Checkout Clerks Checking Out at J.C. Penney

Traditional checkout clerks will soon be a thing of the past for retailer J.C. Penney (NYSE: JCP  ) . CEO Ron Johnson announced at Fortune's Brainstorm Tech conference recently that the company planned to eliminate cash checkouts in its stores by the end of 2013.

According to Johnson, J.C. Penney is rolling out advanced Wi-Fi in all its stores to support mobile checkout by this fall. The company then plans to implement a new radio frequency identification, or RFID, process in February 2013. That sets the stage for customers to check out without scanning bar codes on purchased items -- and without clerks.

J.C. Penney isn't the first to try RFID. Wal-Mart (NYSE: WMT  ) enthusiastically backed the technology a few years ago. However, its suppliers weren't as excited about adopting it. Wal-Mart still publicly states that they are interested in RFID, but the company appears to be backing off from the technology -- especially in its international markets.

At least one expert suspects that retailers such as J.C. Penney might have a better shot at making RFID technology work. Justin Patton, managing director of the RFID Research Center at the Sam M. Walton College of Business, thinks that the $0.07 to $0.10 cost per RFID tag could be better handled by apparel retailers than in lower-margin retail businesses.

Ron Johnson believes J.C. Penney will succeed. He sees the possibility of redirecting the $500 million spent yearly on checkout transactions to improving customer service in other ways.

In his remarks at Fortune's conference, Johnson made repeated references to how Apple (Nasdaq: AAPL  ) transformed retailing through its Apple stores. He intends to bring the concepts that he helped pioneer with Apple -- enthusiastic and knowledgeable sales staff connecting with customers -- to J.C. Penney.

Will J.C. Penney be a winner with RFID? Investors seemed to cheer on the move. The stock went up nearly 5% the day after Johnson's remarks. However, the company faces challenges, including gaining traction for its no-coupon policy and a national boycott by the One Million Moms organization.

One company that clearly appears to be a winner is Oracle (Nasdaq: ORCL  ) . J.C. Penney selected Oracle to support its business transformation and is converting its entire retail platform to Oracle technology. Johnson maintains that his company will spend less money than it did the previous year with this implementation and be able to channel the savings into more customer-facing technologies.

It's too soon to tell if J.C. Penney will succeed with its technology shift. The company might even do well with its checkout transformation yet still fail overall with its new business model.

My hunch is that the self-checkout wave will catch on in retailing, regardless. If that hunch proves to be correct, Oracle appears to be a good stock for investors to check out.

RFID could be a bona fide technology game-changer. To learn about another game-changing technology winner, check out The Motley Fool's special report "The Only Stock You Need to Profit From the NEW Technology Revolution." Get this limited-time free report now by simply clicking here.

Fool contributor Keith Speights owns shares in Apple but has no positions in the other stocks mentioned above. The Motley Fool owns shares of Apple and Oracle. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating bull call spread positions in Apple and Wal-Mart Stores. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On July 24, 2012, at 10:32 AM, FreeRange1 wrote:

    Hello! Who is proof reading???? $500 BILLION spent on checkout annually at JCP???? How about maybe $500 Million...

  • Report this Comment On July 24, 2012, at 2:42 PM, seattle1115 wrote:

    A boycott by One Million Moms ought to be a badge of honor.

  • Report this Comment On July 24, 2012, at 4:33 PM, TMFKlesta wrote:

    It is indeed $500 million, FreeRange1. Thanks for letting us know!

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