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IT Strategy / Industry


Are Stores Really Helpless Against Amazon? That Question Has It Backward

April 2nd, 2013
There's a jarring bit of retail insight buried in a story from The Register last Thursday (March 28): "No one can compete with Amazon when a customer knows what they want," The Register's Bill Ray writes. "Stores need to excel at selling things the customer didn't know they were after, and greater technology might not be the best way to achieve that." That sounds depressing, even though it's probably not quite true.

But let's turn it around: If a customer isn't a pure-play showroomer who really just wants to see whether that gadget looks cheesy or that blouse is the right color before buying on Amazon.com (NASDAQ:AMZN), what kind of in-store technology can help associates do a better job of helping customers find what they want—and convince customers that here and now is the right time and place to buy it?Read more...


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The Ups And Downs Of QR Codes. (OK, It’s Really Just The Downs.)

April 2nd, 2013

QR codes have always been deceptively easy to use, for anyone other than shoppers. Business Insider recently some of the worst QR code deployments it could find and it’s worth a look.

But the retail examples were particularly interesting, such as Subway putting them on employee shirts, which is a place that employees report no one even tries to scan. But our favorite, depicted here, is a sign on how to use QR codes. And to give the lesson? Yep, the shopper has to scan a QR code. …


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Why Amazon And Overstock Lost On Sales Tax

April 2nd, 2013
When Amazon's and Overstock's efforts to avoid sales tax were slapped down last week by New York state's highest court, the judges took an unusual path. Going beyond the normal arguments of nexus — essentially, whether the online operation has any people or operations based in the state — the judges focused more on what those people are doing. And they concluded they were selling, and very often, to fellow state residents. Therefore, hello sales tax.The decision raised — but quickly shut down — the question of whether local presence has any real meaning anymore, suggesting that a different top court would have to make that decision.

"The world has changed dramatically in the last two decades and it may be that the physical presence test is outdated. An entity may now have a profound impact upon a foreign jurisdiction solely through its virtual projection via the Internet," the court said. "That question, however, would be for the United States Supreme Court to consider. We are bound, and adjudicate this controversy, under the binding precedents of that Court, the ultimate arbiter of the meaning of the Commerce Clause."Read more...


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Why The SAQs Will Change This Year

April 1st, 2013
October is likely to see significantly revised Self-Assessment Questionnaires (SAQs) from the PCI Council. Few merchants will be more surprised than those E-Commerce merchants who have outsourced their card processing. Effective with PCI DSS version 3.0, many E-Commerce merchants will learn that their Web servers are in scope for PCI compliance and that SAQ A got a bit longer and a bit more complicated, writes PCI Columnist Walter Conway.

These merchants typically use the simplest SAQ, SAQ A. They also always (in Walt's experience) consider their Web server out of their PCI scope, because that server does not "store process, or transmit" cardholder data. Instead, the server redirects the user to a PCI-compliant third-party service provider that processes the card transaction for the merchant. The conclusion is understandable. An E-Commerce merchant's SAQ A addresses a very small subset of PCI DSS. It includes parts of only two requirements: physical security of backups and paper records that may contain cardholder data; and managing the PCI service provider. Processing is outsourced, and it is outsourced to a PCI-compliant service provider. What could be simpler? Oh, and we should add: What could be more wrong than that conclusion?Read more...


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Supreme Court: Yes, You Can Resell Products You Bought Overseas

March 28th, 2013
On Tuesday (March 19), the U.S. Supreme Court ruled that merchants can purchase products intended for distribution outside the United States and then import those products into the United States for resale without violating copyright law. That's a blow against manufacturers, who wanted to use copyright law as a way of keeping out those cheaper versions of their products, writes Legal Columnist Mark Rasch.

Manufacturers have long been using copyright law, which is intended to protect certain types of expression, to prevent this practice. The Supreme Court said no.Read more...


Limited Makes Emergency Name Change

March 27th, 2013
Apparel group Limited Brands (NYSE:LTD) is changing its name—twice—apparently because time ran out for the company to keep using "Limited" in its name. The company, which runs the Victoria's Secret, Bath and Body Works, and La Senza chains, completed the sale of its flagship The Limited chain in August 2010, and the deal required a name change, according to an SEC filing on March 22.

But the newly christened L Brands won't have that moniker for long. "The Company expects to announce a new permanent name for the Company in the months ahead," the Limited-to-L filing said. That suggests either something went very wrong with a new name the company planned to use or executives simply forgot about the name-change requirement until the deadline arrived—and then had to scramble to switch to a name nobody wanted.Read more...


