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IT Strategy / Industry


Walmart, First Data Say No To PayPal. (Is That Even Allowed?)

May 1st, 2013
PayPal's plan to use Discover's payment-card network to get its in-store payment system into most U.S. stores that accept payment cards isn't quite working out. Contrary to what the eBay subsidiary has been touting, all stores that accept Discover aren't automatically able to take PayPal payments—at least not until they and their acquirers explicitly sign on.

Result: Both Walmart and acquirer First Data have declined to accept the system, and Discover is now doing deals with acquirers one by one in order to get PayPal's system available in more stores. Discover said on Tuesday (April 30) that it has gotten a green light from 50 acquirers, and it is hoping PayPal will be live in 2 million stores by the end of this year, up from 250,000 now.Read more...


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CMOs Should Watch “Revenge Of The Nerds” And “Real Genius”

April 30th, 2013
The biggest challenge that is facing marketers in the next five to seven years is the quest to become relevant, which means that they need to become data geeks. In fact, it is crucial that they become bigger and better geeks than their IT counterparts. As the pendulum moves from art to science, many marketing leaders find themselves on a platform of skills that are no longer the keys to success, writes retail columnist Todd Michaud.

Instead of IP addresses, they need to think about e-mail segmentation. Instead of database clusters, they need live content marketing. Instead of disaster recovery, they need to wake up focused on integrated marketing across all digital channels. It’s as much science and math as configuring a new router, and that has many marketers nervous. And it should. But as these marketers find their way into this new world of math and science (digital relevancy), they need to be careful to not cross the fine line between being relevant and being just plain creepy.Read more...


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Walmart’s Employee Mobile Trial Is That Rare Bird: It Helps Associates While Helping Corporate’s Bottom Line

April 29th, 2013
Sometimes, a program that makes associates happier—even Walmart associates—can also help the bottom line. Consider Walmart's mobile (and, to a lesser extent, desktop) program to make it easier for associates to find other work within their Walmart store.

Walmart (NYSE:WMT) has announced that it is expanding—to chainwide—an experiment to let associates more easily see work opportunities in other departments at their store, as a way to supplement their pay. "For example, a bakery or deli associate can now request to work an available shift in electronics or the lawn and garden area and vice versa," the Walmart statement said, adding that "this program is showing value beyond filling available shifts. It's providing associates the opportunity to help build their careers by learning about different departments, which helps strengthen our stores and benefit associates and our customers."Read more...


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Tesco Really Doesn’t Like NFC

April 26th, 2013
Near field communication (NFC) is retail's whipping boy these days, with almost every analyst and vendor going out of their way to point out how poorly it's done and how bleak the NFC future is. And although deep shopper apathy about NFC has justified many of those critiques, major chains—wanting to keep their options open—have hesitated in outright attacking NFC. That's why a blistering critique from the world's third largest chain, Tesco, is so potentially devastating.

"NFC was revolutionary 10 years ago but I think it just might have passed its sell-by date," Lyndon Lee (Tesco Enterprise Consultant Architect) told attendees at a mobile payments conference in London this week, according to a report in NFC World. "Is mobile NFC at the right place, at the right time? I don't see any real movement or activity. NFC usability is not really revolutionary and, for the general public, is it really that cool? I think the next generation won't think it's cool enough for them and they won't use it. Mobile NFC is unappealing."Read more...


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The Legal Risks Of External Surveillance

April 25th, 2013
The cooperation of retailers like Lord & Taylor in the Boston bombing investigation proved to be invaluable and provided the most important clues to catching the two terrorism suspects. But retailers should be wary about using that incident as an invitation to increase the amount of surveillance that they conduct both inside and outside of their stores. Video surveillance, although a very powerful tool for certain things, can lead to loss of customer confidence, and even to liability, writes legal columnist Mark Rasch.

In the United States, it is generally presumed that the use of video surveillance technology in non-"private" places ("private" as in bathrooms and changing rooms) is perfectly legal. Unlike audio surveillance, which is regulated by federal and state law, there appears to be little regulation of video surveillance technologies. Retailers regularly employ them for loss prevention purposes, inventory management, and to defend themselves in liability lawsuits such as workers’ compensation claims or "slip and fall" claims by customers. Video surveillance technology can also be useful in tracking customer behavior and traffic patterns; footfall analysis; to evaluate the effectiveness of advertising or displays; and even to evaluate the gender, age and behavior of customers.Read more...


