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Is It Too Radical To Rethink Pricing Optimization Strategy? Hint: If The Answer Wasn’t ‘Yes,’ Would We Have Even Bothered To Ask The Question?

December 5th, 2012
Pricing optimization today has evolved into software from one chain watching software-generated pricing from 20 other chains. The programmed engines then instantly undercut other programmed engines, sometimes resulting in hysterically priced products such as multi-billion-dollar outdated Windows CD-ROMs. But now consumers can see these pricing patterns in real time, courtesy of various data-scraping Web sites.

This new pricing transparency could severely undermine the purchase behaviors these optimized prices were supposed to cause. Will shoppers wait out fluctuations, knowing that prices will eventually drop sharply again? Will the dizzying speed of the changes make them ignore the price wars entirely and default to the chain and products they're most comfortable with? Should this new shopper pricing transparency change how retailers use pricing optimization? Chains today are soon going to have three buckets of pricing optimization options to crunch: internal, such as inventory level, close-outs, slow-moving SKUs, manufacturer incentives, etc.; external, such as competitor price monitoring or what rivals are running out of; and customer/CRM, which is individualized pricing based on a shopper's purchase history, cart assortment and demographics—for both online and, ultimately, in-store pricing.Read more...


Is Nordstrom’s Data-Retentiveness A Sign Of Trouble For CRM?

December 5th, 2012
The fight over customer data just keeps getting nastier. Nordstrom has now joined Gap and as retailers who no longer cooperate with an Intuit service that lets customers aggregate all their bank and payment-card balances so they can manage their money better.

This data-retentiveness puts these chains in a tricky position. Every retailer wants large quantities of CRM information from customers. Telling those same customers they don't have control over information about their store-branded credit-card accounts (as in, customers can access it themselves but can't have an aggregator collect it for them) risks turning the image of chains from a friendly retailer to that of a paranoid Big Brother—especially as chains start behaving more like banks.Read more...


Would You Like Spam With That?

November 28th, 2012
Recent court cases demonstrate how difficult it can be for retailers to collect personal information about their customers and then use that information for marketing directly to them. Get it right, and you have a goldmine of personal information and contact information you can use to sell your products and services and to share with other interested third parties.

Get it wrong, writes Legal Columnist Mark Rasch, and you can be paying tens of thousands of dollars in fines, court costs and legal bills. And here's the fun part: There's virtually no difference between the two.Read more...


Federal Judge Dismisses Walmart Texting Lawsuit, Just Days After Another Federal Judge Ruled The Opposite Way For Papa Johns

November 28th, 2012
Oh, that wacky federal court system. Within days of a U.S. federal judge ordering that retail pizza chain Papa Johns must stand trial in a class-action case alleging misuse of a customer texting program, a different federal judge dismissed an almost identical accusation against Walmart. The cases both deal with the issue of consent. Specifically, if a shopper gives a chain a mobile phone number for any purpose, is that consent for the chain to use that number for an unlimited number of other purposes? In the Walmart case, a customer left a prescription with a Walmart pharmacy to be filled and then picked up later. The pharmacy associate asked for a mobile number "in case they needed to contact her," presumably to discuss or ask about the prescription.

U.S. District Court Judge C. Lynwood Smith, Jr., said that Walmart associates said that the "telephone number was needed 'in case there were any questions that came up.' None of the defendant's employees explicitly sought permission to send plaintiff text messages. Nevertheless, plaintiff received an undisclosed number of text messages on her cellular telephone from defendant within hours of leaving her prescription at defendant's pharmacy."Read more...


The Sadder The Shopper, The More Impulsively They Buy

November 27th, 2012
A University of California study has come up with a bizarre but intriguing finding: The sadder a shopper is, the more likely he or she will be to accept special offers that promise immediate returns. This is true "even when such urgency comes at financial cost" to the shopper, the study found. What makes this study persuasive is that it tested another negative emotion, in addition to neutral emotions, and found that those shoppers made much better financial decisions.

Before retailers start taking down the happy Santa videos and replacing them with films about dying puppies, let's drill down into what the study actually found. (OK, you can show one of the puppy videos, but not the one with the beagles.) The study, from the University of California Riverside's School of Business Administration, offered participants various levels of Amazon gift certificates, with some of the awards being given immediately and larger payments delivered later.Read more...

