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Harbor Freight Breach May Be Biggest Of 2013, Issuers Say

August 12th, 2013
What looked initially like a two-store payment-card breach may end up being one of the biggest breaches of 2013. In late July, the 425-store discount hardware chain Harbor Freight Tools posted signs in its stores, warning customers that there might have been a problem with some in-store card transactions. Now it appears thieves were using multiple kinds of malware to tap transactions between June 14 and July 20, and the breach has affected at least 30,000 card holders at just two card issuers. That's eventually expected to climb into the millions.

Harbor Freight itself isn't saying much except that it hired Mandiant to investigate and that the malware has been found and blocked. But card issuers and card brands are now sending out advisories about possibly compromised card numbers on nearly a daily basis, according to BankInfoSecurity, which has been tracking the breach. And it's only in the past two weeks that fraudulent transactions linked to the breach have begun to increase significantly—suggesting that the card numbers are just now beginning to be sold to cashers.Read more...


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Sephora Buys A Software Vendor. Wait, Can They Do That?

August 9th, 2013
In the kind of move you'd expect from Walmart (NYSE:WMT) or Amazon (NASDAQ:AMZN) but not a retailer who couldn't make the NRF's Top 100 list, beauty products retailer Sephora has acquired a software startup. Last Wednesday (Aug. 7), the 1,300-store chain said it has acquired Scentsa, the company that developed Sephora's touchscreen Fragrance Finder in 2008 and its Color IQ system last year—a pair of in-store kiosk systems that have become signature features for Sephora.

While it's not surprising for a $2.6 billion retailer to develop in-store technology like that, no one seems to think of actually buying the startup as something most retailers can do. In part, that's because most chains are deeply marinated in the buy-don't-build concept, which makes perfect sense when it comes to ERP but no longer really holds for non-enterprise software. Besides, we're not talking about acquiring IBM here: Sephora said the acquisition will add eight or ten people to its payroll.Read more...


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Walmart Sales Tax Snafu: How Did They Get This So Wrong?

July 29th, 2013
In a sterling example of what big retailers' POS software is not supposed to get wrong, Walmart has apparently been charging too much sales tax on two-for-one coupon deals in Pennsylvania in violation of the state's law. Walmart insists the way it handles coupons in Pennsylvania has gotten an OK from the state—despite the fact that Pennsylvania law appears to spell out exactly the situation in which Walmart is accused of collecting too much tax.

According to a class-action lawsuit that was moved from state to federal court last week, when a Pennsylvania customer uses a two-for-one coupon, Walmart charges sales tax on both items, but it's only supposed to charge for one. Because Walmart gets to keep 1 percent of the sales tax it collects as a collection fee, the chain is being accused of unjust enrichment from every coupon sale it has made since June 2007.Read more...


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A Patent On Clicking Website Images? Nope, Appeals Court Affirms

July 25th, 2013
For once, JCPenney has something to be happy—not just hopeful—about. On July 22, a federal appeals court delivered what should be the final blow to a patent-infringement lawsuit that dates from CEO Mike Ullman's first stint in that job—and one for which JCPenney served as a stand-in for the entire retail industry.

It was in October 2009 that a company called Eolas, claiming it had patent rights to any interaction with images using a web browser, sued more than 20 big companies, ranging from Apple and Perot Systems to Frito-Lay and Playboy. By the time the case came to trial in 2012, most had settled, but half of those who remained were retailers: Amazon, CDW, JCPenney and Staples. As the jury deliberated, only JCPenney, Amazon, Google and Yahoo hadn't bought their way out. Then the jury came back—and invalidated all of Eolas's patents.Read more...


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Victoria’s Secret Mobile Site Chokes On Plus-Size Images

July 18th, 2013

First Victoria’s Secret’s (NYSE:LTD) mobile website choked during the last week of June, resulting in slow content delivery, failed connections and damaged or missing content. The next week it was fine, according to web monitor Keynote, with no clear explanation for the change. And the week after that, the site choked again—but this time Keynote has an explanation. It seems the lingerie retailer revamped its home page, and many of the new images were in PNG format instead of the JPEGs the site had been using. Result: The home page ballooned to almost five times its previous size.

Yes, those PNG images look great to site designers, and they should: They use lossless compression, so they can be repeatedly manipulated without losing image quality. JPEG, on the other hand, degrades if it’s resized too much. That doesn’t mean designers shouldn’t use PNG. It means IT should be converting those files to JPEGs as the very last step before a new page goes live. (IT should also have tested that page with actual phones to discover it took nearly 20 seconds to load and frequently timed out.) When it comes to images on a mobile website, less really is more. We’d have thought Victoria’s Secret, of all retailers, would have figured that out.…


QR Codes Are A Terrible Idea. Why Is Image Recognition Even Worse?

