Keeping Up With J. C. Penney

There’s no question that J. C. Penney is making news in 2012. The company released no less than 22 press announcements since January, running the gamut from announcing new leadership and monetizing assets to revealing a new pricing structure and moving toward the elimination of all traditional POS units.

The most recent announcements — around ending all cash transactions, mobilizing the POS and implementing 100% RFID ticketing — may significantly impact the entire U.S. retail industry if they prove successful and profitable.

Mobile checkout is rolling out through fall 2012 and the entire J. C. Penney platform will be on RFID tickets by February 1, 2013, Johnson stated.  Additionally, the company expects to eliminate cash registers, checkout counters and all cashiers as early as 2014. “Think of a physical store without a cash routing,” noted Ron Johnson, CEO, in an interview with Fortune. “About 10% of all the money we spend, half a billion dollars a year, goes to transactions. Well that could be done through technology.”


Part of the strategy involves self-checkout kiosks, facilitated by RFID. Customers won’t need to scan items in order to check out, and because there are no longer coupons involved in the process, the checkout process is simple and seamless.

Speaking at the Fortune Brainstorm Tech conference in New York on July 18, Johnson assured attendees that the company’s overall goal is to focus on the customer and the customer experience. His comments may have been a bit defensive, since some of the initiatives implemented since Johnson took over as CEO have not produced the expected results.  The pricing strategy in particular caused many shoppers to recoil. Yet Johnson and J. C.Penney are standing behind the no-coupon/no discount strategy moving forward.

Moving Forward With Oracle
One of the key components of J. C. Penney’s next phase includes an Oracle-based technology infrastructure. The system includes a suite of Oracle products, including Oracle Retail Merchandising Operations Management, Oracle Retail Merchandise Planning and Optimization, Oracle Retail Supply Chain Planning and Executive and Oracle Retail Stores.

“In order to become America’s Favorite Store, J. C. Penney must simplify our processes and our technology infrastructure to deliver the best possible customer experience,” Johnson noted in a press announcement. “A critical step on this journey is providing our team with better access to the information they need to make strategic business decisions, drive performance and exceed customer expectations. Working with Oracle, we will achieve our goal.”

Kristen Blum, J. C. Penney’s recently acquired Chief Technology Officer, added: “We need an IT foundation that delivers real-time, mobile access to accurate information throughout the organization. We selected Oracle based on its deep retail functionality and the fact that it is proven to handle the volumes of transaction, customer and business data generated by a large organization. Together, we will deploy modern merchandising, planning, supply chain and store systems to help us deliver a seamless and engaging customer experience.” Blum joined the J. C. Penney team in January, following stints at Pepsico, Abercrombie & Fitch and Apple.

New Store Strategy Features Shops-Within-A-Shop
As part of the company’s efforts reshape the J. C. Penney brand image and customer experience, Johnson plans to launch numerous shops-within-a-shop in store throughout the next three years. Johnson has stated that the plans are to add two to three per month and reach up to 100 by 2015.

The most recent shop-within-a-shop partnership is with Joe Fresh, a Canadian women’s apparel brand, owned by Loblaw. Approximately 700 Joe Fresh in-store boutiques are scheduled to open in J. C. Penney department stores in April 2013. J. C. Penney also has similar partnerships with Levi’s, Sephora and MNG by Mango.

How will the Ron Johnson/J. C. Penney strategies play out? It remains to be seen. Johnson would like to jury to hold off on judgment for a few years. “We’re in a marathon here,” he told Fortune. “It’s going to be four years, and we’ve got a very precise vision of how we’re going to get there, and we’re going to stick to our plan, you know, because that’s what it’s going to take. You know, that’s what I learned at Apple; that’s what it’s going to take here.”

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