Top Stories


Amazon Tops Wal-Mart: Mobile Revenue 15X Greater

October 5th, 2011
Newly released mobile-commerce sales figures from major retail chains show a stunning difference success, with the largest M-Commerce retailer—Amazon—making more than 15 times as much as the next largest M-Commerce revenue retailer: Wal-Mart. M-Commerce revenue plunged after that, with Amazon, for example, making 156 times the M-Commerce revenue than Home Depot. Part of the explanation is that retailers, in general, are doing quite poorly in M-Commerce sales. A new extensive ranking of the 300 largest M-Commerce companies—sequenced by M-Commerce revenue—shows only two retailers in the top 10 list.

The $2 billion Amazon is projected to make via transactions made by consumer phones is a non-trivial figure, given its $34.2 billion in global revenue of all types, according to the figures published by Internet Retailer. But note how quickly the numbers drop with its rivals. Wal-Mart, the only other retailer to make the overall top 10, appeared at slot 4 with $127.7 million. The third largest retailer—Staples—comes in at a projected $45.3 million this year, followed by Best Buy ($37.9 million), Macy's ($33.2 million), ($32.5 million), Foot Locker ($32 million), Sears ($31.7 million) and Overstock ($31.6 million).Read more...


Neiman Marcus Social Experiment Doesn’t Go Nearly Far Enough

October 5th, 2011
Neiman Marcus on September 29 announced an unusual-sounding Foursquare marketing campaign. The chain hid cards giving away 15 $1,000 handbags (Nancy Gonzalez clutches, to be precise) in its stores and used Foursquare to reveal a clue to help shoppers find the product. A statement the chain issued said the system would "indicate whether the user is in the vicinity of a hidden clutch." But in actual fact, the system didn't know anything beyond the fact that the consumer had entered a particular store.

It then offered a clue. For a store in Ft. Worth, Texas, for example, the tease said: "It may be a Full House but we are convinced you will go bananas for this bag. Find it and win the bag." The promotion couldn't really indicate how close the customer was to the gift, because Foursquare's GPS signal typically ends the instant the customer enters the building. Neiman Marcus couldn't go any farther, "because of our infrastructure. We'd need to have sensors all over the store," said Jean Scheidnes, the chain's manager of social media. But what if a chain did deploy such a network of in-store sensors? The potential could go way beyond fun and games.Read more...


Macy’s Pledging Item-Level RFID Chain-Wide By 2013

September 28th, 2011
Macy's on Wednesday (Sept. 28) pledged an aggressive chain-wide RFID rollout, promising to item-level tag some 700,000 UPCs in every Macy's and Bloomingdale's by the end of 2013. That will represent about a third of all of the $25 billion chain's products and one of the most aggressive retail item-level deployments yet. Macy's won't be tagging any of the replenishment goods directly, leaving that task to its suppliers, who will ship products to Macy's already tagged.

This massive item-level selling-floor-to-the-stockroom project began as a pilot at the Bloomingdale's New York SoHo, which is a pilot-friendly place apparently—the chain is now using Bloomingdale's SoHo to test Google Wallet. As a practical matter, this rollout will give Macy's a wide range of technology options as the potential of full item-level RFID gets closer. But Macy's is officially focused fully on just one RFID function: faster and more accurate inventory.Read more...


Barnes & Noble Will Have Only One Day To Let Borders’ Loyalty Customers Opt Out

September 28th, 2011
Here's a quick little IT project during the run-up to Black Friday: After spending $13.9 million for Borders' CRM data, Barnes & Noble will have a single business day to send E-mails to 43 million Borders loyalty customers offering them the chance to opt-out of joining B&N's own customer list—and only 20 days to purge the data of any customer who wants out.

That's the upshot of the deal cut in bankruptcy court after the Federal Trade Commission and a special court-appointed Consumer Privacy Ombudsman pushed for an opt-in requirement for Borders loyalty customers, while B&N wanted to offer them nothing more than its own privacy policy. Ironically, either of those two choices would have made life relatively easy for B&N's IT shop. Instead, the privacy compromise could require furious IT activity in the weeks after the sale closes on Friday (Sept. 30).Read more...


Mobile POS Beta Site Fear Keeps Checkout Right By Exit

September 28th, 2011
When the manager of a Florida hobby store was about to begin testing in-store mobile checkout as part of an NCR beta test in June, she envisioned using the devices throughout the store, to both free up POS space and give shoppers a faster experience. But like so many mobile-payment issues, those plans yielded to the reality of hosts of unanswered loss-prevention questions about the mobile payments. The manager ordered the Apple-based units be restricted to an existing POS area right by the exit.

