Chapter 12: The Transaction Recorder


As Walt Neppl went to New York and, in a year's time, put "The Book" together, [1] Mil Batten pressed ahead on the four main implementations of "The Memo." By 1964, a credit division was in full operation, the giant upgrading of stores was progressing (thanks, in part, to Marshall and Neppl), and the cash-hemorrhaging catalog division was at least still showing long- term promise. Now Batten turned his attention to the point-of-sale data dilemma. It would be a real test.

As he recalled, "We had made a total systems study and come to the conclusion that the vital key for us was something that was not in existence. We had to be able to gather essential data at the point of sale. We couldn't do it with the cash register. There was nothing else. We asked around outside the company and nobody was even thinking along those lines. Nobody."

The Great Idea

Trying to get something going, Batten formed a technical team to develop a set of specifications for what was labeled the "transaction recorder." The next step was to find a manufacturer who would be interested in making such a product. Batten thought that with Penney behind the concept, somebody would jump quickly. And the logical place to start was National Cash Register, supplier of all Penney cash registers. Batten called Bob Oelman, NCR's chairman.

Batten exchanged hellos with Oelman and then added with a chuckle, "But the reason I called could be a little unsettling." Oelman responded with forced humor and Batten continued with, "Well, what I have in mind is of such import, I wonder if you and a couple of your other top people might come down to New York and meet with me? It's along the lines of an advanced product we need."

Oelman tried to push for more, but Batten parried with, "Bob, it's a big concept. I need to show you tentative specs and speak in some depth. It would be unfair to tell you anything more on the phone."

The top three NCR executives were in Batten's office the next week. After brief pleasantries, their host dove right in. "Well, gentlemen, we've been doing some thinking about your primary product." Batten opened a big file on the conference room table. "And we have come to the conclusion that the cash register, per se, will be obsolete within the decade ." He had wanted to get Oelman's attention, and he had it. The NCR people were clearly shocked.

Batten handed out tentative specs as he began describing the Penney concept to the numb execs. "Gentlemen, here is a rough work-up of specifications for what we have given the working name of ˜transaction recorder. In plain words, it's a cash register that also captures all relevant data at the point of sale. We believe it's the wave of the future and will mean the death of the simple cash register ”at least as far as J. C. Penney is concerned . We wanted NCR, of course, to hear this first and respond."

The response of the men from Dayton was not very positive. They were immediately skeptical about the need for such a product, irrespective of Penney's interest. Still, they agreed to form a joint venture to develop a prototype. NCR would provide the technical know-how, and Penney would work on the requirements and full specifications. It was a handshake agreement that Batten felt uneasy about. And, sure enough, before the lawyers had anything ready to sign and before much had transpired in NCR's research facility, Bob Oelman was on the phone to Batten. He very apologetically backed out of the project, citing two main reasons:

  1. The idea didn't seem feasible .

  2. NCR couldn't find a single additional retailer interested in such a device.

Batten next tried Singer, which was making a bold move into computers from their sewing machine concentration. But not that bold.

Then Control Data called. They had heard that NCR might be working on an automated cash register for "X" customer. They immediately went to a close contact at Sears for more information. Sears knew nothing about any such device, had no interest in the idea, and suggested that Control Data contact J. C. Penney. As Batten recalled, "Sears said that, in terms of automation, the most technically advanced retailer was us. So Control Data called and discovered that we were the culprits in back of the whole thing. They came in, and we explained the idea and asked if they would have any interest. A small computer? It was obvious at the end of this first conversation that they either didn't understand what we were talking about or didn't have any interest in it. Control Data at the time was focused on large mainframe computers to compete with IBM. They never came back."

Batten next tried AT&T, on whose board he sat. There was lukewarm interest at the top of the telephone monopoly, but then the Western Electric division got in touch. They were highly excited about the concept, could see its future applications across the entire retail industry, and quickly bought into the joint venture. It just had to be run through AT&T legal. Where it was killed . At the time AT&T was operating under a consent decree with the Department of Justice that prohibited its getting into anything but the telephone business. Nobody had thought to check first.

[1] Considering the departmental sprawl of J. C. Penney, it was a striking accomplishment for Neppl's team (abetted by several senior execs). "The Book" included every level of market, store type and size , merchandise assortment, and profit projection. Every major department was represented, including stores, merchandise, planning and research, real estate, personnel, and accounting. It became the company's operational bible, whose computerized cousin was in use decades later.




Celebration of Fools. An Inside Look at the Rise and Fall of JCPenney
Celebration of Fools: An Inside Look at the Rise and Fall of JCPenney
ISBN: 0814471595
EAN: 2147483647
Year: 2003
Pages: 177
Authors: Bill Hare

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