J.C. Penney is going against the retail trend and dumping its newly installed in-store Wi-Fi.
The department-store company, which invested about $12 million installing the free, publicly accessible Wi-Fi last year, will save about $7 million a year by halting the service, sources familiar with the situation told BuzzFeed on the condition of anonymity. While mobile checkout devices will still use wireless internet, it won't work for the public — or for store employees' personal phones, sources say, leading to some unhappy grumbling on Twitter.
"There was little use by customers," a spokeswoman for J.C. Penney said in an email, confirming the removal of the Wi-Fi.
The company is aggressively trimming expenses where it can, sources told BuzzFeed. Still, this is a relatively small cost-saving measurein the context of the $985 million net loss posted by J.C. Penney in the year ended Feb. 2, 2013.
Former CEO Ron Johnson, the ex-Apple retail head who was replaced by his predecessor in April, said last year that Wi-Fi was "a fundamental architecture" for the company's 1,100 stores, especially as it implemented mobile checkout via iPads and iPhones. He also said it was a way to keep shoppers in stores longer.
However, current CEO Mike Ullman said mobile checkout confused customers. He has sought to make associates more visible by implementing proper uniforms and wheeled carts to go with the devices in many stores, Bloomberg News reported in June. He hasn't mentioned plans for the in-store internet in calls with analysts since his return in April.
Ullman has hit undo on a number of changes to return J.C. Penney to the days before Johnson's 17-month tenure, during which the retailer lost $4.3 billion in annual sales. He's also halted the pricey construction of mini boutiques within most stores, brought back coupons and sales and bolstered popular private labels such as St. John's Bay.
Retailers from Target to Macy's have introduced free Wi-Fi in stores in the past year (and Nordstrom and McDonald's started offering it in 2010), though its effectiveness is, well, up in the air. Customers are often unaware they can check into a store's wireless network or simply choose to remain on their cell phone data plan while at a retailer.
Still, a number of retailers contend it's a way to keep shoppers happy in stores and to stay there longer, especially as Americans spend more time than ever on their tablets and cell phones. Free Wi-Fi can speed up mobile shopping apps, which are gaining popularity, especially in large department stores where cell service can get dodgy. It's also a perk for employees, who may find it harder — and more expensive — to check mail, Facebook, and the like on breaks without the Wi-Fi.