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IT Strategy / Industry


Why Did Merged Channel Fail Barnes & Noble?

July 10th, 2013
Now that Barnes & Noble has lost its CEO and is further exploring "strategic alternatives," it looks increasingly like the last bookstore megachain has reached its last link. On Monday (July 8), CEO William Lynch resigned, and Chairman Leonard Riggio named a new president, but not a CEO. The obvious question: When does a retailer not need a CEO? When it expects a new owner to name one. The less obvious question: How could merged channel/omnichannel have failed Barnes & Noble so completely?

Think it's because Barnes & Noble is in the dead-tree book business? So is Amazon. Besides, at last report the brick-and-mortar bookstore business was still holding up (if only barely). It's the Nook and the chain's efforts to merge physical book and E-book retailing that have been a bottomless money pit. So why did Barnes & Noble—having lost its biggest physical-store competitor when Borders went under—fail to gain any merged channel traction?Read more...


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Vanity Domains Inch Closer For 23 Big Retailers, But Not Walmart Or Amazon

July 10th, 2013
Vanity top-level domains (TLDs), which seemed like such a good idea a year ago to Walmart, Safeway, Amazon and Google, are slowly grinding their way forward. Last week ICANN, which is selling the new dot-names at $185,000 each, said it has finalized the registrar's contract for the new names. Unfortunately, that doesn't help the would-be owners of .walmart, .amazon, .book and .grocery—they're still stuck in ICANN's flypaper-like approval process.

To be fair, after more than a year, 552 vanity TLDs (out of 1,930 applications) have actually made it through the process to the point where there are no objections and they don't match other applicants. That includes retail-related terms like .camera, .clothing, .market, .markets, .pharmacy, .shoes and .toys, along with 23 actual retailer names. They're ready to start getting their contracts. Everybody else still has hurdles to climb.Read more...


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Giving A Thief A Chance To Not Steal

July 9th, 2013
In the loss prevention world of counter-counter-espionage, a California vendor is pitching a silent way to detect shoplifters who have their own silent way of detecting the detectors. Let's slow this down. In an attempt to defeat standard EAS devices, shoplifters for years and years have lined shopping bags with aluminum foil and sometimes carried strong magnets to deactivate EAS tags. Then came LP's response, where stores could detect the foil and those magnets, but the detection was audible and did little beyond alerting the thief. Even worse (well, from the thief's perspective, even better), that alert happened immediately, before the thief could steal anything.

In a handful of jurisdictions, the mere possession of such devices is illegal. What the vendor, San Diego-based Indyme, is pushing is a silent system that alerts LP that a foiled bag (calling it a "booster bag" is so clichéd) or magnet has entered the store and it flags the shopper and allows the shopper to be tracked, hopefully discretely. It also triggers security cameras to follow the shopper.Read more...


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Safeway Self-Checkout Security Hole Illustrates The Importance Of Button Sequence

July 3rd, 2013
The self-checkout software at a Safeway chain in California, Vons, lets the shopper move directly to the payment area and then still buy more items. This bit of flexibility likely seemed a good idea at the time, until it was discovered that it meant that the next shopper could scan groceries and those groceries would be charged to the payment card of the first shopper.

Nearby stores within the Ralph's and Albertson's chains avoid this issue by simply forcing the shopper to close out the order before proceeding to payment, according to a California TV station's report. The Safeway stores had a "finish" button but was it not required that it be hit before proceeding to payment. One wonders how much time was spent watching and fixing these holes and creating and distributing the signs, as well as dealing with customers who were apparently paying for other shoppers. It's also possible that many of those ripped-off shoppers never detected it, but they will now that media coverage has kicked in. How will those shoppers feel about Safeway's "let the glitch happen and we'll fix the individuals who notice later" approach? Compare all that to how much time it would have likely taken IT to simply force that the "finish" button be hit before payment was accepted? Ahhh, the wacky world of retail cost-benefit and analysis.Read more...