Papa John’s Texting Lawsuit Raises Troubling Mobile Marketing Issues For All Retail

November 14th, 2012
When a federal judge certified class-action status against Papa John's on November 9, the pizza chain became the poster child for mobile text-messaging abuse. But this case raises some key questions retailers need to wrestle with—and which the court will decide—including the use of POS data for non-payment functions, the chain's reasonable responsibilities for the decisions of very independent franchisee owners and what constitutes a business relationship sufficient to establish marketing permission (and in any definition, does buying one slice of pizza reasonably trigger it?).

The specifics of this Papa John's case involve a vendor that never worked for Papa John's but was retained by quite a few franchisees. That vendor, OnTime4U, sent a huge number of texts to customers of Papa John's franchisees and never received explicit permission from any of those customers. If this had been a case of whether OnTime4U had violated the Telephone Consumer Protection Act (TCPA), it would be a very easy case. But because the case is focused on the retailer that never retained the vendor, things get much trickier.Read more...

Macy’s Hiding Black Friday In-Store GPS Test In Plain Sight

November 14th, 2012
When word broke on November 8 that Macy's is testing in-store navigation technology in its Herald Square flagship store, the chain was surprisingly silent. A week later, Macy's is still saying nothing about the "indoor GPS" system, even though it has been in the chain's iPhone app since late October. Meanwhile, Macy's is promoting a Black Friday product-finding system the chain is doing with eBay.

Part of the reason for Macy's silence on in-store navigation could be that it's only in the flagship store. A more likely reason: There's only one safe way to roll out untried technology on Black Friday, and that's very, very quietly.Read more...

JCPenney CEO: “We Can Have Loyalty Programs For Kids.” Doing It Is Smart. Saying It Isn’t

November 14th, 2012
In the middle of an analyst briefing on November 9, where he was detailing a painful 27 percent drop in quarterly revenue, JCPenney CEO Ron Johnson made a bizarre comment that "we can have loyalty programs for kids." Such utterances have been heresy in retail circles, where it sets off every creepy warning alarm that parents have. But Johnson's point, which JCPenney tried its best to walk back, may have a lot of legitimacy behind it.

Johnson's comment points to a hole in the legal minefield of marketing to children. Federal law strictly restricts and all but prohibits online marketing and tracking of children younger than 13 (once they become teenagers, the government—and parents around the world—have pretty much agreed that it's time to surrender). But there are no such restrictions in-store. Ironically, the reasons Congress agreed to restrict online activity are, today, probably more relevant to in-store, thanks to mobile.Read more...

Google Wallet Goes Plastic. What Now For Mobile Payments?

November 8th, 2012

In another blow to mobile wallets’ credibility, word leaked out last Thursday (Nov. 1) that Google will soon copy PayPal by introducing a plastic Google Wallet Card—complete with the magstripe that Google Wallet’s NFC hasn’t been able to displace. (This may be what Google was planning to announce last month but didn’t.) Google will be pitching the plastic for times “when you can’t tap and pay,” and any coupons or loyalty cards in a user’s Google Wallet will be automatically applied.

But we have to ask—why? Sure, we understand that Google seriously misunderstood either how hard mobile payments would be, how much its competitors hate it or how unwilling consumers are to use anything but plastic. If this is really Google throwing in the towel on NFC-based mobile payments, we have to wonder what else Google isn’t going to follow through on for Google Wallet retailers. After all, Google will still be tapping the transaction stream for CRM data, even at places that haven’t signed on. Is the search giant going to act like a partner after all this? This move may be just what Google Wallet needs. But chains? Not so much.…

Amazon Prime Price Test May Be Testing A Lot More Than You Thought

November 7th, 2012
Amazon's decision to begin testing a $7.99 monthly price for Amazon Prime is at least as interesting for how Amazon is doing the test as it is for the test itself. The new price was spotted by a blogger on Monday (Nov. 5) without any announcement from Amazon, which will only confirm that it is testing a monthly price. But Amazon has made the pricing option tricky for customers to find if, it's offered at all. Click one Amazon Prime link, and you may be offered $7.99 a month; click a different link, and the price is $79 a year.

Which raises an interesting question: What exactly is Amazon testing here?Read more...