As mobile payments inch along, retailers are trying to balance two concepts: the ideals of mobile-payment strategies with the mundane, practical logistics issues. And nowhere did those two concepts collide more clearly than in the one-location $3.5 million specialty store in Plantation, FL. How could someone at the door verify that the receipt is legitimate? For that matter, if the associate at the door is shown a digital receipt, how is he/she to know if it's a valid receipt—as opposed to a doctored image—unless the associate scans the receipt's barcode and runs a check to see if that item was indeed purchased in the prior 10 minutes?Read more...

Frustration: Thy Name Is Social

September 27th, 2011
Shoppers going to E-tail sites from Facebook and Twitter are much less likely to make purchases; but when they do make a purchase, it is sharply higher from these social network referrals than from other types of referrals, a recent report said. Those Twitter purchasers also seem willing to pay more for the same merchandise. This apparent contradiction—actually, it's more of a nuanced distinction than a real contradiction—is interesting as much from a "what do we do about that?" perspective as from a "is this really valid?" take.

The simplest way for a site to guess whether another site is influencing purchases is to review referral link logs, to see where customers were right before. That method, however, doesn't make much sense with many social sites. A Twitter visitor, for example, will likely click on a link to read the reviews/photos/thoughts of a Twitter connection, and only after that—and perhaps one or two more links—will the customer visit the retailer's site.Read more...

Domino’s Site Crashes During Pizza Giveaway, Chain Blames “Bad Apple” Customers

September 21st, 2011
When it comes to short-term E-Commerce promotions, be careful what you wish for or you will surely crash. learned that lesson last week and, on Tuesday (Sept. 20), it was the turn for Domino's Pizza. But Domino's explained away its crash with a twist: it blamed "bad apple" customers.

Domino's enjoyed a piping hot multi-hour site outage that day, shortly after it launched a Facebook promotion—which was also shut down—to give away 100,000 pizzas in a new gourmet-style pizza line dubbed Artisan Pizza. The chain isn't saying exactly what happened to cause its outage, but it is saying that customers—presumably ultra-intent on winning the free pizzas—did something unfair. Ostensibly, it was some sort of denial-of-service variation where they would flood the servers with responses, thereby getting lots of entries in and denying others the ability to do the same. Domino's is declining to say precisely what it thinks was done. But the chain still apologized for it on Facebook on Wednesday (Sept. 21).Read more...

The Arbitration Clauses That Used To Protect Retailers Now Do The Opposite

September 20th, 2011
Arbitration clauses have always been seen as favoring the retailers and, therefore, as a clause you always want to fight for—if you can. But as the world of retail has changed, with Web and mobile enabling customers to have much greater access to critical operations, things have subtly flipped. Those retailer-protecting arbitration clauses of yesteryear have now morphed into the customer-protecting clauses of today.

Consumers are now empowered to do genuine harm to retailers—harm that would otherwise be addressed through some legal recourse, writes Legal Columnist Mark Rasch. Consumers can commit commercial defamation (think Oprah and the beef industry). They can manipulate stock prices through online campaigns. They can shoplift or otherwise steal goods, products or services. They can release sensitive personal information about the company, its products or plans, its personnel or processes. They can hack into computer systems and steal information. They can infringe or disparage trademarks. They can infringe copyrights. They can modify hardware or software. They can start a grass-roots online campaign to literally destroy a business. They can organize online protest movements, flash mobs or other demonstrations. They can launch denial of service attacks. Consumers can even use your goods and services to harm others.Read more...

Now For All StorefrontBacktalk Readers: Five Monthlies Covering E-Commerce, Mobile, Security, In-Store And CRM

September 14th, 2011
Starting today (Sept. 14), we are making our monthly topic-specific newsletters available for all of our readers, for free. These five newsletters—each one covering solely E-Commerce, Mobile, PCI/Security, In-Store or CRM issues—have until now only been available to Premium subscribers.

For readers focused on any of those areas, the Monthlies provide an easy way to keep up-to-date and to make sure you don't miss any story important to your operation. The Monthlies also have two other helpful features.Read more...

Amazon Cuts Calif. Deal—Now It’s Fighting For Online Sales Taxes

September 8th, 2011
Amazon has cut a deal with California politicians to block the state's online sales-tax law for at least a year. The political deal, reached Wednesday (Sept. 7), buys Amazon and other online retailers a year's respite from the online tax in California. But it also effectively guarantees that, one way or another, E-tailers will be collecting state sales tax 16 months from now.

