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Next StorefrontBacktalk Newsletter Will Be Published January 5th

December 14th, 2011

As is our tradition, StorefrontBacktalk shuts down for the last two weeks in December, due to the fact that y’all are far too busy (a) supporting the biggest selling weeks of the year until December 25th, (b) supporting the biggest returns-and-exchanges week of the year after December 25th and (c) closing the quarterly books until December 31st on what everyone hopes will be a bigger year than 2010.

That means our next regular weekly issue will arrive on January 5th, 2012. In the meantime, everything else will still be live (the Web sites, our Kindle version, our Twitter tweets, our mobile sites, etc.). And we’ll, as always, send out breaking news alerts if circumstances merit. …


Interested In Advertising In StorefrontBacktalk In 2012?

December 12th, 2011

A message from our beloved business side: As the NRF Big Show happens next month, StorefrontBacktalk has a couple of last-minute slots for anyone wanting to communicate with NRF attendees. In mid-January, as our readers leave their postmortem holiday shopping meetings with the list of everything that went wrong, every feature management wants to add and a wishlist of products to make it all, it’s a nice time message.

We will also be adding several content channels next year—including several new weekly podcast series, more monthlies, events in addition to our usual weekly and monthly newsletters, and Web sites—and if your marketing people have any interest in getting involved, we now have new opportunities. Some of these new channels were specifically created to enable smaller vendors, with much more limited resources, into our community. If your marketers want to get your brand in the middle of these discussions, please drop us a note.…


Google Trial Sends Home Depot Shoppers Away To Lowe’s

December 8th, 2011
A mobile vendor who was testing out the in-store Google Maps application this week at a Home Depot store in Florida discovered an unexpected result. While standing inside a Home Depot—which is one of a handful of Google partners on this project—and just feet away from the store's paint aisle, the tester called up the store's inside layout and asked the app where the paint aisle was.

The Home Depot partner app quickly responded: At the Lowe's store three blocks away. It's becoming clear that retailers need to be thinking about—and asking—a lot more questions about in-store maps and mobile navigation.Read more...


Best Buy’s Cloud: Wild West Gives Way To Making The Same Data Mistakes Again

December 7th, 2011
Many chains have seen the cloud as a nice way to get unlimited data storage on the cheap. But Best Buy's initial cloud efforts revealed something much more fun: a lawless area where IT management didn't have any rules.

A funny thing happened, though: "Everybody has always said that if we could do the datacenter over again, we'd make no mistakes and everything would be perfect. It would be this incredible Utopian datacenter, except that we're all making the same mistakes that we made in the datacenter originally, because you go to the cloud like the Wild West," said Thomas Kelly, Best Buy's enterprise architect for cloud services.Read more...


In The Dillard’s/JDA Software Settlement, Details Of Sleazy Vendor Practices Come Out

November 30th, 2011
Late on Wednesday (Nov. 30), the 11-year-long battle between the 288-store 29-state Dillard's chain and JDA Software/i2 finally closed, when JDA agreed to write Dillard's a check for $57 million. The vendor's check was to compensate Dillard's for what were allegedly lies the software company used when selling a supply chain system. But the filings in the case provide a rare look into how software companies regard sales tactics and it’s essential reading for all IT execs before their next meeting with any software sales rep.

Quick background: JDA was not involved in this matter when the sale was made in 2000 and is only now involved because JDA bought i2 in January 2010. In June 2010, the case went to trial and a Texas jury awarded Dillard's $237 million. That's an impressive amount given that Dillard's had only paid $2.4 million for the software. JDA/i2 appealed and Wednesday's settlement happened while the appeal was still processing. Dillard's position has been that JDA lied to them during the sales process and that the $6.1 billion chain didn't receive the value the vendor had promised.Read more...

What Wal-Mart Didn’t Say About Its POS Move

November 16th, 2011
Wal-Mart's newest mobile acquisition may be a lot more than the world's largest retailer is admitting. On November 10, the chain announced that it acquired Grabble, a tiny Australian mobile POS startup that can deliver receipts to customers' phones. Wal-Mart also did a good job of scrubbing the Internet of information about what Grabble actually makes: hardware that attaches to POS systems to capture purchases and other customer data in real time, so that information can be used without having to change existing back-end POS software. Mobile receipts are just one obvious application.