California Supreme Court Ponders Whether Online Privacy Is Different From In-Store Privacy

November 7th, 2012
In a case to be argued Wednesday (Nov. 7), the California Supreme Court will decide whether to treat brick-and-mortar stores differently from online stores when it comes to the collection of personal information about customers who make purchases by credit card. The case could have serious consequences for personal privacy of online customers, as well as for the ability of online retailers to prevent fraud and authenticate their customers.

Several online retailers, including Apple, eHarmony and Ticketmaster, were sued in a class-action lawsuit that claimed their collective practice of collecting certain personal information—including consumers' names, street addresses, telephone numbers and E-mail addresses—violates the provisions of a 1971 law that precludes the collection of personal information about users of payment cards. The E-tailers are arguing before California's highest court that the 1971 law didn't contemplate online transactions, that prohibitions on merchants "writing down" consumer information don't apply to data entry into a computer databases and, besides, they need this information to authenticate users and prevent fraud, pens Legal Columnist Mark Rasch.Read more...

Kroger’s Geolocation Glitch: That Local Store Really Isn’t Very Local

October 31st, 2012

At the Web site for $85 billion grocer Kroger, the site makes its best guess for the customer’s location. But this week it identified a New Jersey customer as being in Missouri and located an Oregon visitor in Texas—off by more than 1,000 miles each time.

Was that a storm-related glitch? We’re still waiting for an answer from Kroger, and we know that location feature has worked fine for at least some shoppers in the past. But considering how critical geolocation is in merged-channel retail (where’s the closest store? What’s on sale right now?) and the fact that IP addresses can often be tied to other CRM data, this may be a good reminder of how tricky outsourcing location services can get. Even if your datacenter is safely out of harm’s way, an outside location provider can still be inside a disaster zone and may need its own third-party help—and end up scattering your E-Commerce credibility all over the map. So many other things can impact location accuracy: A VPN can throw it off, and an ISP’s own disaster plans can alter where others think your customers are. Then again, it’s not especially onerous for customers to fix their location, as long as the site makes that at an easy fix.…

Getting Consumers To Add CRM Data To Mobile Wallets Is Really Hard, Until You Think Like A Shopper

October 31st, 2012
The idea that mobile wallets should also house loyalty cards is all but mandatory at this point, and the rationale appears to be the classic, "why not?" But shoppers have been decidedly apathetic, responding with their own, "Why should I?" It's a replay of the mobile and contactless payment problem, where a digital system is trying to displace a manual system (magstripe swipes, in the case of payment) that works perfectly well and that customers are used to it.

What makes this disconnect worse is the real reason mobile wallets need CRM/loyalty functionality: Shoppers have no problem with existing loyalty cards, because they just don't use them that often. The retailer benefit in mobile loyalty cards is clear: much greater use of CRM. But the benefit for shoppers? That's much more amorphous.Read more...

Monthlies And A Shout-Out To Kindle Users

October 29th, 2012

A little late October housecleaning here at StorefrontBacktalk. First, a quick reminder: StorefrontBacktalk now has five free Monthly newsletters, each one focusing on a different key area for you: E-Commerce, Mobile, PCI/Security, In-Store and CRM. The Monthlies—see the descriptions here—are available to anyone via a quick E-mail sign up and the November monthlies will publish next week.

The Monthlies are a great way to catch up on all the news in a given area. So before you miss the November Monthlies, sign up for your free copy—and remember, you can sign up for multiple topics. Finally, a quick thought for Kindle users. For those of you who have not yet subscribed to our Kindle feed, it’s not bad for convenience while traveling. You’ll get the latest on retail tech, E-Commerce, mobile and security beamed into your Kindle when you’re not looking. …

Can Aéropostale’s iPad Pied Piper Turn Teen Browsers Into Buyers?

October 24th, 2012
Aéropostale, the 1,108-store teen apparel chain with stores in all 50 U.S. states, is trying a creative iPad jukebox flytrap experiment to precisely track clothing, teen and music interactions. By giving teens control of the songs, they will gleefully wait 30 minutes to hear their tunes throughout the store—time spent browsing and likely buying.

The potential here isn't just to track generic music influences. The stores can already play different songs in different areas of the store and specific dressing rooms, with the sound bleeding out of the store and into the mall. What if specific songs influence—or attract—shoppers focused on specific types of clothing? Which tunes pull in tire-kickers and which are good buyer lures? Critically, though, this is all based on the psychology of how teens interact with apparel. It has very little to do with actual tailoring.Read more...