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Square Mastering PayPal’s “Don’t Tell Store Associates And See What Happens” Strategy

July 2nd, 2013
When a Reuters story this week detailed that retail associates were oblivious about a Square service being offered in their stores, it had a frighteningly familiar ring to it. We have repeatedly run into chains that roll out brilliantly planned payment or mobile offerings, but somehow forgot to brief associates.

This is bad for an infinite number of reasons, but none more striking than the fact that associates are the primary interaction point with shoppers. When they see something new and unfamiliar, the associate is where they turn. When that inquiry is met with a baffled look and a pair of shrugged shoulders, that IT initiative is about to lose any shoppers—and IT may never know why. (They'd know if they asked associates, but if thought about asking associates, they would have had them briefed in the first place.)Read more...


CVS App Brings Home Hard-To-Get CRM Data

July 2nd, 2013
When CVS on Monday (July 1) launched a drug interaction feature on its mobile app, it was a classic example of a deep CRM gift that was positioned—correctly—as a truly useful shopper app. In short, it was one of those rare situations where the interests of the retailer and the shopper were perfectly aligned. The feature itself is straight-forward. A customer can download all of their CVS prescriptions and then type in any other prescriptions that are being taken plus—and this is critical—any over-the-counter (non-prescription) things they are taking, anything from aspirin or a hay fever pill to Vitamin C to 5-hour Energy.

CVS now gets three extremely valuable pieces of data: First, a list of prescription drugs presumably being filled by a rival pharmacy. What a clear chance to argue that those particular drugs should be brought over to CVS, an opportunity that doesn't exist without this information. Secondly, a list of various other things the customer is buying, many of which are likely sold by CVS. Another sales opportunity. Third, given that this is a mobile app, the data is already tied into a specific customer. This sharply enriches the CRM profile for CVS customers—and does it for very few dollars and in a way that seems to be altruistic.Read more...


Why Quarterly Vulnerability Scanning Is An Impressively Stupid Idea

July 2nd, 2013
The current PCI DSS quarterly vulnerability scanning requirement is nothing short of ridiculous, given the fact that most operating system vendors and some application software providers release patches at least monthly, pens GuestView PCI Columnist Jeff Hall. (OK, it isn’t so ridiculous if your goal is to guarantee a constant security hole for the convenience of cyberthieves. For those of you whose goals are other than that, though….) When Visa published their Customer Information Security Program (CISP) back in 2002, they set the bar of quarterly vulnerability scanning because it was believed to be the most efficient and cost effective approach for providing security. This practice has continued unaltered even when the CISP was converted to the PCI DSS in 2007.

Over the past decade, Council officials, retail IT people and QSAs have begun to question the quarterly requirement, but the fear was that retailers would simply not do it, as they could never cost-justify it, particularly for Level 4 retailers. The council has always had a strong pragmatic nature, weighing the effectiveness of guidelines against what they could realistically hope for retailers to do.Read more...


As Chain Trials Facial Recognition, Channel Assumptions Flip

July 1st, 2013
A major Russian convenience store chain, Ulybka Radugi, is now running a trial of facial recognition to choose digital in-store ads to be displayed and POS coupons to be offered. But as more chains start to seriously investigate the facial recognition potential, some of the fundamental CRM biometric assumptions are being challenged. Such activities need not end with the same channel where they began. Once a shopper is identified in-store and is matched with a CRM profile—or they are identified anonymously in-store and a purchase profile of this unknown-person-with-this-specific-face is slowly built—that information can theoretically be married to data from that person's desktop-shopping e-commerce efforts or their tablet/smartphone's m-commerce efforts.

The question, then, is whether it has to start in-store. What if this hypothetical chain pushes some attractive incentives to get lots of customers and prospects to download its free mobile app? And buried in the terms and conditions is the right for the app to monitor images? The next selfie or Snapchat that the shopper sends is captured and the facial data points are noted. Here's where it gets even freakier. Once the mobile app has identified the face of the shopper—and has linked it to whatever mobile shopper that customer has done—it can tell the in-store camera databases what to look for. When that shopper walks in, it can connect the mobile activity with any observed in-store activity.Read more...