Facial Recognition May Not Work For Security, But For CRM, …

April 24th, 2013
With all of the in-store changes being pushed by mobile—including the long-overdue-predicted disappearance of the cashwrap—retailers are going to be moving payments in-aisle and pretty much anywhere instore. Does facial recognition make sense? One vendor on Tuesday (April 23) tried, with a system that allows facial recognition to unlock a refrigerator, which determines which products are removed based on weight.

Although the current version of the system has serious technical limitations, the potential is probably greater for facial recognition than any other technology. Unlike PIN, cardswipes or any other form of biometrics, facial recognition has the promise to do far more than verify identity, including guessing at emotional state, gender, age and other attributes. Selling suntan lotion? How about the ability to identify shoppers with deep tans? Want to be able to tailor suggestions made to first-time shoppers based on gender or age? With a thermal scan comes the ability to pitch hot cocoa to shoppers whose skin is especially cold or ice-cold lemonade to those whose skin is especially hot. (It could factor in the outside temperature so that it doesn't confuse someone who has been working in the sun with someone who is just running a fever. And if that shopper does have a fever, how about 50 cents off Tylenol?)Read more...


Online Sales Tax Bill Could Help Chains With Taxes, Too

April 24th, 2013
Online sales taxes are marching toward reality much faster than anyone would have expected even a month ago. The "Marketplace Fairness Act," which would allow states to collect sales taxes through online retailers even if the merchants don't have physical operations in those states, is being debated in the U.S. Senate this week after being fast-tracked to avoid the Senate Finance Committee, where every previous version of the bill since 2001 has died.

One key element of the bill that won't relieve the tax pinch but should simplify the implementation: A state can't start requiring collection of the taxes until it provides free software that nails down all the complexities of that state's sales tax structure, including automatic calculation of what rates are owed on which products for any location in the state.Read more...


Gap’s Take On Typical Buy-Online-Pickup-In-Store Programs: Too Efficient

April 24th, 2013
When Gap looked at buy-online-pickup-in-store programs, the president of Gap digital saw the programs that others chains have as very efficient. Indeed, far too efficient. It allowed the shopper to come in, get their merchandise and leave far too quickly. The chain on June 10 will launch its answer to this feature, something called reserve-in-store, and it is designed to get the shopper into the store and to keep them there for as long as practical.

The most concrete difference between the two approaches is that Gap will force shoppers to pay for their goods in-store. After it's reserved online, the customer has until the end of the next business day to show up, pay and pick it up. That's good for getting shoppers deeper into the store, but not so good for guaranteeing the sale.Read more...


Data Breach At Gunpoint: Kmart Armed Robber Gets Pharmacy Files

April 23rd, 2013
It is IT's worst nightmare: What if an armed violent criminal hits the store and empties the safe and, perhaps unintentionally, takes our unencrypted data backup? It happened to Kmart at its store in Little Rock, Ark., according to a statement parent company Sears issued Monday (April 22). The statement, which came more than a month after the March 17 armed robbery, was forced by rules from the Health Insurance Portability and Accountability Act (HIPAA). At 8:55 PM, some 55 minutes after the store had closed, the intruder confronted the store's assistant manager, who had just closed the store for the night, when he went into the parking lot to get to his car.

The thief stabbed the assistant manager's car's front driver side tire, presumably so that the assistant manager would be occupied when the thief pointed a silver gun at him and ordered him to open the store and to then open the safe, according to the police report. The thief helped himself to the contents, including about $6,000 in cash and that day's backup disk. The disk, which was unencrypted and apparently not password-protected, included the full names, addresses, dates of birth, prescription numbers, prescribers, insurance cardholder IDs and drug names for some 788 customers, according to Sears. Read more...


Amazon Issued Patent To Make Mobile Purchases Anonymous

April 19th, 2013
When Amazon was awarded a patent this week to allow for anonymous online purchases—anonymous from shopper to shopper, not anonymous to Amazon—it could be the world's largest e-tailer taking its next step into payments. The actual money part of the payments are still to be handled through the same means Amazon does today—payment card, bank account debits, gift cards, Amazon Store Card, etc.—so it's not about Amazon becoming a processor. What it does, though, is add a layer on top to allow consumer-to-consumer transactions to be done without sharing private information with strangers. (Or, much worse than strangers, relatives.)