Amazon Cross-Border Pricing Quirk Means Prices Jump Right After Customers Log In

October 24th, 2012

Amazon insists that it doesn’t do differential pricing, but on October 18 a high-profile tech blogger went ballistic because the E-tail giant apparently did just that. Tim Bray, who also happens to be a Google engineer, fumed that had a $9.48 price on an e-book he wanted, but when he logged in to buy it, the price immediately jumped by more than $5—to $15.17. “Maybe there’s an explanation,” Bray wrote. “I don’t care what it is, it’s not good enough and it’s not reasonable

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and I’m not paying that price and maybe you shouldn’t be either.” Whew!

The likely problem: Bray, a Canadian, was visiting Amazon’s U.S. site, where Amazon sets its own e-book prices under terms of a price-fixing settlement. Once Bray logged in, Amazon spotted him as Canadian and gave him Amazon Canada’s price, which is set by the publisher. (The fact that publishers also run their own sale prices may be why e-book prices also seemed to drop for Bray as soon as he bought books.) But it’s still aggravating to customers. And that cross-border quirk means Amazon does differential pricing after all—no matter how much it tries not to.…

Merged Channel Is A Wonderful Thing, If The Transition Doesn’t Destroy Your Chain

October 24th, 2012

As more chains struggle with fully embracing merged-channel operations, we have a delicious contradiction. The benefits of such a merged-channel approach are definite and intense. However, the risk of damage being inflicted by a less than precise execution is equally certain. Hence, it’s a path that needs to be traveled—but oh so carefully.

StorefrontBacktalk and ChainLink Research have collaborated on a report that looks at some of the less-covered pitfalls and opportunities of this approach. Take a peek.…

This Year, DDoS Attacks Are Shorter, Hit Harder And Aim At Things Like Shopping Carts

October 18th, 2012
With the big holiday distributed denial-of-service season coming up quickly for retailers' E-Commerce sites ("Merry SYN flood to all!"), here's a little bit of cheery news: Brute-force DDoS attacks are getting shorter in duration than in years past—even though the actual blast during a brute-force DDoS can get as high as 65 Gbps. And although last year attackers were starting to target routers instead of Web servers, this year they're aiming lower—and much more often going after things like the lowly shopping cart.

Unfortunately, with those so-called "low and slow" attacks—which require a lot less firepower from attackers but can still crash your site—brute-force DDoS defenses won't work. Your E-Commerce and network security teams may need to take a lesson from associates and loss prevention in thinking about online defense.Read more...

Want Out Of Interchange? It May Be A Question Of Loyalty Vs. Fear

October 17th, 2012
Can anything actually reduce interchange? With the interchange settlement inching toward approval in New York federal court, and announcements expected next week from Google Wallet, Isis and maybe Apple, it's easy to forget the underlying reality: Visa and MasterCard have their interchange stranglehold on retailers because interchange is the payment-card business model. Cutting interchange requires weaning customers off the card brands, and that means coming up with a widely used alternative to Visa and MasterCard. It's as simple—and impossibly difficult—as that.

And it can't be created the same way Visa and MasterCard were, because that's now illegal. If the MCX retailers' alliance wants to beat the card brands, that's going to require some seriously new thinking—and it should probably start with loyalty.Read more...

Why New Best Buy E-Commerce Chief Is Focused On In-Store

October 10th, 2012
Best Buy's new E-Commerce chief is planning to make changes to the troubled 1,400-store chain that, in their own way, will be as big a shakeup as JCPenney's so-far-so-disastrous makeover. Instead of making online a mirror of the in-store experience, Scott Durchslag wants to replicate the online experience inside Best Buy stores.

That's way outside the traditional scope of an E-Commerce president. Then again, Durchslag's lack of retail experience and tech background might explain much of his optimism—and his scope creep. And he's still up against Best Buy's reputation as a victim of showrooming, unknowledgeable associates, high prices and the customer perception that it's the electronics retailer of last resort—after Amazon, Walmart, Target and Costco have turned up empty. Durchslag understands some of the huge perception issues his team must overcome. "Showrooming is a symptom, not a cause," he said. "It's arrogant to think that you're going to cause or prevent that kind of behavior. It is a reality that is happening today. The only question is: Are you going to harness that and make things easier, or are you going to try and put your head in the sand and deny reality?"Read more...