MasterCard’s Retail Data Grab: Forget PayPal, It’s About Chains

March 26th, 2013
MasterCard (NYSE:MA) wants your customer data. That's the bottom line when it comes to the new fee that the number-two card brand will start slapping on PayPal, Google (NASDAQ:GOOG) and other digital wallet operators in June. It's not really about digital wallets, which represent a tiny fraction of big chains' transactions. MasterCard just wants to put pressure on anyone who might keep customer data out of the hands of itself and its issuing banks.

Wait—isn't losing control of CRM data the biggest reason chains aren't wild about digital wallets in the first place? Wasn't everyone worried that Google might somehow share transaction data with a chain's competitors? Apparently, that fear was well-founded—just misplaced. It turns out the people who will do anything to grab CRM data are the card brands and issuers.Read more...


With Starbucks’ Grocery CRM Plan, It Had To Get Clever About Fraud

March 26th, 2013
When Starbucks (NASDAQ:SBUX) announced Wednesday (March 20) it would spread its CRM program to grocery stores that sell its bagged coffee, it wasn't merely an industry first. It was Starbucks' attempt to track shopper activity beyond the limits of the chain's stores, site and mobile app—as if CRM deployments aren't already complex enough.

Given that its program would deliver expensive value in the form of free food and drink at its stores, the first priority of the rollout was to try and discourage fraud. And that involved some creative packaging and identification mechanisms. And a choice to exclude mobile from the launch.Read more...


PCI DSS: The Next Generation

March 25th, 2013
PCI DSS is going through a generational change. That change has nothing to do with the upcoming release of PCI DSS version 3.0 this fall, pens PCI Columnist Walter Conway. Instead, the generational change is in the security professionals he works with everyday, the people who are managing their organizations' PCI compliance. Most of these professionals are very qualified, but they are new to their job and often also new to PCI.

One result of this generational change is that Walt is being asked some of the same questions he was asked five or more years ago. The questions range from whether pre-authorization data is in scope (treat it like it is) to the feasibility of E-mailing card data (a seriously bad idea) to what constitutes effective network segmentation (think "air gap"). Fresh perspectives are always welcome, so the implications of this generational change for merchants and QSAs alike are generally positive. But with new compliance staff and assessors come fresh challenges and approaches that can impact every merchant and service provider. Read more...


Customer Service Survey Places Apple Second To Last

March 22nd, 2013
The vaunted customer service chops of Apple Stores may not be what they once were. A new retail survey of 10,000 U.S. shoppers placed Apple second-to-last in customer experience, just slightly better than RadioShack. Is Apple a victim of its own reputation? In other words, are its fans' expectations now so high as to be unreachable, delivering disappointment? Another surprise: Ace Hardware placed third, beating out customer service king Nordstrom by one notch. Amazon and Sam's Club were the only retailers to achieve better customer service scores.

Customer service is one of the hardest things to reliably, consistently, accurately and—here's the hardest one—meaningfully measure in retail. Other top customer service performers according to the survey are, in order: PetSmart, BJ's Wholesale, Walgreens, AutoZone and Home Depot. Weak performers include: JCPenney, Marshalls, Gamestop and 7-Eleven. (Note: JCPenney has the distinction of being the retailer that suffered the largest drop in customer service ratings from last year to this year. JCPenney dropped 6 percent. The biggest retail gain during the same period? Office Depot (NYSE:ODP), which boosted its score by 11 percent.) Read more...


eBay’s New Simplified Pricing Is Not So Simple

March 22nd, 2013
When eBay (NASDAQ:EBAY) on Tuesday (March 19) announced "simplified pricing" that was actually far more complex pricing, it made its war with Amazon (NASDAQ:AMZN) over third-party sellers even more direct. It marked the first time that eBay has ever publicly compared its pricing with Amazon. The enhanced eBay assault comes at a time when Amazon is feeling a lot of heat on its Marketplace third-party seller program—and as other retailers are preparing to create such marketplaces of their own.

eBay marks the second direct assault on Amazon Marketplace in as many weeks. The first came from Germany, where government officials are challenging Amazon's ability to force Marketplace merchants to always give Amazon their lowest prices. And a federal class-action lawsuit in the U.S. is saying that Amazon delays its payments to other merchants deliberately and for too long. None of these moves can slow Amazon's marketplace efforts much, but they don't have to. To the extent that it makes Amazon's third-party merchants itchy to look elsewhere—perhaps into the waiting arms of eBay or Walmart.com (NYSE:WMT)—then Amazon has reason to worry, because the advantages it gets from these merchants extend well beyond the revenue commissions.Read more...


