Just because troubled retailer J.C. Penney (JCPN.Q) is going retro and scrubbing the last vestiges of former tech-oriented CEO Ron Johnson's tenure from its memory doesn't mean the department store chain is going back to the days of the abacus.
Sure, Penney's is bringing back the old-fashioned cash register line while eliminating the Apple-like associate who helped you check out with a tablet PC in hand, but it also seems to understand that even the old fogies who shop its stores have taken up tech themselves, particularly smartphones. So it's implementing an initiative to drive sales through mobile apps with Shopkick, an app developer that's attempting to socialize customer loyalty.
Using geolocation and geofencing technology, as soon as a shopper enters a Penney's store, the downloaded app recognizes this, differentiating it from other geo apps like Foursquare or Gowalla that require you to manually sign in. Shopkick verifies a shopper is actually in the store by the sounds it hears through the smartphone, then lets the customer know they've gotten points called "kicks" for shopping at the retailer, advising there are deals available in-store.
According to the app developer, Nielsen says it's already one of the five most widely used shopping apps in the country, putting it in the same category with eBay and Amazon. Penney rival Macy's rolled out the Shopkick mobile rewards program a few years ago, with other retailers like Best Buy, Target, and American Eagle Outfitters deploying the technology, too.
The potential for tapping into the growth of mobile commerce is huge. According to a report by the market researchers at IMRG and Capgemini, m-commerce accounted for all of the growth witnessed in online retail sales in the second quarter. Tablet computers made up the vast bulk of such sales, or 85%, and smartphones comprised the rest, but with only half of all smartphone users having used their device to make a purchase, there's plenty of runway left to see that percentage rise by orders of magnitude.
Wal-Mart (WMT -0.08%) recognizes the extent to which consumers are relying upon their mobile devices for shopping, and though it used the same geofencing technology that Penney's and others are using, it's gone its own way and built from the ground up a location-aware app that can be used by consumers whether they're in-store or at home.
In online mode, shoppers can find products that might be out of stock at one Wal-Mart but in stock elsewhere. In in-store mode, they can view the weekly sales flyer, see what's new on sale, scan bar codes, and tally the cost of what's being bought before even getting to the register.
The Shopkick app being deployed by Penney's and other retailers seems to be a lower-cost option than building a program from the ground up. In fact, Macy's was the first retailer to deploy Shopkick's streamlined technology that no longer required a device installed at entrances to the store but rather used an inaudible tone added to the canned music played over a store's sound system as the signaling source. The change allowed the retailer to expand the rewards program nationwide.
As Penney's struggles to revive its flagging sales, it can't afford to be a Luddite and eschew all technology, as its own customers have embraced it themselves. But it also needs to keep in mind the sensibilities of those who do shop at its stores, and looking like a department store version of an Apple store wasn't the right move either. This latest move seems like it nicely straddles the two camps and could help it kick its sales higher.