When this approach would make sense depends on the nature of the transaction. If the purchase involves the seller sending a physical product to the recipient, the recipient has little choice but to reveal name and street address. But for digital purposes, it could work well. And it might even work with physical shipments, assuming the recipient uses a post office box or some similar alternative.Read more...


New FTC Geolocation Ruling Will Force Retail Data Changes

April 18th, 2013
On Monday (April 15), the U.S. Federal Trade Commission (FTC) cut a deal with some manufacturers whereby they agreed not to include "phone home" software, which would tell the leasing company the address of the computer or other device without the express consent of the lessee. The retail bottom line: All of those apps you're using to gather shopper information may now legally require very specific notices. That, plus the always-feared opt-out for gathering any geolocation data. Uh-oh.

The FTC consent decree involves shoppers who lease computer equipment and other devices equipped with GPS tracking or other tracking software, pens legal columnist Mark Rasch. If a consumer fails to make a scheduled payment, or if they default on the terms of the contract, the leasing company would activate the software, which could do things like turn on the cameras on the computer, capture keystrokes on the computer, or use either Internet protocol or GPS tracking to determine the exact location of the computer. In this way, the retailer would be able to engage in a form of "electronic repossession" of the device, either shut it down completely, or sending someone in to actually physically retrieve the device. Read more...


Boston Bomber Caught On Lord & Taylor LP Camera?

April 17th, 2013
Loss Prevention security footage from a Boston Lord & Taylor located across the street from where two bombs had detonated near the Boston Marathon finish line on Monday (April 17) captured footage of someone leaving the bag with the bomb in position. This is far from the first time retail security video has been used to help solve a crime that does not directly involve that retailer, but it might go down as one of the most historic.

The bombing, which killed three people and injured 176 others, was one of the more devastating terrorist attacks in the U.S.. The footage from a surveillance camera at Lord & Taylor "has provided clear video of the area" but law enforcement officials were initially vague about what was captured, according to The Boston Globe. "The camera from Lord & Taylor is the best source of video so far," said Dot Joyce, a spokeswoman for Boston Mayor Thomas M. Menino.Read more...


Interchange Judge Orders Retailers To Change Anti-Settlement Websites

April 17th, 2013
Retailers who oppose the proposed payment-card interchange settlement will have to change the information posted on their websites, a federal judge ordered last Thursday (April 11). The changes required include links to the official site that merchants are supposed to use for objecting to or opting out of the settlement—and a banner stating that the judge determined previous information on the sites to be misleading.

In a hearing in Brooklyn on Thursday afternoon, U.S. District Judge John Gleeson said that unhappy plaintiffs, including the National Association of Convenience Stores, the National Restaurant Association and the National Grocers Association, and their lawyers in the class-action suit have until today (April 18) to decide on a plan for fixing the information on the sites.Read more...


As Many As 2.4 Million Card Numbers Stolen in Breach at Regional Grocery Chain Schnuck’s

April 17th, 2013
Who says regional chains can't compete with the big boys? On Sunday (April 14), the 100-store Schnuck Markets grocery chain revealed more details about the breach it reported in March, and the numbers are impressive: 79 stores breached, with as many as 2.4 million payment card numbers potentially stolen over a four-month period. That puts it in the same class as breaches in recent years at Barnes & Noble, Michaels, Aldi and Hancock Fabrics stores.

But unlike those attacks, Schnuck's said its PINpads were not tampered with—the attack was apparently done entirely through malware implanting somehow on Schnuck's payment-related systems. An even more troubling revelation: The breach activity seems to have begun on Dec. 1, less than a month after the chain's QSA validated its systems as PCI DSS compliant.Read more...


Walmart Joins NRF, Ends Longest-Running Retail Feud Ever

April 16th, 2013
Walmart has now officially joined the National Retail Federation (NRF) as a member. For those new to retail, this may seem to be no big deal, but the background is that Walmart (NYSE:WMT) and the NRF have been in what amounts to a blood feud for decades.

Why have the world's largest retailer and the world's largest retail organization been doing this Hatfields-and-McCoys thing? This all started back in 1969, when the NRF was known as the National Retail Merchants Association and Walmart's annual revenue was about $30 million (about $190 million in 2013 dollars). According to several people involved, the bad feelings started when Walmart founder Sam Walton came to New York City—where the association was based at the time—and lobbied to join the group. They did something that one doesn't do to Sam Walton: They rejected him, saying that they didn't want Walmart as a member. Given that there is nothing that has been more a part of Walmart's culture than holding a grudge, that rejection kept Walmart out of the association for 44 years.Read more...