It never really made much sense that Wal-Mart would go all the way to Australia for a mobile-receipts startup—that's hardly a new idea. But a box that plugs into a POS, so it's easy to experiment on a store-by-store basis with everything from mobile receipts and coupons to plug-and-play CRM, inventory and analytics systems, sounds like it's worth the trip. And that could explain why Wal-Mart worked so hard to make most details about Grabble disappear.Read more...

StorefrontBacktalk Will Not Publish Newsletter For Thanksgiving

November 16th, 2011

Given the dominance of the key U.S. holiday next week (we mean Thanksgiving, not Black Friday), StorefrontBacktalk‘s weekly newsletter won’t publish on November 24. Everything else will still be live (the Web sites, our Kindle version, our Twitter tweets, our mobile sites, etc.), but we need a little time off to burn some turkey and over-season some stuffing.

Speaking of which, we want to tap into the knowledge of our audience with a question that has nothing to do with retail technology. One of us here at StorefrontBacktalk is going to try something new for Thanksgiving: Cooking the turkey on a gas grill. The problem is that, well, it’s me. And my Weber grill seems to have two temperature settings: 750 degrees Fahrenheit and OFF. To be precise, it has tons of settings, but those two numbers seem to be the only heat levels the beast is capable of delivering and maintaining. In a short duration grilling (say 5 to 8 minutes), it’s easy to compensate. But when dinner for a dozen people needs to cook for five hours, I’m open to any tricks to get the temperature to get down to 325 degrees and to stay there. Any suggestions? If you do have any suggestions, please E-mail me at Help Evan To Not Turn His Entree Into Sawdust Held Together By Static Electricity.…

EMV Is Simply Not Worth The Effort. Not Even A Little

November 16th, 2011
Ever since Visa reversed itself and embraced EMV this summer, GuestView Columnist Trinette Huber—who by day is information privacy and security manager for the 2,700-store Sinclair Oil company—has been wondering why. She has concluded it's not for the security. For the last five years, Huber pens, she has been advising, cajoling, arguing and sometimes arm-twisting when it comes to PCI compliance for Sinclair's distributors and c-store operators. "We've been waiting for technology that protects credit-card data. Stop coming back to the trough to get retailers to pay for something that doesn't remove PCI compliance requirements and protect online transactions."

Huber adds: "Chip-and-PIN doesn't eliminate your requirement to be PCI compliant. You still have to do that. If we adopt Europe's old technology, the card data will still pass in the clear. You still need to spend all of that money securing your point-of-sales, auditing your network and reporting on your compliance status. Well, maybe not reporting to Visa—if you meet its requirements—but there's still MasterCard, American Express and Discover."Read more...

Behind The Scenes: The Mobile Prescription Alert Ideas That Winn-Dixie Rejected

November 3rd, 2011
Offering to alert pharmacy customers to prescriptions that are about to expire would be a terrific idea, were it not for privacy restrictions imposed by the U.S. Health Insurance Portability and Accountability Act (HIPAA). That's something Walgreens learned the hard way last month. Winn-Dixie, the $7 billion regional grocery chain, tackled the same issue and debated and ultimately rejected several tech approaches.

With so many chains offering pharmacy services, the debates provide a glimpse into how mobile strategies can slam into privacy rules and, sometimes, technology simply can't get around that. Tim Bell is the director for pharmacy managed care and systems at the 460-store chain operating in Florida, Alabama, Louisiana, Georgia and Mississippi. Bell said the issue is that the best approach for sending a quick alert (such as "Your Prescription for Lipitor is due for renewing. Should we renew?") and accepting ("Renew") is the least secure: text messaging.Read more...

Debenhams Gets Clever About Mobile Invisible Pop-Up Stores

November 2nd, 2011
In unrelated trials this week, Debenhams—the UK's second-largest department store—and eBay are trying to push the mobile limits of creating stores with no physical infrastructure. But unlike Web sites, these virtual stores exist in a specific place to which customers must travel. In Debenhams' case, a human being at that location would see nothing, except other human beings oddly pointing their phones around the sky.

The virtual store is not new. In a much publicized trial this summer, Tesco re-created almost all of the merchandise from one of its stores as a series of high-res photographs with QR codes on the walls of a South Korean subway. But the Debenhams' effort takes it farther than any other retailer. At least consumers arriving at that subway would see pictures of products and could guess what to do. In the Debenhams' trial, consumers were directed to very prominent street corners in London (Trafalgar Square), Manchester (Albert Square), Birmingham (Centenary Square), Cardiff (Cardiff Castle) and Glasgow (George Square). They then loaded a mobile app onto their phones. If the geolocation of the phones matched what the app had been programmed to look for, it would display a ghostly image of a dress.Read more...