How Much Trouble Could You Be In If Online Customers Can Hide Where They Are?

June 28th, 2013
One of the largest Internet providers in New Zealand is now letting customers pretend they're somewhere else when it comes to buying things online. That's likely to be a thorn in the side of digital content providers such as movie producers and e-book publishers, but it could also set up online retailers for a whole host of complications. What happens when your transaction is subject to the laws of a country you're not expecting?

Slingshot, the third-largest ISP in New Zealand with about 10 percent of the market, last week rolled out its Global Mode service, which lets users block Internet geolocation. That's used by many digital content providers to prevent movies and e-books from being viewed in regions where they haven't officially been licensed.Read more...


Extremely Sad News

June 26th, 2013
It pains us greatly to have to report to you that our PCI Columnist, Walt Conway, passed away on Tuesday (June 26) after a battle with pancreatic cancer. Professionally, Walt had that rare ability to take complex compliance issues and make them approachable. He was a huge fan of the PCI process, which meant that he felt the obligation to point out its flaws or its inconsistencies.

Personally, I've never met someone who was as personable, intelligent and just plain nice as Walt. He will be missed far more than any words can convey.Read more...


NSA Phone Data Grab Raises Frightening Retail Questions. Can Complying With A Lawful Warrant Still Violate A Chain’s Privacy Policy?

June 26th, 2013
The recent revelations that Verizon and most likely others shared the entire contents of their customer databases with the U.S. National Security Agency raises a question for retailers and payment processors. How much data should I share with the government, particularly when they have a subpoena, and how much effort should I expend fighting government demands for information?

Here’s the problem, pens Legal Columnist Mark Rasch. Most retailers have privacy policies that say they will turn over data (or even databases) in response to "lawful" government demands or requests. But if it turns out that the demand or request is overbroad, unreasonable, not supported by probable cause, done for an improper purpose, or simply that the government did not follow the proper procedure in obtaining the subpoena or warrant, or in otherwise requesting the information, the demand may not be lawful. And voila! The retailer will have violated its own privacy policies.Read more...


Twitter Preparing Geofencing Retail Ads For The Holidays—And You’ll Be Giving A Lot More Than You’ll Receive

June 26th, 2013
Just in time for the holidays, Twitter will unveil a retail program where it will deliver geo-targeted messages to shoppers as they approach specific latitudes and longitudes, according to a report in Ad Age. Although the idea of letting Twitter blast anyone with 15 percent off coupons when they get within eyeshot of your store is pleasant enough, retailers might easily find themselves giving more than they receive—a lot more.

What is being given up is data, but this isn't referring to the limiters your team will give to Twitter ("we want 18-24 year old women who have Tweeted about clothing in the prior 96 hours and who are nearing our store between 9 AM and 10 PM"). The data at risk are the responses. Let's say you broadcast these discount messages to 4,000 proximity shoppers and 300 react, 250 download the coupon and 86 redeem the coupon. You won't be the only one saving those 86 names in the "nice" list, the one that you'll want to check a lot more than twice. So will Twitter.Read more...


When Testing The Largest Retailers Against Google’s M-Commerce Standard, Amazon Is The Rare Flunkee

June 26th, 2013
With a looming threat that Google will punish sites that do not strictly comply with its specific mobile guidelines, one SEO firm decided to pull out the Fortune 100 list and test everybody on it, using Google's benchmark. Only a half-dozen companies passed (I'd argue it was only five as one of the six was Google itself). No surprise: None of them were retailers. This we didn't see coming, though. One of the worst performers was Amazon (NASDAQ:AMZN).