Starbucks Weighs In On “Download Mobile App Vs. Get Customers In-Store” Debate. And The App Won

April 15th, 2013
A classic retail mobile question is whether it's better to get shoppers in the store or to get them to download the retail mobile app. Starbucks (NASDAQ:SBUX), which has one of the most successful mobile payment programs in retail and also happens to not have the typical online-offline internal corporate conflicts, has come down squarely on the "'tis better to get the app downloaded" side.

For years, the coffee chain has pushed a promotion called Pick Of The Week, where it gave free copies of various pieces of digital media (songs, apps, games, etc.) to shoppers who went in-store and grabbed a card with a code on it. As of April 9, Starbucks has changed the program, no longer requiring the card to get the digital goodies. All it requires is downloading the app. "The intent is really to build a relationship. You don't need to go into our stores," said Linda Mills, a Starbucks senior manager for global brand public relations. "This is about educating about our product offerings and just engaging with our customers."Read more...


Lawyers To Interchange Judge: Tell Our Clients To Shut Up

April 10th, 2013
All those noisy complaints about the interchange settlement are apparently having an effect. A federal judge will hear arguments today (April 11) to decide whether some retailer groups can continue to blast away at the proposed class-action settlement on websites designed to convince retailers to opt out of it. And it's the lawyers representing those groups who are trying to shut them up.

On March 29, lawyers officially representing the class—that's merchants who have accepted Visa and MasterCard payments since 2004, which means virtually all retailers—complained to U.S. District Judge John Gleeson about the websites set up by the National Association of Convenience Stores (NACS) and the National Grocers Association. Such sites as MerchantsObject.com offer both arguments against the settlement and tools to let merchants automatically send opt-out letters to the court, so they won't be covered by the settlement.Read more...


JCPenney’s Johnson Is Out, Ullman Is Back. Now What?

April 9th, 2013
What happens next at JCPenney (NYSE:JCP), after the 1,100-store chain fired CEO Ron Johnson on Monday (April 8) and replaced him with the CEO that Johnson replaced, Mike Ullman? The retailer isn't saying. But one thing is certain: The chain won't just be turning the clock back to the day Ullman departed in 2011. Many of the internal changes Johnson instituted at JCPenney are effectively irreversible, including remodeling all the chain's stores and replacing much of the chain's IT capability. That money is already spent.

Johnson had already reversed many of his decisions that were the most unpopular with shoppers—including his elimination of sales, discount pricing (including "mark up to mark down") and coupons. And then there's Johnson's beloved shops-within-the-store concept—which isn't likely to be reversed, mainly because it was originally the brainchild of a former Sephora executive with a familiar name: Mike Ullman.Read more...


Macy’s Thief Exploits Courtesy Hole

April 9th, 2013
Macy's has a courtesy policy in which if any Macy's card shoppers come into a Macy's and do not have their cards with them, they can still charge items to the card by inputting their Social Security number and showing the associate a government ID. It was precisely that policy that created a hole for an Indiana man to crawl through, charging thousands of dollars worth of merchandise to various Macy's customers.

The precise methodology of the accused thief, Mark A. Douglas, is not clear, but he apparently created a list of Macy's account holders and then used various techniques to learn their Social Security numbers. Making the false identifications—with the real shopper's name and a picture of Douglas—seems to have been the easy part. Although sophicated cyberthief techniques could have been used to create that list of Macy's cardholders, it might also have been done as easily as standing near a Macy's cashier and listening.Read more...


Why One Chain Is Insisting That Same-Day Delivery Orders Can Be Placed Only On The Phone

April 9th, 2013
When 53-store regional chain Sports Chalet decided to join many of its big-chain counterparts in offering same-day delivery, it decided to base both its pricing and its promised delivery time on location and, logically enough, on the availability of the product being sought. The chain also considers same-day orders to be very personal, which is one reason same-day isn't available online. A customer must talk with someone on the phone to receive the service.

Beyond personalization, there is a very practical reason to insist that companies get on the phone for these deliveries: to force shoppers to listen. On the Web, it's very easy to post all kinds of restrictions ("Must call by 1 p.m." or "We're not responsible for traffic jams or road closures") that shoppers won't read and they certainly won't internalize.Read more...


Is Giant Eagle’s Forced Self-Checkout CRM Tactic Smart?

