Mischaracterizing JCPenney’s Approach

A Web site claims that because the retailer is taking a phased approach to RFID adoption, that mans the company is abandoning end-to-end tracking.
Published: April 25, 2011

I saw this curious headline on the Web the other day: “JCPenney CIO Decides: No RFID for Checkout.” Intrigued, I clicked on the link, which took me to a Web site known as Storefront Backtalk.

The article claims that JCPenney has been “testing RFID just on high-SKU [stock-keeping unit] items, such as athletic shoes, bras and denim apparel—and isn’t using it at the POS [point of sale] at all.” Based on this information, the writer concludes: “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.”

That kind of logic—that taking an incremental approach means abandoning the technology entirely—is a bit odd, to say the least. It’s a bit like claiming that someone who is only saving $100 a month has given up plans to retire because he or she is not putting away $5,000 a month.

JCPenney has declined to publicly discuss its use of RFID, so I don’t have insight into CEO Mike Ullman’s thinking. But it seems to me that taking an incremental approach to deploying RFID makes a lot of sense. Essentially, you could invest tens of millions of dollars to tag every item and put readers at every point of sale, or you could use RFID on the inventory where it is going, in order to attain the most return on investment in the near term.

An incremental approach has a number of virtues. First, you wouldn’t have to tie up all available capital in your RFID system, so money is available for other projects. In addition, you’d get some immediate benefits from RFID, so that everyone in the company could develop a trust in the technology. You’d also have time to learn how to use RFID data to maximize business benefits, and you’d be able to address any privacy concerns that might arise.

Then, as you built out your RFID infrastructure and tag prices came down, you’d be able to increase the number of SKUs that were tagged. Eventually, you’d tag everything, and at that point, you’d install readers at the POS to speed up the checkout process. You might also introduce self-service kiosks and RFID-enabled sales tools, such as a “magicmirror” (see Magicmirror Could Assist Retail Customers and To Glimpse RFID’s Future Down Under, Gaze into the EPCmagic Mirror).

It might well be that JCPenney will never employ RFID at the point of sale—but I doubt that decision will be made for a few more years.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark’s opinions, visit the RFID Journal Blog, the Editor’s Note archive or RFID Connect.