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JCPenney CEO’s departure highlights challenges retailers face with in-store mobile efforts

By
April 10, 2013

CEO Ron Johnson’s departure from JCPenney is a cautionary tale for retailers about how moving forward quickly with a mobile in-store strategy will not necessarily drive sales if all the other pieces are not in place.

Mr. Johnson, who previously ran Apple’s retail business, tried to lead a turnaround at JCPenney by introducing a number of changes, including eliminating price promotions and replacing checkout counters with iPod touches. However, instead of these moves growing the business, the retailer’s fourth quarter 2012 sales were down 28 percent compared with the same period a year before and Mr. Johnson was let go.

“What Mr. Johnson did was like a splash in the face to his consumers, and technology was not able to redeem him in that regard,” said Stephen Burke, vice president of mobile at Resource, Columbus, OH.

“There can be such a thing as too much innovation too quickly, which is why many brands opt for the test-and-learn approach and gradually introduce changes,” he said. “He did not seem inclined to want to test or learn.

“I would say this is not a referendum on mobile in-store, this is a referendum on overturning the value proposition while you change everything else around it. Their consumers simply weren’t prepared for that.”

Preparing customers for change
Mr. Johnson tried to change too much, too quickly and, in the process, alienated the retailer’s traditional customers. In addition to the new pricing strategy and mobile checkout, he also introduced redesigned store layouts and got rid of some older brands.

At the same time, moves intended to attract younger, hipper customers such as the introduction of mobile checkout, were not able to bring in enough new customers.

While the belief that mobile can enhance the in-store experience, department stores face some challenges here.

One is making sure customers are well prepared for the changes, both demographically and in terms of the shopping experience.

“Clearly, the biggest challenge is Wi-Fi enablement as a first step,” said Rick Chavie, vice president at Hybris Software, Seattle.

“The second is to use mobile as a complement to a strong customer service culture – if the culture does not exist, mobile tools can actually distract from the customer experience by giving associates a tool to play with instead of engaging with customers,” he said.

Training staff
The significant investment need to train staff on how to engage customers via mobile is another challenge.

As a result of these challenges, department stores are behind some other retailers when it comes to putting these strategies into place.

“There is a significant investment in not only technology but more importantly training of front line staff to make this work,” said Laura Wheeler DeYonker, vice president of client services at AbsolutData, Alameda, CA. “Department stores often have high turn-over of the front line staff, which increases the frequency and costs of training.

“Department stores are lagging behind some of the high end retailers in using mobile inside the stores, but they are experimenting more than retailers with lower product lines,” she said.  “The best in class retailers are the technology/electronics retailers and high end fashion retailers, such as Tory Burch, that are using mobile to empower the sales representatives in enhancing the customer experience.”

The right way
There are examples of department stores that are doing a good job of integrating mobile into the customer experience to provide shoppers with access to product information and to speed up the checkout process.

Kohl’s has announced plans to make Wi-Fi available in all of its stores so it can engage customers while they are shopping.

Nordstrom is also using mobile in-store effectively.

Macy’s has gradually incorporated mobile calls-to-action in its various campaigns, departments and promotions. It was also an early adopter in testing shopkick before rolling it across its store base and continues to test other mobile initiatives.

“The way Macy’s positioned it and the consistency with which they have done it has made it comfortable for consumers to engage that way,” Resource’s Mr. Burke said.

“It is additive to the consumer experience and it is done in consistent way,” he said.

Gradual roll out
One way to prepare customers for using mobile to enhance the customer experience is with a gradual roll out that involves testing and learning along the way.

“Thoughtful test and learns that are rolled out over a period of time against a growing consumer bases tend to be successful,” Mr. Burke said. “Total rips and rebuilds tend not to be successful.

The example of Mr. Johnson and JCPenney does not suggest that retailers should not consider rolling out mobile technology – just that they need to do it thoughtfully.

This means making sure that mobile is aligned with a retailer’s core value proposition. For example, Macy’s uses mobile to provide more in-depth information on designers.

“If you look across the spectrum of retailers across America, most are marching very steadily towards an integrated mobile in-store experience,” Mr. Burke said.

“JCPenney is an outlier in this equation, not an example of cross-integration failing because of technology or platform,” he said.

“Make sure mobile is utilitarian and it is ideally transparent in that you don’t have to depend on mobile to deliver the whole value proposition. It enhances it in conjunction with standard merchandising and marketing techniques.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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