April 8th, 2013
Some Giant Eagle stores have started blocking access to self-checkout for anyone other than loyalty card holders while they are using their cards. It's an interesting move, in that it simultaneously discourages self-checkout usage but also gathers far more information about those who do opt to self-checkout, CRM-style.

For the last couple of years, retailers have had this intense love-hate relationship with self-checkout. Chains have touted "customer service" as their reason both for yanking the self-checkout units out and for adding more of them. Higher theft rates have been reported in some stores and not others. Much of it is like any other retail IT deployment, influenced sharply by how much attention is paid to the deployment and how the customers in different neighborhoods — based on demographics — react to the machines. But the idea of requiring CRM to self-checkout is a new twist. Chains — and that's triply true for grocery — have always struggled getting shoppers to use their loyalty cards. To be fair, many of those difficulties have been self-inflicted.Read more...


Care About Issues Beyond IT?

April 6th, 2013

One of the results of StorefrontBacktalk‘s being acquired back in December is that we are going to be expanding into coverage that goes beyond Retail IT into other areas of retail. The first example of this launched last week and is a daily newsletter and site called FierceRetail.

The site applies the same kind of perspective, analysis and bad jokes that StorefrontBacktalk has always delivered, but we can now explore issues way beyond IT. Consider our coverage of an unorthodox Apple patent, the reasoning behind the Sears Portrait shutdown, why Target’s Manatee mishap is a lot worse than it looked, Samsung’s real retail strategy, why Best Buy and Target’s Geek Squad alliance was doomed and stats showing Visa having all-but-cornered the debit market. It’s all free, of course. If you’d like to sign up, our latest thoughts will be in your Inbox early each morning.…


Retail Employee Theft Databases Riddled With Inaccuracies

April 5th, 2013
On paper, it sounds like a great idea. Create a database of retail employees who are accused of theft and have its contents freely shared with other retailers. Two problems: One, what if the information is flawed, if employees who "confessed" actually argued that they were innocent, and what if this information is being used to deny people jobs? And two, what if it's depriving retailers of honest, falsely accused, talented retail associates?

There are quite a few reasons for the lack of accuracy in these databases. First, loss prevention officers are not there to establish the truth as much as they are there to protect the store brand and the store itself. If no police charges are filed and an associate is simply fired, there can often be an attitude that there's no reason to take a chance once an accusation has been made. Conducting a true investigation is time-consuming, and although some LP officers—especially those with a law enforcement background—have the training to conduct one, few can justify the time.Read more...


A Breached Chain Needs To Remember Its Shoppers Are Victims, Too

April 4th, 2013
When a cyberthief breaks into a retailer’s network and steals data and payment card specs, the retailer absolutely is a victim. But many chains tend to think of themselves as the only victim, an attitude that manifests itself in various ways when talking with their customers who are also victims. Just because a shopper’s monetary losses are being covered by zero liability doesn’t make them feel less violated and, therefore, feel any less like a victim, pens legal columnist Mark Rasch.

When setting policies and when talking with shoppers after a breach, communicating the message that the retailer is the only victim may prove to be self-fulfilling, as you'll quite likely be an imminent victim of lost revenue and thrown-away loyalty. When a crime has been committed, attitude and empathy go a long way — and they are among the hardest things for many chains to deliver.Read more...


Macy’s Wrongly Priced Necklace: The Problem That Was Never Supposed To Be Possible In-Store

April 3rd, 2013
A strange recent incident involving Macy's (NYSE:M), an impressively—and unintentionally—marked down necklace and a POS system is noteworthy not merely because of what happened, but where it happened: namely, in-store. The recent Macy's (NYSE:M) print ad certainly spoke the truth. It described as a "super buy" a $1,500 diamond-silver-and-14-karat-gold necklace on sale for $47. It was indeed a super buy — and it was also a major mistake. But Macy's didn't catch its own mistake for some time, until well after quite a few customers made good on the purchases in-store.

The $1,500 necklace was indeed supposed to be marked down, but only to $479, not $47. Things like this happen online with annoying frequency. But in-store? This raises several questions: Macy's described the error as "a mistake [that] was made in a recent Macy's advertisement," according to Holly Thomas, a Macy's VP for national media relations. Was that mistake replicated in the pricing database, accessible through POS? If the wrong price existed only in the print ad, what happened with the checks-and-balances that are supposed to exist in-store? When an associate did a scan and saw $479, didn't a $47 ad activate any alarm bells? No one thought to check with a supervisor?Read more...


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