JCPenney CIO: We Forgot About In-Store (But For A Good Reason)

How could JCPenney forget about its stores? That's essentially what the 1,100-store retailer did while developing its new 7-foot-tall in-store kiosks, according to CIO Ed Robben. In his first interview as JCPenney's CIO, Robben acknowledged that the 106-year-old chain, which for years did nothing but in-store and wasn't quick to get into E-Commerce, so completely embraced the idea of a Web site kiosk for customers to check online for products that no one thought to include in-store information customers expected—such as store maps and where to find a restroom.

That disconnect between what developers built and what customers expected would have been unthinkable as recently as five years ago, when JCPenney's strategy was to use its Web site to drive customers to stores. But when a skunkworks team began work on the kiosk in the summer of 2009, the goal was to flip that, so in-store customers who couldn't find exactly what they needed could check the expanded assortment online—in Robben's words, "to extend the aisle to the online assortment."

JCPenney Special Report: In his first interview, the CIO also discusses mobile strategy and an RFID approach that gives up on POS.

It was a step in the direction of multichannel. But in reality, it was about dropping one channel (the Web site) down in the middle of another channel (the brick-and-mortar store).

"To be honest, we didn't think enough about the kiosk as an in-store information device," Robben said. "We don't have store maps on it, and we didn't do any features that would allow [customers] to locate an item in-store. I think we tell you online if it's in stores or not, so you can go find it, and there's some inventory information on there, as well. But we got that question a lot in some of the early surveys: 'It won't show me where the bathrooms are.'"

As logical as it might seem to use the kiosks as store signage, there are additional challenges. Store formats for the chain range from 300,000 square feet of selling space in the biggest stores down to 12,000 in the smallest. Floor plans are literally all over the map, and exactly what products are available in-store would have to be tweaked on a store-by-store basis.

The kiosk was developed by a small innovation group started by Tom Nealon, Robben's predecessor as CIO, who still oversees the chain's IT and digital strategy. But the kiosk has already changed from its original design, which was even larger than the current seven-foot giants. "We built five or six of those and rolled them out to see what people thought," Robben said. "The feedback we got was, that's way intimidating, it takes too much space in the store. Some of the stores can't handle a seven-foot device. So we slimmed it down to the version you see where it's on a pedestal, it's more phone-like with a touch screen."

The kiosk design used a large screen to give maximum impact, but that turned out not always to be appropriate. For home furnishings and fashion apparel, it's fine. But for other categories, it can be a problem—and it's something the chain may change in the kiosk's next generation.

"We're a big bra-fit company, and if the merchant feels like we could use an assisted selling device within that category, you wouldn't want that on a big 42-inch screen," Robben said. "You may want it on a handheld iPad assisted-selling device, or maybe up to a 27- or 32-inch screen that you can stand in front of it and block the view. We want to be security conscious, and we want to be sure it's discreet."

The next rev of kiosks will also do a better job of bridging the gap between Web site and store.The next rev of kiosks will also do a better job of bridging the gap between Web site and store. "Today, the kiosk is pointed at the online assortment, meaning that there's no merchandise tied to that transaction," Robben said. "We want to make that better. We've got some features that we need to add around promotions and gift carding. Once we do that, that'll help even increase the business we're seeing today on that kiosk. Could I take store merchandise and check out on that device? We'd have to think about how that's going to work just in-store process-wise around removing ink tags and bagging."

That can't happen until JCPenney has an enterprise-wide inventory system—and that's two or three years away from seamless integration, Robben said. Shifting the Web site from Microsoft's .NET technology to Oracle's ATG, which will set the stage for cross-channel inventory, is about a year from going live.

That will also make a lot more possible than just better use of the kiosks. "If we want it to be true multichannel, we've got to overlap those experiences, so you could take a mobile phone into our store, scan a barcode and, whether it's private label or a national label, get the data that you need to make a shopping decision, and then carry that through the checkout," Robben said.

"We're working through how does that really work in-store from the mobile-payment aspect. Do you do self-checkout, or do they always have to go to the cash wrap? I think we could get there with some sort of roaming POS at a minimum, and then evolve into some sort of customer self-checkout."

Even starting down that path will have JCPenney butting heads with the PCI Council, which has stopped approving mobile POS devices. Home Depot and Apple have gone ahead with mobile POS anyway, and Robben said JCPenney is likely to move ahead, too.

"We want to move as aggressively as we can," he said. "If they're not going to approve it, I think we'd have to dig into what is it they're not going to approve. If it's any wireless, no matter private wireless or encrypted, we might have a tougher case around it. But I don't think we'd wait for them to decide that we could go do something. In the past we've been aggressive on various innovations, and we've been able to work through some of the bureaucracy that's been a friction point for it. We'll fight to make it work."

What won't necessarily work is the idea that mobile payments of any type will actually cut costs such as interchange fees, including whatever mobile carriers end up offering. "In the discussions we've had with carriers, they come in and want to sell you services—we can do the mobile wallet, all these value adds and features and functions," Robben said. "Then once you get down to what the business model is for how this is going to work, it's a discussion of a per-transaction fee or who's going to own the customer data. Is it going to decrease the cost? I think it's another avenue for another fee for somebody to charge me on my transactions."

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