The deal also effectively signals an end to a string of political and court battles in New York, Illinois, Connecticut, Rhode Island, North Carolina, Arkansas and Colorado. Amazon—which California calculated would be responsible for delivering half the online sales taxes the state expects to collect—is now in a race to get Congress to authorize online sales taxes. And unless the rest of the pure-play E-tailers decide to fight it, Amazon will drag them all along in its slipstream.Read more...

FTC Gets Serious About Collecting CRM Data From Kids Using Mobile Apps

August 17th, 2011
When it comes to CRM data, what's perfectly OK for retailers to collect from adults using a mobile app just got a lot trickier when kids are involved. On August 15, an iPhone app developer was fined $50,000 by the Federal Trade Commission for collecting 30,000 E-mail addresses from users who might (or might not) be children—the first time the FTC has gotten involved in an app-related case.

The developer, Broken Thumbs Apps, isn't a retailer. But the case sets a standard for retailers whose apps may be used by children under 13: Offering underage customers kid-friendly activities puts you squarely in the FTC's sights unless you get parents' permission for every child's information—even if the information will only be used internally.Read more...

Charming Shoppes E-Commerce Chief Speaks Of Retailer Social Ignorance

August 17th, 2011
One of the brightest E-Commerce observers in the industry—Bill Bass—commented recently about the confusion between social media and brand awareness. Bass used to head E-Commerce at Lands' End and then Sears, and he now runs Fair Indigo and E-Commerce operations for the Charming Shoppes chain (1,989 stores in 48 states branded as Lane Bryant, Cacique, Fashion Bug, Catherines Plus Sizes and Figi's). But his point is that retailers need to better understand what social media can do and what it truly represents, rather than what they want it to represent.

"No one has cracked the code on how social media impacts retail. I recently had an agency pitch an app as a way to build brand awareness. I pointed out that for someone to go to the trouble of downloading an app, they already need to be aware of the brand. So at best you could argue that it would help brand engagement, but not brand awareness. Lots of money is being spent in this area. Suspect most of it is being poured down a rat hole." The rat hole is simply that retailers don't have the ability today to understand the social-media influence on retail, and that lack of understanding is almost certainly causing a lot of wasted effort and money.Read more...

Fighting Words: Why PCI’s Token Group Blew Up

August 17th, 2011
The PCI group working on the Council's tokenization policy got so embroiled in infighting that it had to be restructured by the Council, according to one participant, which mostly explains the year-long delay in the Council's tokenization policy. But this is hardly surprising, given that the group is mostly employees of competing security vendors—almost all of whom are trying to skew the Council's policy to benefit that vendor's approach.

The token guidance that the group and the PCI Council staff ultimately released on August 12 was a classic compromise, in that it pleased few in the group but was a huge step forward for retail security. The purpose of such guidelines is not to get so specific that it benefits any vendor, but to give instructions to QSAs and retailers on what is permissible and what isn't. Reaction to the document has fallen into these two camps: one saying that the document was not nearly specific enough and is passing the buck to QSAs, and the other saying that this guidance represents major progress and that it should be applauded.Read more...

When Choosing Customer VIPs, Is It Time To Ignore Purchase History And Focus On Social-Media Clout?

August 17th, 2011
It's a time-honored retail tradition to identify—and try and pamper—the group of best (most profitable) customers. But social media has provided a new way to define VIP shoppers, with "most influential" having the potential to trump "spends the most." Consider: Who do you want to take care of first and in the most boot-lick fashion? The person who personally spends $100 thousand a year with your store or someone whose friends and followers spend a total of $25 million? Is someone with a huge number of Twitter followers, Facebook friends or a popular shopping blog more worthy of the royal treatment than someone who personally spends a lot?

Granted, there are shopping carts full of complexities and nuances in analyzing such profiles—generating a meaningful influence rate, if you will—but that's where the fun comes in. Even worse, beyond those analytical complexities, there's the issue of how to get this data in front of the eyes of store associates and also how to do it in a timely matter. Of course, to start things off, there needs to be a reliable way to identify these influencers as they enter your store.Read more...

Visa Using EMV To Rig The Mobile Game

August 11th, 2011
When Visa announced Tuesday (Aug. 9) that it was reversing course and endorsing EMV for the U.S., the card brand billed it as a bridge to mobile payments, which it is. But the move is also some crafty strategy, one designed to lay a foundation for a mobile-payment environment that will be much more hospitable for Visa's mobile-payment flavor than for rivals' options.