Most of the retailers did OK, including Walmart, CVS, Costco, Home Depot, Target, Walgreen, Lowe's, Best Buy and Sears. The grocery chains (Kroger, Safeway and Supervalu) did poorly, but mobile commerce is generally a low grocery priority. Then we get back to Amazon, the retailer—let alone e-tailer—that has generally made all matters tech a huge priority. Amazon got beaten up on the ratings partially because the spreadsheet said it didn't have a true mobile site. But it seems to have a true mobile site—a very nice-looking one, too. They do, but it's apparently not done in the way that Google has in mind.Read more...


Updated: No, Target Won’t Be Slashing Its IT Budget By Two-Thirds Next Year. But Could It?

June 24th, 2013
Is Target (NYSE:TGT) about to slash IT spending? No, it turns out, it's not. An investors' note from Citi analyst Deborah Weinswig on Friday (June 21) said Target has reached "peak spending" on IT and next year the IT budget will drop from the range of $130 million to $160 million down to between $30 million and $60 million. That would be $100 million, or about two-thirds of Target's IT spend, chopped from the budget.

But on Thursday (June 27), Citi reissued that investors' note at Target's prompting, because in reality Target's IT spending will actually rise next year. It seems there was a communication problem between Target's top executives and Citi. The new version of the note reads: "TGT is investing approx. $0.20-$0.25 per share more in technology this year than last year. Next year, the incremental spending on technology is expected to be worth $0.05-$0.10/share YOY." No slashed IT budget. No wild swing between investing in new systems and digesting the results. In short, a much more conventional IT budget story. But wait—what if Citi had gotten it right the first time? Could that even have worked? Read more...


Retailers Win—And Lose—In Supreme Court Arbitration Ruling

June 24th, 2013
When the U.S. Supreme Court on Thursday (June 20) ruled in favor of American Express and against a retailer in a dispute about interchange rates, it put retailers in an awkward bind. The ruling was really about whether the retailer could be forced to submit to arbitration, writes Legal Columnist Mark Rasch. That awkwardness is because retailers hate arbitration when they are the ones being forced to do it (by perhaps a card brand or a QSA or a manufacturer) but they are positively giddy and in love with it when they're forcing it on their shoppers.

As far as Amex is concerned, here's the deal. If you want to accept American Express corporate cards, then, according to the terms of the agreement with Amex, you have to also accept all other Amex cards as well. And you have to agree to all of Amex’s terms. It’s all or nothing—or as antitrust lawyers might argue, an unlawful tying arrangement in violation of the Clayton Antitrust Act. Antitrust lawyers talk like that.Read more...


Facebook’s 6-Million-User Breach A Frightening Reminder To Retailers About Data-Sharing Partner Risks

June 21st, 2013
Retailers who worry about data and PII security issues were reminded Friday (June 21) that they have to worry about not only about their own systems, but the security mechanisms of every data-sharing partner. And given the social media goals of most chains, the fact that it was Facebook fessing up to a 6-million-user data leak didn't help their nerves. It didn't help matters that Facebook said it discovered the problem the week of June 10, fixed it within 24 hours but didn't reveal the problem until late in the day on June 21. (Want to bury news? Release it at 4:50 PM on a Friday in late June.)

The details of the breach illustrate how innocuously these problems can crop up and how destructive they can be. And when your shoppers are hurt because the data they shared with you gets stolen, the blame falls on the retailer regardless of whether your team had anything to do with the breach. It's not pleasant, but there is something you can do about it.Read more...


Labs Strategy: Why Embracing “Failure” Is A Great Idea But A Horrible Word

June 20th, 2013
Oracle posted a very interesting short thought-piece Wednesday (June 19) about the different ways retail chains do—and should—handle lab strategy. Often labs are pure internal mechanisms, but they are more often the result of a tech acquisition. But the choice of strategies reveals an awful lot about attitudes of senior management. One key point is that management must be willing to accept—and learn from—failures. But if the CEO even thinks of the ultra-valuable data that comes from learning what shoppers will not accept as "a failure," the chain has even bigger problems than it thinks.

