service."

Great, but I'd rather have "the money saved" go toward lower prices.

Think I'll do business elsewhere. I like to shop around.

Boxingwithangels
Boxingwithangels

Seriously?  Checkout counters also serve as customer service.  These companies are getting so unbelievably cheap.  I've already boycotted stores that have strictly self-checkout, and JC Penny, if you lay off all those employees, I won't be shopping with your store either. 

Kevin Watterson
Kevin Watterson

Am I the only one who is starting to realize that maybe JCP's customers are just too stupid to understand the prices they're paying?

lglzfredm
lglzfredm

Every time I go to safeway I checkout and BAG my own groceries. Its faster and I can bag things how I want them.. No more cans on my peaches!!

It is Awesome

Tamara L Cadieux
Tamara L Cadieux

I have worked at JCP almost 8 years...we are a great store who is just undergoing some new changes....change is scary for some..not for others..

Amanda Herman
Amanda Herman

With the Apple store, you're probably only buying one thing or several small things. With clothes you have to deal with hangers and security tags. What if you have more than 5 items to check out? This would be impractical for JC Penney or any other clothing retailer.

Adnan7631
Adnan7631

So what if I want to pay cash for my shirt?

Connie Hubbard Reagan
Connie Hubbard Reagan

Don't worry. At the rate Penney's is going they will be out of business before this gets implemented. 

dialyn
dialyn

So if you can't afford a SmartPhone (and I can't) and you don't want to stick everything on credit or give away your bank information to the wandering floor monitor, then you can't afford to shop at J.C. Penney's (because I'm assuming they find cash passe)?  Do their gadget rich executives assume everyone has the same access they do?   I'm seeing this at grocery stores. More people on the floor than checking out the customers...can't tell you how thrilling it is to be in a line of 10 people with only one cashier in sight.  Frustrating customers is not the way to make them repeat the experience.  Unfortunately I have to eat and so I have to shop at a grocery store. Fortunately neither Penney's (nor Apple, for that matter)  has anything I want or need.

abby0802
abby0802

And then they can fire all those employees....  Another way to "downsize" using customer service as an excuse.....  I will never shop at Penneys again...

SFolino
SFolino

JC Penney's doesn't need any cashiers.  Nobody shops there.  I haven't been in one of their stores in over 10 years.  There selection sucks, they're over-priced, they've had no customer service and the quality of their products in no better than Target.

Shaun Deacon
Shaun Deacon

Brilliant, lets fire all those cashiers and put more people out of work. That will really help the economy. Way to keep failing JCP.

Katie
Katie

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Fatesrider
Fatesrider

Just to point out one flaw in your reasoning (which is where I stopped reading your comment, by the way), you seem to have missed the point of the original makeover.

You said:  "The glossy brochures too often try to project an image and do not inform the prospective shopper what's really on sale."

NOTHING IS ON SALE.  It's all supposed to be "everyday low prices".  It IS projecting an image - that you can get the best price just by buying without "bargain hunting" or worrying about bait and switch (which happens all the time at retail stores when something runs out of a very limited stock).

So like most people, you failed to understand the whole thing from the start.

As for this idea, the implementation will be everything.

If they were SMART, they'd have examples of what's in stock out in a wide area, but only one of each kind of thing (instead of a lot of them), a large stock room where everything is stored, packaged and ready, and simple-to-use terminals all over the store to "order" items from the display floor with several dozen pick-up stations where the customer would get their products dispensed like a giant vending machine. 

Having a product you can look at and touch and play with helps sell it.  The rest cuts out the need for a check-out line.   You just get your stuff with a coded receipt from one of several dozen automatic dispensing stations.  This way you could order it online and go to the store with the printed receipt - or order one from the floor - and just pick it up.

dannyj88
dannyj88

You won't be saying that after they find a bogus reason to fire you like they did to more than half of the people that use to work at my old store... Keep spreading the word of how great this change is like they are paying and brainwashing you to do... dont believe them when they say you'll be working the floor instead of ringing customers how many associates do you see helping customers on the floor at Target?

Jeff Schueler
Jeff Schueler

I agree. I have been shopping at Penney's all of my life, and I welcome the change. Keep up the good work, and I will keep shopping at your store!