July 12th, 2013
QR codes are ugly. They're intrusive. Most designers hate them because there's no way to make them look any less like the brick-full-of-blocks they are, especially when they've been slapped next to a great-looking retail marketing image. That's why the idea of leaving out the QR code entirely and just getting a mobile phone to react to the image itself is so appealing. It looks so much better that it's easy to forget why it's a bad idea: That ugly, intrusive QR code screams "Point your camera at me!" An ordinary image doesn't.

As a result, if potential customers know what they're supposed to do with a QR code, they can easily do it. But how are they supposed to know that there's any special significance to the image in an ad or porter or brochure?Read more...


IBM, Google, Best Buy May Have Cracked E-Commerce Pain Point

July 11th, 2013
A group of dozens of tech firms—and two major retailers—are working on a standardized way of storing E-Commerce data for websites as JavaScript objects. IBM, Google, Adobe, Accenture and other IT software and services suppliers are backing the proposed Customer Experience Digital Data Acquisition standard, and they went public with it last week after submitting it to the World Wide Web Consortium (W3C) in May. But only two large retailers have people working on the standard: Best Buy (NYSE:BBY) and HSN (NASDAQ:HSNI).

That's too bad, because the problem of all the incompatible, vendor-specific data formats for shopping carts, product identifiers, transactions and customer information is costing retailers money to integrate and maintain E-Commerce sites. It also locks chains into specific vendors' formats—and vendor lock-in is very much a dollars-and-cents issue in retail IT. Any retailer's E-Commerce group that doesn't start tracking this effort now may soon either be paying or playing catch-up.Read more...


Apple Drops Amazon “App Store” Lawsuit, Now That Everyone Knows What The Real App Store Is

July 10th, 2013

Apple (NASDAQ:AAPL) has given up its fight with Amazon (NASDAQ:AMZN) over app stores—specifically, its trademark lawsuit over the name “App Store” for an online store where customers can buy apps. All Things D reported this week that on Tuesday (July 9), after months of settlement talks, Apple finally asked the judge in the case to dismiss the two-year-old lawsuit. There wasn’t much explanation—an Apple spokeswoman grandly pointed to 900,000 apps and 50 billion downloads, while Amazon just said it was relieved the legal ordeal was finally over.

But it’s not really such a mystery. In March 2011, when Apple filed its lawsuit, the iPad was less than a year old and the Kindle, introduced in November 2007, looked like a better-established competitive threat. (And it was, just not to the iPad.) Two years later, the iPad is a solid winner, the lawsuit is a waste of money, and the whole thing probably looks silly even to the Apple executives who helped gin it up. A name, however generic it sounds, can be a critical success factor for an unfamiliar element of E-Commerce—but once customers figure it out, they don’t need the name any more. Now will somebody please explain that to the

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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...


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...


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...


Still No Apple Mobile Wallet, But A Card-Number Keychain That May Be Just A Bit Too Clever

June 12th, 2013
Anyone who was expecting Apple (NASDAQ:AAPL) to jump into in-store mobile payments this week is probably feeling...well, comfortably disappointed. The big keynote speech at Apple's Worldwide Developers Conference on Monday (June 10) contained, as usual, no sign of the "iWallet" that some Apple fans insist will be coming any day now. But there was something just a little bit like a mobile wallet, and that's sure to keep the wishful thinking alive.

That something was the iCloud Keychain. Put simply, it's a cloud-based feature of both Apple's new iPhone operating system, iOS 7, that lets users store passwords, logins and payment-card numbers for use with mobile commerce sites. Yes, it does all the things password managers do these days, including automatically filling in the forms that make online retail so much more miserable for customers on a phone than on a PC. But it's adding card numbers that makes this interesting.Read more...


JCPenney CTO Kristen Blum Gone, IT Transition Questions Remain

June 5th, 2013
JCPenney CTO Kristen Blum, who was hired to execute the IT side of former CEO Ron Johnson's grand vision for the 1,100-store chain, is out. The retailer confirmed on Wednesday (June 5) that Blum is gone with the standard thank-her-and-wish-her-well statement. But what's left in her wake is a set of questions about how JCPenney will deal with a massive IT overhaul that it can't really afford but may not be able to reverse.

Let's be clear: None of that uncertainty was Blum's fault. The decision to rip out 500 legacy systems and replace them with Oracle came from Johnson and former COO Michael Kramer. Kramer was the exec who ripped into the chain's culture and called its systems and IT infrastructure "a mess" last year. Blum's job was to retire systems, streamline processes and push forward into Oracle—and she reportedly managed to do that without creating nearly as many enemies as some of Johnson and Kramer's executive hires.Read more...