By looking at the different choices made by Walmart, Target, Home Depot, Nordstrom, Staples, Tesco, Wet Seal and Lowe's, Oracle categorizes three IT lab approaches. But how a lab is corporately structured will make little difference if senior management isn't willing to first learn (and to pay a lot for those lessons) and to be open to a future that they may not like. The job of a chain is to adapt to the reality in its market. The job of a dying chain is to cling to its current tactics if the future doesn't look like what it wants it to look like.Read more...


Swimwear Site Shifting Its Mobile Site Display Power From Browser To Server

June 19th, 2013
A swimwear and lingerie e-tailer called Bare Necessities is experimenting with a server-based (rather than browser-based) approach to re-sizing its site for various mobile devices. The benefit—if it works when fully deployed—will be faster initial page display and reduced overall load on the mobile browser. But the client-server rebalancing for mobile browsers is an interesting approach.

Jay Dunn, the site's chief marketing officer, told Internet Retailer that he thought the approach has strong potential, but he's skeptical until he sees how it does with the site's full launch later this summer. "I have not yet seen conventional responsive design handle a true retail site. I have 6,000 products and more than 24,000 product images, not counting color swatches, marketing, video and animation," Dunn said. "I haven’t yet seen the pure responsive design technology that handles that smoothly and efficiently across multiple devices." The historic problem with server-based approaches has been that it ultimately slows down the experience after the initial download, as the shopper needs to do a lot of back-and-forth interaction with the site.Read more...


Amazon’s Supply Chain Kicking The SKUs Out Of Walmart’s

June 19th, 2013
After some 19 years of struggling with E-Commerce, Walmart is once again learning that managing a merged channel retail strategy is almost never going to beat a well-run pure-play e-tailer like Amazon when it comes to online sales. Was reminded of this point courtesy of a wonderful stat in a Wall Street Journal story that ran Wednesday (June 19), which compared Amazon and Walmart's supply chain costs: "Wal-Mart's online shipping can cost $5 to $7 per parcel, while Amazon averages $3 to $4 per parcel, analysts say—a big difference considering some of Wal-Mart's popular purchases are low-cost items like $10 packs of underwear."

There are many factors behind those numbers, but it really comes down to the fact that Walmart's massive global supply chain needs to support more than 4,000 physical stores—a feat that Amazon need not worry about. Given that huge physical burden, Walmart's costs are quite impressive. But no one ever said that fighting against a pure play was particularly fair. Like all major chains, Walmart initially had two choices. Run the chain as one big happy merged channel family or separate and run online and offline as separate companies. Neither approach is perfect.Read more...


U.S. Supreme Court Opens New Retail Privacy Defense

June 19th, 2013
When the U.S. Supreme Court on Monday (June 17) ruled on a personal information privacy case involving driver's license information, it opened an entirely new defense strategy for retailers. In effect, it flipped privacy laws around to where chains can use privacy laws to prevent shoppers from accessing the chain's information about them.

The Supreme Court in this case used federal privacy laws to protect a car dealership from being sued in a class action lawsuit. But the facts could also serve to help, for example, Target trying to defend itself against a consumer lawsuit about a defective product, where the chain could say that privacy laws prevent its revealing key information to the plaintiffs, opines Legal Columnist Mark Rasch. The court indicated its intention to read exceptions to general privacy laws narrowly and, in an unusual way, used privacy laws not just to protect privacy, but to protect businesses themselves.Read more...


Social ROI: Isn’t A Loyal Shopper Already Going To Buy From You?

June 18th, 2013
The indirect nature of social media marketing for retail makes for a lot of frustration. IT execs are desperate for any concrete examples of ROI and pollsters (working for vendors) are only too happy to try and accommodate, even if those stats are meaningless. This unhappy thought bubbled up again this week when survey results were released that proclaimed in the headline: 31 percent of online Canadians are more likely to purchase after following a brand on Twitter.

