JC Penney Replacing Cash Registers With Coffee and Juice Bars

Caribou coffeeBy Ashley Lutz

JCPenney (JCP) can offer shoppers something no online retailer can: food and drinks to enjoy while they spend money.

CEO Ron Johnson said the retailer was planning on replacing traditional cash registers with coffee and juice bars, reports Sapna Maheshwari at Bloomberg News. A prototype he showed reporters in August included a Caribou coffee stand.

The stands will be there so "no one has to leave the store if they want to refresh," Johnson said.

It's a smart strategy and one that gives JCPenney a leg up on online retailers. Johnson has also announced plans to give associates iPads and eliminate most cash registers.

Other retailers are also using food to lure shoppers into physical stores and away from their computers.

After introducing cafes to a couple of its stores, Urban Outfitters (URBN) found that a visit to the cafe doubled the amount of time people spent in the store, Maheshwari reported.

Gap's Banana Republic has also started hosting more in-store events that include food.

"The one thing you can't get in the cyberworld is the tactile experience and that won't go away," an Urban Outfitters executive told Bloomberg. "Food is becoming bigger and bigger in terms of entertainment value."

The 10 Oddball Quotes From JC Penney's Fired CEO
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JC Penney Replacing Cash Registers With Coffee and Juice Bars

"The first and most encouraging thing to me is I am completely convinced that our transformation is on track. We are making extraordinary progress in everything we're doing."

"In haircuts, it's pretty incredible. Today we will cut on our tenth day of this effort to help Americans look better, help the kids look better. We'll do our 500,000th haircut, free haircut. And today customers will book their millionth appointment during the month of August to get a haircut.

"We're reducing the money on television. We'll still run television and we're investing heavily in the traditional traffic driving median, so be in the newspaper and we think that's going to be good."

"We're going to go paperless. ... Imagine a retail store without any paper except the signs, because everything will be done digitally through iPods and iPads and those are our priorities and those are all priorities within the next 12 to 18 months."

"Well, for the first 10 days with our new marketing, our traffic is down 7% to last year, which is a dramatic improvement."

"We're inspired by Selfridges. Selfridges is the leading department store in the world. You ask any retailer what's the number one department store? They will all say Selfridges."

"It's a place to refresh and we're going to have coffee bars and juice bars and place to get food, that's 25-square feet of space, but by putting out a few tables that have no cost, where we used to have cash wraps, no one has to leave the store if they want to refresh, they can grab a cup of coffee while someone shops and continue to stay in the store and continue to shop."

"We've rolled out Wi-Fi, but we really don't have a lot of use for it."

"What happens in a big mall of a 1 million square feet, about 600,000 square feet goes to the anchors and the common area which leaves about 400,000 square feet for the stores and the stores average 3,000 to 4,000 square feet. So, you run the math, you have about 100 to 120 stores in a typical mall we're in. We'll have just as many shops with inside JCPenney and that's what we call it a specialty department store. It's like a mall within a mall.

"Yeah, we're very anxious to communicate our pricing to our customer and we have failed at that, right? They were confused. Now, we have a pricing strategy that they understand. We have done focused groups around the country over the last 30 days with our new pricing strategy and they all say, we get it, whereas before, they were confused."

"At Apple our stores were busy when we only had Macs. Then we added the iPod; they got busier. We added the iPhone; they got busier yet. We added the iPad, and they got busier. The same thing will happen here. Next spring it's Joe Fresh, Martha Stewart, all our new partners. It will be just like Apple: boom, boom, boom."

As analyst Bill Dreher of Newedge USA told Johnson on the call, "I want to applaud you for creating one of the most exciting stories in retail write-down."


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