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 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 the department store biz, I believe it will prove a challenge.
What do you think, can JCPenney create better customer service this way? And if the answer is no, 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).
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