U.S. Supreme Court Knocks Down Barrier To Cross-Border E-Tail

March 21st, 2013
The U.S. Supreme Court has removed a major barricade for cross-border E-Commerce. On Tuesday (March 19), the court ruled that so long as a product isn't pirated, U.S. retailers can import it without violating copyright law. In practice, that means an online retailer can sell U.S. customers many products that are lower priced—and were never intended to be sold in the U.S.—without breaking the law.

We're not talking about pirated goods here, but what's often called the "gray market"—legitimate products that aren't authorized for U.S. sale. Those products are usually priced lower, because they're intended for less-affluent markets than the U.S. Costco (NASDAQ:COST)and Kmart (NASDAQ:SHLD) have sold those types of products in the past and gotten into legal trouble. This week's ruling says they won't have that trouble again. But there are much bigger E-Commerce implications in the court's decision to get rid of those geographical limits.Read more...


Walmart Protects Cyberthief Privacy While Choosing To Not Prosecute

March 21st, 2013
When Legal Columnist Mark Rasch's wife had her credit card stolen, it was used to make bogus purchases from Walmart (NYSE:WMT) . Walmart not only chose to not prosecute—typical when the fraud falls below a threshold that thieves know very well—but it went out of its way to protect the privacy of the thief.

"All that is necessary for evil to triumph is for good men to do nothing." So said Sir Edmund Burke. But the phrase could equally apply to merchants, and their failure to adequately and aggressively investigate and prosecute online payment-card fraud. Rather than aggressively going after these carders, most retailers consider such losses a "cost of doing business." Where does that leave the honest shopper? From the shopper's perspective, whose back is Walmart seeming to protect more?Read more...


Amazon’s Secret Weapon May Be A Mystery To Amazon, Too

March 20th, 2013
Is Amazon Marketplace really the E-tail giant's "secret weapon"? That's reportedly how a Walmart (NTSE:WMT) executive described it at a top-management meeting in February. Amazon (NASDAQ:AMZN) itself may not hold its collection of third-party sellers in quite such high esteem—especially since March 15, when two of them launched a class-action lawsuit complaining that Amazon routinely holds up payments it owes to the sellers.

In fact, Amazon Marketplace now brings in almost 12 percent of Amazon's retail revenues. But it also represents more than 40 percent of the goods sold on Amazon's site, which makes the Marketplace merchants both competition and a huge market-research pool for Amazon—and, potentially, a legal time bomb.Read more...


NeimanMarcus.com’s Fake Faux-Fur Fiasco Draws A Real 20-Year Consent Agreement

March 20th, 2013
In what is probably a sign of the real-vs.-fake end times, Neiman Marcus agreed on Tuesday (March 19) to stop labeling real fur as "faux fur." According to a very real FTC complaint, between October 2009 and November 2012, the luxury chain's NeimanMarcus.com and BergdorfGoodman.com websites sold a Burberry jacket, a Stuart Weitzman shoe and an Alice + Olivia Kyah coat described on the sites as trimmed with faux fur, when actually the trimming was real fur.

Part of the reason Neiman Marcus got into trouble here is that it started selling the fake faux fur products less than six months after settling a previous FTC fake faux fur investigation. But the bigger problem may be the fact that physical stores have human beings who can catch some of these labeling problems before they become a federal case. Online stores don't.Read more...


Federal Appellate Panel Backs Walmart On Obscenity Case, But It Was One Malice Claim From Going In The Opposite Direction

March 20th, 2013
A federal appellate panel on March 15 backed Walmart (NYSE:WMT), ruling that the chain had no need to train employees on when they should or shouldn't call police after seeing customer photographs. The test case involved a couple who had their children taken away for a month, until a judge saw the actual photographs and the results of an examination of the children and then ordered the children to be returned to their parents and no charges filed.

The decision from the U.S. Court of Appeals for the Ninth Circuit also flagged to retailers their Achilles heel in such cases, pointing out that the parents' case fell apart when they didn't allege that the store associates had not acted in good faith. In other words, had there been evidence that the associates acted maliciously, things might have gone very differently for Walmart. The parents certainly wouldn't have had difficulty establishing harm that resulted from the associate's actions.Read more...