Visa's new approach will also likely spell the end—within about five-to-seven years—of mag-stripe cards in the U.S., a move that many payment security advocates say is years overdue. To make all of this happen, Visa is bringing its global EMV incentive program—officially the Technology Innovation Program (TIP)—to the States, along with its PCI-relaxation components. (PCI relaxation? There are two words I never expected to see used consecutively.) This means chains that start using specific EMV chip-enabled terminals will be permitted to forego the annual compliance validation nightmare. But Visa has added such a lengthy list of qualifiers and exceptions to the program—along with the practical fact that some chains will opt to do the assessments anyway, for pure security purposes—that it's not clear how many chains will find that incentive compelling enough to do massive hardware swaps.Read more...

Instant Face ID: CRM Will Never Be The Same

August 4th, 2011
In a development that will have a huge impact on retail CRM and IT security operations, a series of Carnegie-Mellon University experiments has established startling recent improvements in facial recognition. The biometric technology improvements would be meaningless, though, were it not for a social-media-fueled avalanche of tagged images and personal information.

The combination makes absolutely practical a science-fiction-like scenario of customers being identified as they walk into a store by virtue of their face alone. Cameras at POS could match faces with names from a payment card, thereby enabling the customer to be subsequently identified and tracked without a loyalty card. The CMU experiments suggest an even more powerful privacy-smashing scenario, with consumers walking into a store identified by any site that has ever posted their pictures. Imagine a loyalty program with 90 percent participation, requiring no effort—nor, for that matter, intent or consent—from any customers. An absence of laws will make the ethics of retail senior executives the only boundary. (Uh-oh.)Read more...

Domino’s Pizza’s Ultimate Social Media Experiment

July 27th, 2011
Domino's Pizza is trying to take social media to the next level. The chain has purchased extensive advertising display space in New York City's Times Square and plans on posting unedited comments from customers through its site. The technology is fairly simple, but the experiment is going to truly test how long Domino's will actually pay oodles of dollars to broadcast its customers complaining about the chain on a 4,630-square-foot billboard.

It's been said that there is no such thing as bad publicity as long as the brand is spelled correctly. Domino's may be about to undermine that adage. The problem is, Domino's is pledging full openness—which is hard to do.Read more...

Sears Canada Gambles On An Online Group-Coupon Deal That Excludes Online Customers

July 27th, 2011

Cross-channel retailing doesn’t display its weird moments any more clearly than this: Last week, Sears Canada offered a group-coupon deal ($25 for a coupon good for any merchandise worth $50) through Canadian Groupon competitor All 5,000 vouchers sold by the first afternoon of the three-day deal, so the promotion was clearly a success. But Sears wants the coupons to pull customers into its stores now, during the lull before back-to-school shopping starts. As such, the coupons specifically exclude online sales—they’re good in-store only. Unfortunately for Sears, and as usual with such deals, the coupons are good for 90 days—long past Sears’ target shopping window.

That means the promotion could be a sell-out success and a complete failure if coupon buyers decide to just wait a month until they would have hit the stores anyway. The in-store-only requirement could also irritate the online-oriented customers Sears was targeting. And even if a group-coupon promotion works for the first time with a big retailer that is not a discount apparel chain, sorting out why it worked may be impossible. There may just be too many built-in contradictions for Sears to be able to work out whether this is a case of highly tuned cross-channel retailing—or just dumb luck.…

Macy’s Won’t Make Its RFID Move Until Everyone Else Does

July 27th, 2011
Macy's is quickly moving ahead with its RFID item-level tagging efforts, with one report saying the testing has expanded to six distribution centers. But the retailer is saying that significant additional moves will only happen when key competing retailers make their item-level RFID moves. It seems that the $25 billion chain has figured out the difference between being an industry leader and leading an army of one.

Nowhere is that distinction more critical than with item-level RFID. Suppliers will resist—if they resisted the early Wal-Mart edicts and risked the wrath of Bentonville, they'll resist Macy's—and they'll only sign on either when they see concrete benefits or when the percentage of retailers making the move is so high that they have no option but to comply.Read more...

Despite—And Actually Because Of—The Numbers, Hispanic Retail Sites Are A Bad Idea

July 27th, 2011
With more than 30 million Hispanic consumers in the U.S. spending tens of billions of dollars a year, it would seem to be a no-brainer that major retail chains should have Spanish-language versions of their sites. In reality, not only is it not a no-brainer to create such a site, it turns out to be an impressively bad idea to try.

