Less Staff, Better Customer Service? The JCPenney Plan

January 17, 2013

Technology is shaping how companies interact with customers. From social media to big data, from CRM systems to GPS tracking, almost every company’s relationships with its customers are shaped by technology.

Despite technology’s prominence, companies are finding that the optimal intersection of technology and customer service is not always obvious. As we move to an increasingly low touch world, human interaction is craved more than ever by customers.

Yet, in times of increasing costs and shrinking bottom lines, technologies that enable cost reductions in one area of the customer experience can often free up resources to create a closer connection in another area of the customer experience.

And such is the theory behind JCPenney’s new retail strategy.

JCPenney Customer Service: Will Less Staff Create Better Service?

JCPenney has had a troubled few years and has attempted to regain traction through some major initiatives such as changing its logo, changing its pricing model, and hiring former Target and Apple executive, Ron Johnson.

It is Johnson that is suggesting a radical departure for JCPenney from the standard retail model. As reported in Time:

“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.”

Not many details of how JCPenney plans to execute this vision have been released. How many humans will be in the store? Security, for sure. Customer service, likely. But who else?

Who will be there to share product knowledge? How will JCPenney create a service culture with its remaining staff when its last initiative was a mass layoff to make way for automation?

Perhaps the concept could work, but I have my doubts.

For one thing, the risk is high because the costs are front loaded. Whatever JCP saves in labor over the long term will come at the expense of a large upfront capital investment from redesigning its stores and creating the new, employee-light environment. So, if the concept is a bust, the already-challenged company is going to have a very hard time flipping back to a traditional model.

On the other hand, it could be a new model for lean retail and could put JCPenney in a position of competitive advantage relative to its competitors. But who then are JCPenney’s competitors?

If JCP eliminate humans from the shopping experience, what advantage does it have over online shopping? Sure, some items are better if you see/touch/try them, but most are not. Without a human touch, why go to JCPenney over Amazon or Zappos?

I would like to hear more details on the plan of execution before passing judgment, but I must say, based on the limited information, I am dubious that the strategy will be successful.

Despite Mr. Johnson’s estimable retail pedigree, the fundamental question is can an entire brick and mortar store provide better customer service by drastically reducing the amount of human interaction with its customers? In a non-competitive space, maybe. But in a department store biz, I believe it will prove a challenge.

What do you think, can JCPenny create better customer service this way? And if the answer is o, is this still the future of retail?

* Though it is possible Johnson meant “rep,” I am assuming that this is a misquote on the part of the Time writer and that Johnson was using the standard retail term “cash wrap,” (i.e. a checkout counter).

16 thoughts on “Less Staff, Better Customer Service? The JCPenney Plan”

  1. Hey, Adam! I’ve been following this company awhile, too. I wrote about them in 2011 when the Apple exec took the reins and changed the marketing approach. To his and investors’ chagrin, it didn’t work.

    Customers are centered on coupon mania; the recession did that.

    JCPenney trying to pave the way as a first mover in its category is laudable; however, it strikes me the company should spin off a launch into a more nimble clothier oriented to tech to try these grandiose ideas.

    When you’re as old as the hills and customer expectation fuels growth and change, AND the company is NOT APPLE and when the stock is sliding due to all these issues…Uhmmm…I think you’re spot on…it ain’t gonna work.

    1. JCP’s had a rough go of it, that’s for sure. The whole situation begs the marketing question: can you really change a historic brand and turn it into something completely different? The brand identity is pretty baked in and is not working for them in the current environment — how do you overcome that? Tough assignment.

      And you’re right Jayme, the comapny is not Apple, who is at the forefront of their industry at the moment.

    2. Well said, Jayme!

      It strikes me that they are trying to innovate the buying experience much like Apple did without the singular counter. This sounds like that idea, but without the human processing the transaction. To me, it seems odd that you have a customer service rep that will help you with the buying decision, but then send you off to pay with a phone yourself. It just makes for an awkward experience, I think.

      I think the idea of mobile check out can be good if you don’t need help with your purchase. But, with clothing, I think that the check out can add to your overall experience, no?

      1. I think that brings up a good question Laura: what percent of JCPenney’s current revenues are from items that people do expect human help with? What will the impact be on their bottom line when that help is unavailable or barely available?

    3. I like using the automated checkout at the grocery store, but not all the time. If I’m tired and don’t want to be bothered with it, I’ll gladly wait in line for a long time to be helped by a human. Sometimes, I’d rather just zone out in line than do it myself.

      I’m not sure their move is going to make me want to shop there more, or at all, but to be honest, I haven’t been in a JCP in a decade. I think they are just past their prime.

      1. “Sometimes, I’d rather just zone out in line than do it myself.” I’m with you Brian. I don’t mind self checkout when I have a small number of items, but if I have a full cart or any kind of produce, forget it. I would much rather have a human help me.

  2. The economy forced a lot of us to run a much leaner operation but I do feel there is a line to be drawn in how much you can automate and try to take the ‘human’ element out of it………

  3. Considering the rush of most online stores and apps to have more customer service/support reps, I too am hesitant on this approach, especially for a brick and mortar store. Amazon, Zappos, you name it – they want you to know that real humans are answering your questions. If I walk into an actual retail store and not see enough employees, I’m probably going to head back on out.

    1. Good point Chase! Some companies are going in the opposite direction.

      I have no problem with using technology to do what it’s good at, but I think that’s the catch: what technology can do and what it can do well are not always the same.

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  6. “Without a human touch, why go to JCPenney over Amazon or Zappos?”

    I think that’s definitely some worth considering. If the human interaction doesn’t matter to me as a shopper why should I bother getting dressed, getting in the car and driving to JCPenney when I can do it all from the comfort of my bed in my pajamas? I feel that most people that like to shop in brick and mortar stores want that human interaction on some level, even if it’s just to have someone give them a suggestion for a new shirt.

    1. Completely agree Trish! Online retailers are making it so easy now — free or cheap shipping, no-hassle returns. What advantages do brick and mortar stores bring? The ability to touch/see the product and human interaction. If you get rid of the human part, then is the advantage really that great?

  7. Do you think this is something that could apply to other non-retail type businesses? We, for example, are a medical center that has a pretty good sized staff. I doubt we could provide the same level of service without the human touch factor. Good article!

    1. Hi Steve, I think it’s always good to be skeptical and cautious when considering technology replacing human customer service; however, there are times where it is appropriate. For instance, some surveys show that about 1/3 of people prefer self-service checkout lines. The key is to still staff them. Whatever systems you look at, I think it is important to make sure there is a “human” backup for when it fails to address the customer’s needs.

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