Is Target Trying To Become Amazon For Cooks?

March 19th, 2013
Target (NYSE:TGT) is quietly getting into the E-Commerce infrastructure business. The $68 billion chain announced last Thursday (March 14) that it is buying online cookery sites CHEFS Catalog and Cooking.com, both of which sell kitchenware and utensils. But Cooking.com also provides the backend for several high-profile celebrity cooking websites -- and Target apparently intends to keep its hands off that business as long as it keeps growing.

Keep in mind that it's barely a year and a half since Target could barely keep its own newly built E-Commerce site running, after a decade of having its E-Commerce operations run by Amazon (NASDAQ:AMZN). That's fresh in the minds of Target E-Commerce execs, so if there's any chain that can see an advantage to becoming a mini-Amazon for cooking websites, it's Target.Read more...


Subway Hit By Ultimate Cyberthief Inside Job: A Double-Insider

March 19th, 2013
A federal indictment unsealed on Friday (March 15) involving a Subway cyberthief attack might be an example of the ultimate insider attack. The thefts were actually double-insider attacks, in that one of the accused was a former franchisee of Subway—an employee is the typical insider attack, but an owner also qualifies—and he then ran a POS company that sold systems to Subway franchisees. A vendor using a backdoor is the other common form of insider attack. Here, the government alleges, we have both.

The case against Shahin Abdollahi, a.k.a. Sean Holdt, is that he supposedly used the systems he sold to Subways around the country to fraudulently load value onto giftcards. The indictment then claims that Abdollahi either used the giftcards himself at Subways thousands of miles away or sold them as discounted cards on eBay (NASDAQ:EBAY) and Craigslist. For that added touch of chutzpah, the indictment alleges, Abdollahi and a co-conspirator "sometimes registered [the giftcards] online with Subway" and that was done "to keep track of the fraudulently loaded cards in case of loss or theft." After all that work, you certainly wouldn't want a card to be lost due to carelessness.Read more...


With POS Paper Supplies Vanishing, E-Receipts May No Longer Be Optional

March 18th, 2013
Maybe digital receipts and coupons are something you need to start promoting—and fast. The second-largest supplier of POS receipt paper, Germany's Koehler, still plans to stop shipping paper to the U.S. in April, after a December ruling by the Commerce Department that will increase tariffs by more than 70 percent. That could translate into shortages and will almost certainly mean higher prices for thermal paper, which is used in most chains' POS printers.

U.S. and Chinese paper mills say they will eventually fill the shortfall from the U.S. exit of Koehler, which has been providing about 40 percent of POS paper. But in the meantime chain execs may be expecting IT to keep stores from running out of paper. Strange as it sounds, it is IT's problem—and the second-easiest option is digital receipts.Read more...


Want To Give Shoppers A Reason To Use Loyalty? How About Saving Their Lives?

March 15th, 2013

Grocery—and other food selling—chains that are trying to encourage shoppers to use CRM? Nothing makes customers more loyal than saving their lives. (Yes, Bentonville, even more than saving them money. Sheesh.) With a steady stream of news reports touting loyalty records as key tools in finding and then notifying customers about poisons, CRM should become a much easier sell.

The capabilities and lives being saved by CRM is hardly new. Costco (NASDAQ: COST) has championed it for years, and Safeway (NYSE:SWY) has been sued for not using loyalty to protect shoppers’ health. Grocery, QSR and convenience chains often complain about the difficulty of getting shoppers to sign up for—and to routinely use—their loyalty cards. Instead of pushing savings, maybe this is a much more effective and truly altruistic (well, semi) argument to make. On the flip side, to help government food investigators do this magic, a lot of data will have to be shared. When that data is then shared with other government agencies and a customer is surprised by an IRS visit? Law enforcement has been finding nuggets in POS databases for years. Privacy violation or saving customer lives? The joys of retail decisions.…


Court: Retailers Not Bound To Online Promises. Their Shoppers Are

March 14th, 2013
A recent dismissal of a class-action lawsuit against the LinkedIn (NYSE:LNKD) social network raises the question of whether anyone is bound to keep the promises they make on their website at all. If taken at face value, pens Legal Columnist Mark Rasch, the court's dismissal means that companies are not bound to meet their own promised obligations but their customers are bound to comply with the Terms and Conditions of the website, whether they read them or not.

