JC Penney Gives Free Wi-Fi The Axe
Department store chain goes against the retail trend of free in-store Wi-Fi
Under the guidance of former CEO Ron Johnson, JC Penney (JCP) invested roughly $12 million installing its Wi-Fi system across all stores last year. Johnson believed that Wi-Fi was a fundamental element of the company’s business, especially with mobile checkout being utilized with iPhones and iPads. Additionally, Johnson believed that free wireless Internet was a way to keep shoppers in stores longer, creating a bigger chance of impulse spending in-store.
Now, under the guidance of CEO Mike Ullman, the retailer is making efforts to recover from Johnson’s tenure, including putting a halt to mini boutiques in JCP stores, returning to the department store chain’s roots of deep discounting and coupons, and promoting private labels like Arizona Jeans and St. John’s Bay. The company now hopes dropping the free Wi-Fi installed by Johnson can help the struggling retailer. Stopping free Internet service for customers will save JCP about $7 million annually. This might seem like small savings, but for JCP, which posted $985 million in loss for 2012, every bit it can save matters.
“There was little use by customers,” a JCP spokeswoman says. Additionally, Ullman believes mobile checkout confuses customers. Rather than impressing customers with flashy technology, Ullman seeks to make store associates visible with uniforms and carts with wheels to accompany mobile device wielding associates.
Now, with mobility becoming the hottest trend in retail, in-store Wi-Fi is more popular than ever. Target and Macy’s have introduced free wireless Internet in-store within the last year, and Nordstrom began this perk in 2010. Despite rising popularity, JCP believes free Wi-Fi is often lost on customers, who choose to engage via their mobile data plan rather than in-store wireless.
JCP is in a tight spot. Posting huge losses in 2012 was the result of alienating business practices that kept the retailer alive and well for years. Now, the company must find ways to bring those alienated customers back and gain new ones, all while uncovering new ways to trim excess spending. JCP has decided that in-store Wi-Fi is an extraneous expense right now, finding any means it can to stop bleeding money. Dropping in-store Wi-Fi can help save JCP money right now, but it might be a good idea to keep the installed Wi-Fi system regularly maintained. With the popularity of in-store mobility on the rise, JCP won’t want to be playing catch-up, again, if its recovery efforts are successful.