What You’re Missing: Urban Outfitters Charging More Online, Does Sears Want To Go Members-Only?

May 29th, 2013

Your friends here at StorefrontBacktalk editorial also now publish a daily retail site, called FierceRetail, and wanted to give you a sense of what you’re missing by not visiting or grabbing its free newsletter. Urban Outfitters discovers that it can get away with charging more online than in-store. See? Sometimes conventional wisdom is conventionally wrong.

A look into how federal judges are likely to force changes in how price anchors are set in-store plus some questions about whether Sears is thinking about becoming members-only. Was Best Buy’s Facebook promo a victim of its own great deal—and some we-should-have-seen-this-coming rip-off artists? We also threw in our take on Walmart’s $82 million hazardous waste settlement, where Walmart spoke of mouthwash and hairspray and the feds said they were pesticides. (You say tomato, I say Molotov cocktail…) All of that—and dozens more stories—and that was just this week. And Monday was a holiday! Drop by and check it out. It’s free and the snacks all have zero calories. (That may be because they don’t exist.)…


Marks & Spencer’s POS Charges Contactless Regardless, At Least Now And Then

May 21st, 2013
Some Marks & Spencer customers have reported that the U.K. chain's contactless payment terminals have taken money from contactless cards even when those cards were still in purses or wallets a foot or more away—and in at least one case, the grabby POS behavior was repeatable.

The retailer recently rolled out contactless point-of-sale terminals to 644 U.K. stores and reportedly processes more than 230,000 contactless transactions every week. But several customers told the BBC that they had the experience of inserting a chip-and-PIN card in the PINpad's slot, but being issued a receipt for a contactless card that was nowhere near the PINpad. The contactless system isn't supposed to work at distances of more than about two inches.Read more...


C-Store Chain Mapco Express Hit With Remote Access Breach

May 8th, 2013
Regional convenience-store chain Mapco Express (NYSE:DK) said on Monday (May 6) that thieves may have stolen credit and debit card information from all 377 of its stores during March and April.

"The hackers accessed the payment processing systems used in all of our stores from March 19-25, in certain stores from April 20-21, 2013, and at two stores in Goodlettsville and Nashville, Tenn., from April 14-15, 2013. If you used your credit or debit card at one of these locations during these time periods, you card data may have been compromised," the retailer said in a statement.Read more...


Nordstrom’s Typhoid Outbreak Used POS Data To Contact Individual Shoppers

May 8th, 2013
After a cook in one of its in-store restaurants was discovered to have typhoid fever, Nordstrom is trying to directly contact customers who might have been exposed to the disease. The retailer is sifting through point-of-sale transactions from the Nordstrom Cafe in the store at San Francisco's Stonestown Galleria mall in an attempt to identify specific customers who could have been exposed, but that's proving more challenging than expected, a spokesperson for the chain said on Monday (May 6).

The San Francisco health department notified the store late last Thursday (May 2) that an employee was diagnosed with typhoid and may have exposed customers who ate in the restaurant to it on April 16, 17, 18, 20 or 27. As of this week, no cases of customers or other store associates having the disease have been reported, according to the health department. But Nordstrom is still trying to track down anyone potentially exposed.Read more...


Walmart Builds Own Search, No Competitive Advantage In Buying

May 7th, 2013
Walmart is arguably the most tightfisted retail chain in the world, constantly driving out costs any way it can. So why is the world's largest retailer now focused on building its own technology instead of buying it off the shelf? According to the chain's e-commerce chief, that's the only way it can get a competitive advantage from the technology.

"We can't do what we need to do and want to do with off-the-shelf solutions," said Neil Ashe, Walmart president and CEO of global e-commerce, speaking at a retail conference last week. And one of the first big projects to come from the insourcing is a proprietary search engine that has tighter integration with local stores that will let Walmart continuously customize its search without having to wait for outsiders to develop the features it wants.Read more...


Can Ebay Pull Off A Giant Touch Window For New York Shoppers?

May 6th, 2013
Ebay and retailer Kate Spade are doing something this summer that would have been unthinkable just a few years ago: creating a pop-up store in New York that will feature a gigantic touchscreen store window. Let's be clear—what would have been unthinkable would be a relatively small (82-store) apparel chain taking on something this technically aggressive, even with a partner as big as eBay to help foot the bill.

Leaving aside all the obvious unanswered questions—from "how do you physically protect a giant touchscreen?" to "how much of an exhibitionist does a customer have to be to browse a web catalog that's taller than she is, right out in public?"—it's a testament to how inexpensive and physically tough this kind of technology has become that it's viewed as practical. Of course, that all assumes that the chain and eBay will actually get it to work as advertised.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...


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...


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...


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.…


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...


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...


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