Google Will Charge For Maps—Just Enough That You Might Notice

November 2nd, 2011

Google is finally beginning to tighten the screws on users of its Google Maps. Well, sort of. On October 26, the search giant said that, starting Jan. 1, 2012, it will begin charging $4 per 1,000 views through its Maps API—but only for Web sites that exceed 25,000 map-views in a single day. Because Google is only counting the initial map access in that 25,000, it should be pretty easy for retailers to calculate whether this change will cost them anything at all.

For many retailers using Google Maps just on “find a store” pages, that pricing pretty much wipes out any incentive to jump ship to Microsoft’s or Yahoo’s map offerings—changing and testing the code would probably cost more than paying the overage fee on a few busy days. (If you’re a heavier user, because you have Google Maps in logistics or other geotracking applications, you may want to consider your options.) The actual pain may be trivial this time around, but it’s still a reminder that free Internet services probably won’t stay free forever—even from Google, which really wants retailers to be its new best friends.…

Home Depot, Macy’s, Target Evaluating QR Codes That Show Different Things Based On The Consumer’s CRM

October 27th, 2011
A QR code approach that will display different information—and initiate different actions—based on the purchase history of the person scanning it is being evaluated by Home Depot, Target and Macy's, according to the CEO of the QR vendor that is trying to sell that system. This next-generation QR code tactic leverages tracking codes from the mobile phones to establish a customer history and thereby permit highly customized responses.

"At the scan, we get a certain amount of metadata as a result of the scan itself—operating system, carrier, cell tower being used, etc. We get all of that," said Scanbuy CEO Mike Wehrs. "We know what that app has scanned in the past." Indeed, Wehrs argues, the app can secure data from the QR code plus the phone plus online data accessed from a retailer's loyalty card database. "If the app integrates with their CRM files, it can give a completely customized experience."Read more...

Amazon’s Bezos Pushed A Platform. Should You?

October 19th, 2011
A Google engineer's accidentally published rant on October 12 made headlines because he ripped into Google's hottest new property, calling Google+ "a knee-jerk reaction, a study in short-term thinking" and "a pathetic afterthought." But ironically, that's the least interesting thing Googlista Steve Yegge had to say—and his real point has serious implications for retailers.

That crucial point, buried in Yegge's 4,800-word rant: Google (just like most retail chains) has built a company on top of a collection of applications. Amazon (where Yegge worked for six years) has built its enormous E-Commerce success because it is not just a bundle of retail applications. It's a platform that lets customers interact, outside retailers sell and other third parties connect. But Amazon didn't start that way. And how it made the transition should have retail chains thinking hard about whether that's the right approach for them, too.Read more...

Want To Cut Shrink By 20 Percent? Forget LP, Fix Your Systems

October 19th, 2011

Shoplifters and employees who steal are classic in-store loss-prevention problems, but fully one-fifth of shrink is due to administrative errors and supplier fraud—things that LP isn’t designed for but that conventional IT should be a lot better at dealing with. According to the annual “Global Retail Theft Barometer” report out this week from the Centre for Retail Research in the U.K., about 20 percent of shrink worldwide is due to administrative errors (including “pricing mistakes, accounting errors and process failures,” the report says) and fraud or errors by suppliers.

That’s a huge chunk of loss that should be fixable with nothing but better automation. The other 80 percent is predictably split between external and internal theft, though that split varies widely: In the U.S. it’s 36 percent shoplifters and 44 percent employees, while worldwide that’s flipped: 43 percent shoplifting and 35 percent internal theft. But using IT to cut administrative-error shrink has at least one big advantage over Loss Prevention: Those errors aren’t working hard to hide themselves. And if you can use better systems to cut admin-error shrink in half, that’s roughly as good as catching a quarter of your shoplifters.…

Mobile Tracking At The Mall: The CRM Potential Is Stunning

October 19th, 2011
When a major Australian shopping mall next month starts tracking consumers by their mobile phones, they will try and pacify privacy advocates by stressing that no customer names nor phone numbers will be given to retailers. Truth be told, the tracking information that they will collect will be far more valuable.

