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Supply Chain

True Local Inventory-Aware Search Will Be Powerful, But We’re Nowhere Close Today

May 6th, 2010
The retail industry is well known for its contrarian tendencies. After all, "be where everyone else is not" was pretty much the original strategy of Wal-Mart when it was setting up shop in rural communities that chains of the day wouldn't go near. This concept is at the heart of the gold mine of information that today lies just out of reach, contained in the local inventories of millions of shops across the country.

The value—and extreme value it is—comes from a search engine finding products that simply cannot be found otherwise. Read more...


Search Local’s Accuracy Problems Severe, With Many Causes

April 29th, 2010
The potential for search engines to accurately find very specific products in local stores is powerful. But companies that have tackled this space thus far—including Google, Thefind and Milo—have discovered it's a radically more difficult search than they're used to. In testing those and other local inventory search engines, we have found almost no accurate search results, suggesting that the technology still has a long way to go.

All of these companies have quickly admitted their current—to be charitable—accuracy deficits. Milo executives, for example, agreed that their engine needs a lot of work. But they also stressed their efforts in improving inventory accuracy. Although that is certainly important, it should be a Phase Two goal. If someone is asking for a "green vest to wear" and the results are showing videos, books, a glow-in-the-dark safety light and a top response of "Nerf Dart Tag Fury Fire Blasters" (actual search target and results from Milo's engine), the fact that it may be accurate in knowing the number of Nerf Dart Tags a toy store has isn't very helpful.Read more...


Will Gov’t Antitrust Moves On Programmer Deals Cost Retail IT Chiefs Big Bucks?

April 15th, 2010
Word came down this week that the U.S. Justice Department's antitrust team is preparing to move against a group of technology vendors—including Google, Intel, IBM and Apple—because they've agreed to not recruit each other's employees. If any such move happens, it could send shockwaves through retail HR—and then to IT—as it could send programmer salaries through the roof.Read more...


The Three Stooges Vendor Accountability Program

April 14th, 2010
Franchisee Columnist Todd Michaud is sick and tired of his vendors using the "other guys" excuse as the reason they miss their deliverables. He currently has a project involving three different vendors that is going to miss its second deadline extension.

Each of the vendors is basically crossing its arms and pointing at the other two. The next person to tell him, "Hey, we did everything right; you need to talk to those other guys." is not going to like the conversation that follows.Read more...


Why IT And Biz Heads Always Think The Other Wants Them To Fail

April 7th, 2010
In setting after setting, IT execs and biz heads quickly run into conflict, with each side certain that the other side is secretly hoping they'll fail. The root cause of this irrational conflict? According to Franchisee Columnist Todd Michaud, it's the way retailers today set IT priorities.

Michaud was on a conference call with a group of franchisees recently, providing a status update on several projects. When asked about the status of one particular project, he informed the group that it had not yet been started, primarily due to a lack of IT resources. This project is important, one that is expected to deliver significant savings to the franchisees' community. He wasn't surprised when they were unhappy with his answer.Read more...

Can Amazon’s Web Video Patent Slash Product Returns?

March 31st, 2010
Can Amazon use Web video to reduce unwarranted product returns? Although the market will ultimately answer that question, the U.S. Patent Office thinks the idea is clever enough to merit a patent, which it issued Tuesday (March 30).

The idea behind the patent—see all of the Patent's glorious tech and logistical specs here—is for Amazon to video each package as it's being filled and link the clip to the order number. The video would show what goes in the box and then do a close-up of the address label as the box is sealed.Read more...

Retail CIOs: It’s Time To Get Off Your Dead Horse

March 31st, 2010
Are you dreaming of the day when your business partners provide detailed requirements before the project starts? Keep dreaming, suggests Franchisee Columnist Todd Michaud.

It's time for IT execs to stop trying to explain how the world works and start accepting how others think it works. I'm not saying that "If you can't beat 'em, join 'em." I'm saying it's time to make your own way. The way of the Maverick CIO. Read more...

Item-Level RFID At One Cent? By 2015, Printed Tags Could Do It

March 20th, 2010
Last week (March 18), a joint U.S.-Korean university research project announced a new approach to item-level RFID, one that is already delivering 3-cent tags and could easily hit 1-cent in volume production. The engineering differences are extensive, with the approach (a collaboration between Sunchon National University in Korea and Rice University in Houston) abandoning silicon-based tags for printed tags. Printed passive RFID, which could easily be woven into paper and plastic product packaging, has been a common RFID experiment for years, but the universities' 13.56-MHz 1-bit approach also abandons ink-jet printers for a gravure process. It uses single-walled carbon nanotubes for printing thin-film transistors. The schools have crafted a very specific methodology, even down to non-traditional cleaning liquids to prep the dielectric layer.

But even setting aside the price, the technology still has several technical hurdles to clear. The current footprint is about three times larger than today's barcode and it's been testing with a read distance of anywhere from 2 centimeters to 10 centimeters whereas project leaders say that it needs to read at about a full meter—at the very least, a half-meter—to be effective.Read more...

Et Tu, Brute? Visa To Compete With Retailers

March 18th, 2010

First, Procter & Gamble and other major manufacturers started direct selling, undermining their longtime retail partners. Now comes word that Visa is setting up its own virtual shop to move products. What, Brutus, the sharp, 8-inch interchange dagger wasn’t enough? You had to go for the jugular?