Let's start with the basics on this one. Setting aside for the moment the counter-conclusion ("Why is it that 69 percent of online Canadians are not apparently more likely to purchase after following a brand on Twitter?"), the implication of this stat is to suggest a connection between the Twitter efforts and an increase in purchases/conversions. But isn't a shopper who chooses to follow a retail brand almost certainly already a fan of that brand and, as such, already someone who is quite likely to make purchases?Read more...


For Fraud And Trust, A Powerful Reminder That Retail Reality And Perception Are Light-Years Apart

June 17th, 2013
A new insurance company survey's shopper perception figures detail what, in the shopper's perception, constitutes a breach. Let's say a major chain has been breached. Standard bank procedure these days is to change the numbers for all payment cards that had been recently used at—or on file with—that retailer. Given the number of recent breaches—and the millions of customers who collectively received such a notice—that's a lot of shoppers who might think they had been personally breached. But they need to ask the question: Did the bank detect any purchases that seemed fraudulent? If the answer is no, then that shopper did not personally experience fraudulent use of their personal information to make purchases without consent. At best, they were mildly inconvenienced because someone else suffered such fraud, but they didn’t.

As a practical matter, though, very few consumers would bother (or even know) to ask such a question. They hear their bank say that their card is being re-issued due to something fraud-like. If a survey asks whether they have personally experienced fraud, they're almost certainly going to say yes. For retailers, this is a very key problem.Read more...


Best Buy’s Online CRM Move: Focus On Why Conversion Rate Is Low

June 14th, 2013
Best Buy is trying to push its substantial in-store CRM program to help its online conversions. Although a noble effort, it's a difficult challenge, trying to get shoppers to not merely change their behavior but also how they envision each channel. At more than 40 million accounts, Best Buy has one of the largest CRM programs in retail. But many of those accounts, of course, are dormant and date from long before the chain's current challenges. They come from a time when the site was seen as little more than a digital directory of the physical stores' SKUs, a place to do some research before heading out to the store.

These days, it's just as likely for shoppers to use the Best Buy site as a way to explore products before buying them at another physical store or a rival's Web site. In effect, the Best Buy site is becoming a showroom for other e-tailers.Read more...


A Clever Way To EAS Protect High Heels

June 13th, 2013

High heels present some interesting LP challenges. Not only are they easily slipped on and off without the need for a monitored dressing room, but they need to be tried on in the store, which can make typical security tags counterproductive. At the NRF Loss Prevention Conference show in San Diego on Wednesday (June 12), Tyco Retail rolled out a new EAS approach.

Tyco’s heel-friendly approach? The tag connects to the back of the heel, with an adjustable knob for different shoe styles. In theory, this shouldn’t damage the product. Tyco argues that although many shoes “have buckles, eyelets, etc, that allow retailers to easily attach” an EAS tag, a “wide variety of women’s pumps and men’s loafers don’t have a convenient place to hook an EAS tag.” As long as the thief doesn’t have a high magnetic detacher, Tyco suggests it should be difficult to remove the tag. Then again, this is a thief, after all. Hopefully she doesn’t simply steal the store’s—or some other store’s—detacher.


Jury Rules For Barnes & Noble In Gift Card Patent Case, But The Implications Are Mixed

June 12th, 2013
On Friday (June 7), a federal jury ruled in favor of (Barnes & Noble (NYSE:BKS)) in retail. The arguments focused on when is a giftcard transaction truly processed—is it when the card has money placed into it or is it when the products/services are delivered?—and whether a processor is acting as a bank? And if the retailer controls the full transactions, is it acting bank-like?

The reason the bank-like issue comes into play is that the patent in this case specified that a transaction would go through a bank connection and Barnes & Noble argued that they handle the transactions internally, as a stored payment. Therefore, the chain argued, it's a different process and does not violate the patent. The patent holder, Alexsam, said that the way that Barnes & Noble processed these payments was using their payment processor. Given that the payment processor network also handled traditional bank card payments, it's a bank network and it's therefore the same as the patent. The jury sided with the bookseller.Read more...


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