The vendor behind the trial, a U.K. firm called Path Intelligence, pledged that "no mobile phone usernames or numbers could be accessed" and that "all we do is log the movement of a phone around an area and aggregate this to provide trend data for businesses." But what if that phone-tracking data is linked with security cameras and/or POS systems? What if a mall representative called one of its retail residents and said, "We're now tracking a woman who has spent $980 in the last hour and she has just walked into your store. For a $300 fee, I'll tell you exactly where she's standing right now. Deal?"Read more...

PCI Finally Addresses Vending Machines, Phones And Kiosks That Take Cards. For Retailers, Though, It’s Still Tricky

October 19th, 2011
The PCI Council has updated its PIN Transaction Security (PTS) rules to include newer types of card-accepting systems, including mobile, kiosks and vending machines, but left vague are many of the most practical retail issues. The new PTS version 3.1 is aimed at device manufacturers. Given that retail shops need to be populated with compliant devices, though, how much time will device makers have to make upgrades? How long will existing systems be given a pass?

The guidelines, which are generally filled with commonsense security restrictions, offer nothing about timing, schedules or when retailers can—or should—include the new requirements in RFPs. The closest the guidelines get to referencing existing hardware is a brief comment that such components can be reused in newly approved systems. It does, however, detail fees.Read more...

One Of Out Three Retailers Screw Up QR Codes. They Are A Lot Harder To Use Than They Look

October 19th, 2011
With all of the recent challenges retailers—including Macy's and HSN—have had with QR codes, it's not a surprise that many chains have underestimated how complex and difficult those little dot-filled squares can be. It's not really that QR codes are so complicated as much as it is that they are different. The problem is that they are misleadingly similar enough to retail-friendly barcodes that they lull many into thinking QR codes can be handled the same way. As chains have tried pushing the images beyond posters and into devices such as televisions and magazines, they have slammed into the logistical problems new technology brings.

For example: Where should the QR codes be placed? Should it be near the bottom of the screen? Well, what if the consumer time-shifts with a DVR or Tivo? A part of the code could be overridden by screen buttons. Place it in a glossy magazine? Good choice, but you have to steer clear of the page side toward any glued (perfect-bound) gutter or else consumers won't be able to get a full scan of the image.Read more...

HSN Advances QR Codes To TV—And Then Learns Why They Are So Frustrating

October 12th, 2011
HSN last Friday (Oct. 7) took the next logical step with mobile-friendly QR codes by placing them in a corner on the television screen, giving high-definition TV viewers the chance to learn more about the products being shown. In addition, HSN cleverly tried to avoid the QR snafus that other retailers—such as Macy's—have fallen into by using its on-air hosts to teach visitors how to use the codes.

But the limited four-day experiment also demonstrated the many QR drawbacks that retailers have to struggle with. A reporter for Forbes, for example, tried making a purchase during the event through a QR code and found that her couch was 10 feet away from the screen but that she had to get up to scan the code from five feet away. People who successfully navigated the QR code got to an ordinary Web site page. No discount, no special reward. And how long would the code be displayed? Then there's the learning curve.Read more...

Federal Reserve Listens To Security Vendor CEO Rip Into PCI

October 5th, 2011
Before a typically staid Federal Reserve Bank of Chicago symposium last week, the CEO of a security device vendor violated Jim Croce's rule of not tugging on Superman's cape. In a speech, the CEO ripped into the PCI Council, dubbing it a "dangerous false God" and saying that "PCI has rapidly become a self-perpetuating, self-aggrandizing, profit-motivated authority. It has and will continue to stifle innovation by its often nonsensical rule making." And she then stopped pulling her punches.

To put this into context, PCI has unquestionably improved retail security in the U.S. and few have suggested a concrete alternative approach that wouldn't bring with it even worse problems. Like the criminal courts, a system can be very far from perfection and still be the best of all alternatives. It's also true that when security choices are made, some vendors are not going to be happy with the new rules. Even with all of that said, the directness and intensity of the speech by Magtek CEO Mimi Hart is worthy of note.Read more...

HTTPS Has A Security Hole, But Browser Makers May Save E-tail Sites From Having To Fix It Themselves

September 21st, 2011
Secure HTTP may be in trouble. The protocol that E-Commerce sites use to safely receive customers' payment-card information can be hijacked in a matter of minutes, according to two security researchers who will demonstrate their attack at a security conference on Friday (Sept. 23). In case anyone doubts how relevant their demonstration is, their target will be a PayPal account.