It's not that the Hispanic segment is not a critically important one for retail. It absolutely is. But the reality is that there are far better ways to reach that audience than a Spanish Web site—and that such site creations come with massive downsides. It's not a trivial investment to create a full version of a chain's site in another language, which means that the benefits have to overcome that. And that's where the math comes in.Read more...

Sears Price Glitch: Is It Time To Slow Down Third-Party Site Access?

July 21st, 2011
Allowing third parties to directly control parts of your site is a great way to improve efficiency: They can generate online disasters at a fraction of the cost of doing it yourself. Such is the lesson that Sears learned—or should we say re-learned—last week when the retailer found itself selling $500 iPads for $69.

Sears has at least learned to share the pain, as the Sears third party that glitched the pricing—GSM Onsale—found its site down within hours. GSM said the pricing error was "due to a software maintenance error." What happened to its site is more of a mystery. went down shortly after the Sears glitch, with a note that said "our online site is currently closed for maintenance. Please visit us again soon." Six days later, the site is still down. Also, the message had something that we've never seen before with a site that expects to be back up anytime soon: a large red "Closed" icon in the middle of the page.Read more...

Gift Card Patent Troll Surrenders, Retailers Off The Hook

July 14th, 2011
The case against the dozens of major retailers who have been sued for supposedly violating a payment patent continued to collapse Friday (July 8) when the patent holder—Card Activation Technologies (CAT)—surrendered the validity of any of its claims. This is good news for those chains, as it means the litigation against them is suspended and is very likely to be dismissed. This immediately followed a federal judge's ruling that invalidated all but three of CAT's claims.

Exactly one week after that federal court decision, CAT agreed to a stipulation that it was surrendering the defense of those last three claims, effectively killing the case. They will consider an appeal—and if the appellate panel reinstates the case, everything is back on—but the case appears dead for the time being.Read more...

Case Against Indicted IT Admin Looks Airtight. Too Airtight

July 13th, 2011
Prosecutors in New York are painting a compelling picture of a veteran Gucci network administrator gone saboteur, making their case with a string of traced IP addresses and a bogus employee's VPN token. The case, though, has huge issues, including defense suggestions of a co-worker frame. The Gucci case, based on not-before-published court records and Secret Service interview notes, provides a rare look into the mechanisms of investigating a retail IT inside job, complete with reviewing logs and figuring out what conclusions to draw. And when the accusations include one network administrator trying to manipulate evidence to point to another IT person, unraveling legitimate and false clues to find the truth can be daunting.

On the one hand, we have a meticulously planned revenge plot of a soon-to-be-fired network admin, who the Manhattan District Attorney's office said prepared a year in advance for the assault by creating a fictitious employee and giving him high-level network access. On the other hand, would someone who had served as the Gucci network administrator for nine years create such a nefarious account using his own account name and password? Would he then access the account and E-mail repeatedly from his home, making no attempt to hide his IP address?Read more...

Oops! My Customer Just Made Me Non-Compliant With PCI

July 13th, 2011
Merchants everywhere love to connect with their customers by E-mail, Twitter and SMS. Such regular and personal communication helps build a strong relationship and loyalty. The problem is that customers sometimes take this communication a bit too far. They can E-mail, tweet or text their payment-card information to a merchant without being asked. When this happens, the merchant is left with a very painful, but very straightforward question: What do I do with that transaction?

If a merchant rejects the transaction, the customer may be offended, confused or just go away. These are bad outcomes for the business, whether it is a retailer or a charity, pens PCI Columnist Walt Conway. On the other hand, processing the transaction means the particular communication system (and everything connected to it) is now transmitting cardholder data. This is the case even if the customer wasn't asked to provide the information. Processing the transaction can increase merchant's PCI scope, thereby leading to an even worse outcome with broad implications for the enterprise. Read more...

Albertsons LLC Ditching Self-Checkout Chainwide

July 6th, 2011
In what might be the first hints of trouble for grocery self-checkout, the 217-store Albertsons LLC grocery chain confirmed Tuesday (July 6) that it is yanking self-checkout systems from all of its stores because of a "very high focus on customer service." This comes on the heels of word from Kroger that it is experimenting with a self-checkout-less store design and an IHL report last week that "Publix continues to be on the fence" of self-checkout.

Sources within both Kroger and Albertsons LLC cited the same self-checkout concern, which is that many customers perceive it to be less customer-service-oriented than staffed checkout lanes. Also, an increasing number of products require staff intervention, and that—coupled with consumers making errors in using the systems—can slow the self-checkout lines dramatically.Read more...


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