When LinkedIn premium customers Katie Szpyrka and Khalilah Wright learned that the website operator had been hacked, and that 6.5 million stolen LinkedIn passwords had been posted on the Internet (together with the user's e-mail address), they went to sue LinkedIn for failing to provide adequate security and appropriate encryption for these passwords. Because users frequently use the same passwords for multiple accounts, stealing their LinkedIn passwords and E-mail addresses might expose a host of other accounts to compromise. Read more...


Costco CFO on Item-Level RFID: “That Ain’t Happening”

March 13th, 2013
Item-Level RFID has its backers at Macy's (NASDAQ:M) and a lot of supporters at JCPenney (NYSE:JCP) (if the retailer only had the cash). But a warehouse chain such Costco (NASDAQ: COST)—with aisle inventory stacked dozens of feet in the air—should be a natural. Not so, Costco CFO Richard Galanti said Tuesday (March 12). In fact, not even close.

Asked about ways to cut labor costs, Galanti went out of his way to dismiss it, arguing that he's not buying item-level RFID's promises. "Everybody thought that RFID would free up the front end and reduce our biggest labor cost area. That ain't happening." (How can you not like a CFO who tells a recorded investor call "that ain't happening"?) Costco has always been the contrarian among the largest chains. Read more...


Chain Sues Visa For Breach Fines, May Actually Get Its Day In Court

March 13th, 2013
Apparel chain Genesco (NYSE:GCO) has sued Visa (NYSE:V)—yes, Visa, not the acquiring banks—over the card brand's $13 million in fines due to a 2010 breach. The 2,440-store retailer, which operates the Journeys, Lids and Johnston & Murphy stores, makes the usual arguments: Visa's fines are illegal, Visa broke its own rules, Genesco didn't violate any PCI DSS requirements. (Well, except PCI's First Commandment: Thou shalt not get breached.)

What's interesting here is why Genesco thinks it will get to take Visa to court: A month before Visa notified the acquirers of the assessment, Genesco signed a separate agreement with one of the acquirers, Wells Fargo (NYSE:WFC), in which the bank actually signed over its right to sue Visa to Genesco.Read more...


Walmart, Safeway, Amazon Share Same Domain Strategy: Mine, Mine, Mine

March 13th, 2013
Walmart (NYSE:WMT) and Safeway (NYSE:SWY) are each trying to privatize .grocery, so no competing chains can use it. Barring an unexpected change, one of the two will lock it down. Meanwhile, the spotlight has been on Amazon (NASDAQ:AMZN) for attempting to get exclusive use of .books. Other retail-friendly top-level domains (TLDs), including .toys, .kids, .tools, .shoes, .fashion and .food, are also in play.

That may not be as paranoid as it first looks. Amazon filed (and paid the $185,000 per TLD application fee) for 76 separate vanity TLDs—all of which it intends to restrict to Amazon and its subsidiaries. (Yes, we looked at all 76 applications.) Some of the most obvious TLDs retailers might conceivably be interested in—.shoes, .toys, .fashion, .jewelry and .tools—have no retailer applicants. They've all been applied for by companies that actually believe they can sell domain names ending with those TLDs. There's also .food, which is the focus of a three-way competition among two domain registrars and the Food Network, which wants to take it private. Amazon, Google and a Hong Kong foundation are each fighting for .kids. How likely is it that .book—owned by Amazon or anyone else—will have an impact? Barnes & Noble (NYSE:BKS) owns both book.com and books.com, which both redirect to the chain's own site. That doesn't seem to have given B&N much of a monopoly.Read more...


Privacy Sure Isn’t What It Once Was

March 12th, 2013

When it comes to softening up shoppers and making them more comfortable sharing personal information with retailers, nothing has done a better job than social media sites. Mobile devices, with their geolocation capabilities and continual beaming of “this is who I am” signals to anyone who chooses to listen, come in a close second. But a recent study has challenged that thinking. Understanding the nuances of how shoppers perceive privacy, what information they consider to be private and what incentives will work to make them give up data is crucial, whether it’s for a CRM (individual) strategy or to merely better understand shoppers in aggregate. With teen shoppers, the challenge is different. The tactic to get them to surrender a piece of private data has to start with understanding what they consider private. What Facebook and Youtube have indeed done is to make them think many of the most intimate details of their lives are not private. Hence, if you want their E-mail address, a one-time $5-off coupon may be all that’s needed.

This is explored in StorefrontBacktalk‘s March 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. You can also check out all of our recent Retail Week columns here.…


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