The good news: The security hole can be closed by upgrading E-Commerce sites to a version of the security protocol that has been available since 2006. The bad news: Most E-Commerce Web sites and most Web browsers are still using the version with the security hole. The security-guru consensus: The sky isn't falling yet, and browser makers may be able to implement a tweak that blocks the threat without a new security protocol.Read more...

Another Target Missoni Reminder: When It Comes To Out-Of-Stocks, You Can’t Win

September 21st, 2011
After everything else that happened to Target in the wake of its catastrophically successful Missoni sale on September 13, here's one more thing to add insult to injury: Customers are now complaining about their online orders being delayed or canceled—and then seeing the merchandise they couldn't get showing up again on But it's hard to blame this problem on Target's new E-Commerce site—the same thing happened to Target and other E-tailers last Black Friday, when was still being run by Amazon.

The "now it's out-of-stock, now it's back in stock" problem isn't new to either in-store or E-Commerce, and it's one that retailers usually try to handle as quietly as possible with ever-smarter inventory systems. But that will probably never work, because real-time inventory stops working very well when an item is about to go out of stock. Unfortunately, giving online customers more information about a looming out-of-stock situation could actually encourage them to buy less—and may not keep them any happier.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...

Target’s Too-Clever Site Fails (Or Does It?): Inside Missoni Tuesday

September 15th, 2011
Target's E-Commerce inventiveness is coming back to bite it. When the chain's three-week-old Web site crashed early Tuesday morning (Sept. 13) in the face of a ravening hoard of shoppers looking for Missoni products, the site truly was down. By noon Eastern time, the site was back up—but many would-be customers continued to think the site was offline throughout the rest of the day. Those who did reach the site to shop reported issues at checkout time that might (or might not) have been true IT glitches. The problem: Even when works, it doesn't work the way customers expect.

That compounded the problems of "Missoni Tuesday," which a Target spokesman said saw "greater item demand than we do on a typical Black Friday." But the crush of customers, and the fact that so many items sold out, masked a serious issue: Even though made buckets of money that day, the result left a bad taste in the mouths of many Target customers—and the site's nonconformist challenges are still there.Read more...

Lab Mirror Retail Idea: A Little Impractical And A Lot Creepy

September 15th, 2011
Early this month, The New York Times R&D Lab started talking up some work it is doing to create an interactive mirror. The idea is that consumers would replace their regular mirrors with this souped-up, voice-recognizing networked version. It responds to the command "Mirror?" You can place a bottle of antacid on the ledge and it will identify it, offer instructions and perhaps a coupon. It will also create a digital tie and "place" it on your neck to try and match your shirt.

This is a very clever project, but I have to wonder whether it has any practical value. There is something ultra-sensitive about a bathroom mirror. Yeah, there's that naked thing and the video-streaming thing that may not play well together. When I think of all of the potentially creepy implementations of RFID, mobile geolocations and facial recognition, I think an interactive video-capable mirror using Microsoft Kinect has got to rank right up there.Read more...

PCI’s New P2PE Rules Won’t Kick In Until Spring 2012 Or Later

September 15th, 2011
The PCI Council on Thursday (Sept. 15) will detail its initial guidelines for point-to-point encryption (P2PE), but retailers need not—and should not—take any near-term action. Nor should they sign any imminent contracts involving P2PE. Why? The Council will stress that the document—a 96-page detailed description of various P2P approaches and common-sense security processes for each—is only "the first set of validation requirements" and that key parts of the program won't even be in place for six to eight months and might be delayed even further.

Why such delays? First, the Council wants retailers to contract only for P2PE applications that appear on a Council list of applications validated to be PCI compliant. The problem? That list doesn't yet exist, and the list's creation is "targeted for Spring 2012," according to a draft copy of the Council's document. A second reason for the delay is PCI training of assessors. The Council isn't promising to identify the testing procedures until "the end of 2011" and "training opportunities" (which we assume means classes) won't be detailed until "Spring 2012." The report will say that the guidelines—even if perfectly followed—won't offer a path for a retailer to be considered out-of-scope. The best that a chain can hope for, according to the document, will be "reduced scope." But nowhere does the document say what exactly that would and wouldn't include.Read more...


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