JCPenney CIO Decides: No RFID For Checkout

The usual assumption about item-level RFID is that it's perfect for managing inventory all the way from the stockroom to store shelves and through the checkout. But if JCPenney CIO Ed Robben is right, that approach is wrong. The 1,100-store chain has been testing RFID just on high-SKU items, such as athletic shoes, bras and denim apparel—and isn't using it at the POS at all.

Of course, testing RFID on just a few items means it's useless at checkout time—unless everything has a tag, you still need scanners for the items that don't. But it also means instead of trying to speed checkout, RFID is only being used to keep shelves stocked in specific categories of goods. By dumping the end-to-end goal, it may be possible to get more real leverage out of RFID—and keep the cost and supplier headaches down, too.

According to JCPenney CIO Ed Robben, the chain has been testing item-level RFID tags for the past year in the Columbus, Ohio, area—first at five stores, then expanding the test to 33. And it has all been focused on inventory control: "It's really enabling the stores to get to basic blocking and tackling around getting things out of the stockroom, getting them on the floor, staying in stock and being able to sell it," Robben said. "That type of application of RFID we think is going to work really well for those high-SKU areas that we really need to be in-stock every day, every hour, every rack, every shelf."

JCPenney Special Report: In his first interview, the CIO also discusses mobile strategy and a kiosk approach that all but forgot about in-store.

That sounds like half the benefit of item-level RFID is out the window. The dream of wheeling a shopping cart up to a cash wrap and having everything instantly tallied up has been the high-concept pitch for RFID tagging almost from the beginning, and that's still Wal-Mart's goal, even though the giant started last year with just men's jeans, underwear and socks at a few stores.

But JCPenney doesn't have Wal-Mart's clout. Demanding that every supplier tag every item is barely possible, even for Wal-Mart. For JCPenney, it's probably a non-starter.

On the other hand, targeting relatively few products that have many sizes and styles makes a lot more sense: fewer suppliers to negotiate with, fewer tags to pay for and a big benefit from being able to quickly check and replenish shelves from the stock room with just the sizes and styles that have been sold.

You don't need item-level RFID on TVs or ladders. They don't come in dozens of sizes for each style, the way bras and shoes do. And while keeping the right sizes in front of customers is no guarantee that they will buy, some customers who don't see exactly what they're looking for won't ask. Even if they ask, store associates often don't have any good way of finding the right combination of size and style in any case.

Targeted RFID use might be the easiest way to solve that problem. One quick pass down a few aisles with a handheld scanner can generate a list of what needs to be restocked and whether the right inventory is in the back. That can happen almost constantly.

There's one more reason that it might be a very good idea to give up that ring-the-whole-cart-up-instantly dream. Wal-Mart ran into a firestorm of criticism from privacy watchdogs last summer when it started testing RFID tags and announced it wouldn't be removing them at checkout time.

At least in its tests, JCPenney is cutting off and discarding the tags at the point of sale. Considering that hangers, security tags and other pieces of in-store hardware already have to be removed from apparel at checkout, it may never have been practical for RFID to speed up checkout anyway.