Retailers To Mobile Payment Players: What’s In It For Us?

October 10th, 2012

We were hoping this week to find out when Isis will finally launch its mobile payment trials in Salt Lake City and Austin. No such luck: “Imminently” is all Isis Chief Commerce Officer Ed Busby would say at a presentation in New York on Wednesday (Oct. 10). But Busby did pass along a comment that crystallizes the problem chains have with the mobile-operator consortium, as well as with Google Wallet and PayPal: “I have a friend over at Banana Republic. He always tells me, ‘Ed, why is it everybody is knocking on my door all the time saying they can give my gross margin away faster than everybody else?'”

That’s how chains see Isis and its rivals? No wonder retailers aren’t pushing mobile payments at POS. Coupons and promotions (which the mobile payments guys love) eat margins. Mobile payments aren’t offering much-hoped-for interchange relief, either. That suggests mobile payments players need to start scrambling. Should they help enable loyalty first and ride payments on loyalty’s coattails? Or make it easier to use phones as in-store customer trackers? Or promise to give chains more and better CRM data? We don’t know. But without something serious in it for retailers to encourage a serious retailer push, there won’t be any mobile payments—Isis or not.…

Showrooming Battles Are Futile, But Some Good Ideas Are Emerging Anyway

October 9th, 2012

In the otherwise futile battle against showrooming—do you really think making it harder for your shoppers to compare prices on their mobile devices isn’t going to backfire?—some chains have started to get clever. Perhaps the motivation is ill- advised. But if the results are helpful to both shoppers and retailers, why complain?

Target’s QR endcap move is a fine example. Although it is only one of many, Target’s efforts are the topic of StorefrontBacktalk‘s October monthly column in Retail Week, the U.K.’s largest retail publication. The column lives here at Retail Week. For those who don’t have a Retail Week subscription—shame on you!—here’s a copy at StorefrontBacktalk.…

Tesco’s “Fun” Approach To Shopper Purchase History Is A Very Dangerous Game

October 4th, 2012
Following rules in the U.K. that say shoppers have to have access to the data retailers collect about them, Tesco is preparing a program that the retailer's spokespeople say gives Tesco shoppers "a fun way to access their own data" and speaks to "simple, useful, fun" CRM data access. Online games are one possibility that has been discussed. Beyond the initial reaction that reviewing old transaction data is rarely seen as fun—unless Tesco thinks its shoppers are alarmingly easily amused—the game element could prove to be a serious mistake.

Given the intense emotions at play, an attempt to treat this rule lightheartedly could backfire in so many ways. On the other hand, dealt with seriously and with good integrated analytics, much good could happen. Consider a program that analyzes how long it takes a particular family to go through soap, bread or coffee and then alerts them when the program anticipates they are about to run out.Read more...

No, The Interchange Settlement Won’t Kill PayPal POS Plans, But It Raises Retailer Pricing Problems

October 3rd, 2012
The fight over the interchange settlement is heating up again, with the biggest settlement opponent apparently trying to swing PayPal onto its team. On September 28, the National Association of Convenience Stores' lawyer, Douglas Kantor, claimed that the settlement's terms would hobble PayPal's in-store payments hopes. (PayPal hasn't said anything on the subject, which suggests how much of a reach this is.)

But even Kantor admitted PayPal could fix the problem with a simple change in its merchant terms. A much trickier problem for retailers post-settlement may be deciding what price to put on each item—or whether there even is a single official price.Read more...

Finish Line’s Mobile Checkout: Practical Vs. Potential

September 26th, 2012
By November, the 654-store Finish Line sportswear chain will become the first major retailer to have mobile checkout in every one of its stores, just in time for the holidays. But while piloting the system in almost 50 stores, the $1.4 billion Indianapolis chain has had to wrestle with the practical versus the potential. For example, the associate-issued mobile units have full CRM access, so associates are able to review a customer's full purchase history to deliver the best experience. To avoid awkwardness, though, most associates don't access such history until after a sale is completed, when asking for a loyalty card seems natural.

"It undermines the strategy," said Finish Line CIO Terry Ledbetter. "But quite frankly, it was hard to imagine how resistant customers would be to telling you who they are. 'You don't need to know who I am,'" he said, adding that the chain is exploring using an opt-in feature on its mobile app that would broadcast to all associates when a customer walks in the store.Read more...


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