RobertSF
RobertSF

RFID technology takes care of that. It's like a barcode that broadcasts its information. Put it on the items for sale, and you can ring them all up just by proximity. In the case of groceries, you push a cart through a gate, and it's all rung up at once. The same with an armful of clothes.

Marc Daneker
Marc Daneker

Too bad, you can't. Or, if you've ever seen one of those new-fangled 15 year old self-checkouts at K-Mart and many Supermarkets you'd know they handle cash and make change just fine.

Anyone who understands retail scheduling understands that much of your "customer service" and "merchandisers" are stuck at the check out counter. You're not eliminating jobs so much as your shifting the focus and not hiring as many people to do a low-paying meaningless job.

ULURU
ULURU

 Just another retail dinosaur going extinct.

Boxingwithangels
Boxingwithangels

I'm getting rid of my smartphone.  Not because of this, but to save money.  But I have to say, I am so very tired of technology being used to replace humans.  We use to worry about robots replacing us all, and it appears the self-checkout amp; smartphones have become the robot.

sayit_outloud
sayit_outloud

 They're not actually getting rid of the cashiers.  However, by the tone of this article, I can see why you would think so.  It's ok- the author of this article is a complete idiot. :)

Matthew Wang
Matthew Wang

Obviously, those people will be re-assigned as salesfloor people, just that they will all be armed with checkout devices.

Ever been to an Apple store? No cashiers, no cash registers. Yet they still have tons of employees working.

TucsonTerpFan
TucsonTerpFan

While the "everyday price" is what they "push."  If you check Penney's ads they, at times, subtly slip in what the store calls a special (not sure they even use the word "sale").  I've seen them a few times billed as on the last Friday, or first Monday, but they might as well be hidden to the average customer. 

The type of store you are proposing has been done before.  Years ago, (I don't know your age), there were several "chains" of these types of stores around the nation.  By individual names, they were mostly regional in nature;  "Service Merchandise" was one I remember by name (I think that was in the Atlanta area).  My wife and I made several buys from that store. 

When we moved to other parts of the country, we found similiar types of stores.  These stores seemed to disappear within a few years of operation.   The items were on display and you selected it by name, number, with a card and picked it up at a certain location in the store.  It was brought to you "from the back of the store."  They also published catalogs like most department stores did (or do).  One store even had conveyers like the baggage terminals found in airports.

Ironically, I also found that same store concept in some of the east block countries.  One of East Germany's largest department stores in East Berlin in the Alex. Platz operated on the same concept.  You saw the items on display and picked up your item at a central location.  Needless to say, that government store "went away" when the wall came down. 

One of the most successful stores that still uses a version of this concept is IKEA, the Swedish furniture store.  Again, in Europe 30 years ago was where we first saw that concept at IKEA stores in Germany and the Netherlands.  Today, at IKEA, for its large items it's all self-serve, i.e., you pick-up your boxed large items from its in-store warehouse section.

Don't think that concept would work too well with a store like Penneys, as most people today want to try on clothes before they buy.  Also, with so much clothing made overseas the "uniformity of sizing" is almost gone, so a "try-on" is necessary.  Clothing is still what the majority of Penney's in-store shoppers are there for.  (Notice those glossy brochures feature mostly clothing items.)  Going throught that pick-up process to try on several clothing items would drive many customers away...far away!

(I tried on three pairs of shorts just last week at a store. They were all the same size, but only one pair fit.)

PS: I enjoyed the subtly of your "diss," i.e., "So like most people, you failed to understand the whole thing from the start."

Stupid me!

Liz Leyden
Liz Leyden

Apple Stores also don't allow customers to pay with cash. I hope JC Penney doesn't go down that road.

RobertSF
RobertSF

No, that's incorrect. A big part of the push behind self-checkout is cutting labor costs.

Shaun Deacon
Shaun Deacon

If you think it's obvious you don't work in retail where firing ppl is a reflex for management to save money.

abby0802
abby0802

Our local Penneys has been slowly reducing the number of employees  -- you can barely find a cashier at a cashier station or on the floor now  -- this is just a ploy to fire people....