Visa’s E-Commerce move, called Rightcliq, is actually a rather clever CRM move to collect more data on consumers directly. “Rightcliq will enable consumers to track their purchases in one convenient location. This removes the hassle of remembering tracking numbers, digging through confirmation E-mails or having to double-check delivery dates,” a Visa statement said. “The information will all be stored in Rightcliq, giving consumers more control over their online shopping experience.” And here’s the unexpected kicker: The service will accept “other payment options, including competing brands.” Visa is setting up an E-Commerce arena in which people can make purchases on their Amex card? That says everything that needs to be said about how much Visa values those extra CRM tidbits.…

CDC Using Retail CRM Data To Track Disease

March 18th, 2010

The Centers For Disease Control have to tackle some wonderfully difficult detective assignments, including a recent case where they had to find out why people were getting sick from salami. (It turned out to be some pepper used as a seasoning.) The government operation is now formally tapping into loyalty card CRM databases from retail chains for help.

Some chains—such as Costco—have been using their CRM databases to alert customers to recalls for years. But the CDC hadn’t done so, at least not in an organized fashion. Now they are, according to this Associated Press story. “Through interviews and questionnaires, investigators suspected some kind of Italian meat was the culprit, but people couldn’t remember what brand they bought, CDC epidemiologist Casey Barton Behravesh said,” according to the AP story. “So the CDC asked supermarkets for certain buying information on seven victims in Washington state, focusing on suspect products rather than everything the customers had bought, Behravesh said. ‘We didn’t care about the brand of toilet paper people were buying,’ she said.”…

In A First, Google Does Real-time Joint Retail Trials

March 18th, 2010
In the 15 or so years that we've had E-Commerce, the industry has seen quite a few improvements, but nothing that radically changed the way people shopped or retailers sold. Local inventory search, which today is not even in its infancy (not really even embryonic; it's more like a zygote), is likely to be the first truly dramatic shift.

Last Thursday (March 11), Google made a major—albeit extremely preliminary—move into local inventory search through a deal with a handful of major chains: Best Buy, Sears, Williams Sonoma, Pottery Barn and the Vitamin Shoppe. But instead of working out this process internally and then bringing in retailers—or the reverse, with retailers figuring it out first—Google's objective is to run the earliest stage tests with various chains "so we're both learning how to do this in parallel," said Paul Lee, Google Product Search's business product manager.Read more...

Friend Or Foe: When P&G (And Other Partners) Push Direct Selling

March 10th, 2010
The growing movement of major league consumer goods manufacturers selling directly from their Web sites is hardly unexpected. But the lack of a defensive reaction from retail IT is. For more than a decade, a mountain of extranet projects has allowed data to flow freely from manufacturer to retailer, with real-time data about pricing, inventory and millions of marketing insights. Is it time to radically reevaluate what is being shared?

The direct-sell CG announcements are all couched in politically sensitive phrasing, with promises that it's just a short-term test to better understand mutual customers and that some of the data will be shared with retailers. Some even argue that these direct-to-consumer moves will help retailers make more money by allowing the manufacturer to better target its products. (That argument is not necessarily impressive, but making it with a straight face is.)Read more...

Best Buy’s Trade-In Plans: “Why Let eBay Have All The Fun?”

March 4th, 2010
With the economy putting intense pressure on supplier costs—while also making lower cost merchandise highly attractive—Best Buy is quietly making a push into the secondary market, a strategy that is opening huge possibilities in its CRM analytics. Suddenly, a sold product starts the clock on when it can be profitably bought back.

"The product now doesn't disappear from your mind after it’s sold. It actually just begins a different lifecycle," said Larissa Hall, the Best Buy general manager in charge of the consumer end of Best Buy's new venture. "Why let eBay have all the fun? You don’t throw away a car when you're done with it. Even a broken DVD player is worth something."Read more...

Pizza Hut CIO Proving The Unprovable: Mobile ROI

February 11th, 2010
Pizza Hut CIO Baron Concors oversaw what could easily be the most successful mobile application and certainly the most successful retail mobile app, a colorful applet that is directly responsible for "millions of dollars in additional sales" and 1.5 million downloads from Apple. And yet, when he was fighting to get it funded and approved, his return-on-investment (ROI) argument was weak and speculative.

Concors said he was lucky; his senior management team is open to creativity and was willing to roll the pizza dough dice on what sounded like an interesting idea for the world's largest pizza chain, with its more than 7,500 U.S. restaurants and more than 5,600 shops in 97 countries and territories globally. But few CIOs are in that position, and that's a piece of reality that could cripple the nascent retail mobile app space. "A lot of companies are struggling with whether to enter this space because of the ROI issue," Concors said. A big part of the problem is that far too many retailers are deploying mobile apps for the wrong reason or doing it the wrong way.Read more...

Using Robots To Get Saks Web Orders Out A Day Faster

February 11th, 2010
When Saks CIO Michael Rodgers was tasked with trying to accelerate the $3 billion apparel chain's Web order deliveries, he knew he needed help, and he opted for a non-traditional form. Rodgers made arrangements to command an army of 700 robots—each one capable of transporting a half-ton of merchandise at a time.

No, this isn't some IT apparel version of Revenge of the Sith (although that would be cool, in a sort of geeky wool-blend kind of way). It's merely the unexpected path taken by the 53-store chain’s IT leader, who wanted to see how much of a Butterfly Effect he could cause in E-Commerce customer satisfaction by making small improvements in fulfillment operations. The computers in question are not of the Cyborg type, and they look less like C3PO and more like a cross between R2D2 and what Rodgers calls a "giant Roomba"—you know, those robotic self-running vacuum cleaners. They're orange and made by a robotics startup called Kiva Systems, which has placed these squat robots in the warehouses of retailers including Gap, Crate & Barrel, Walgreens and Staples.Read more...

Amazon Explores Buying Back Products; Wal-Mart, Best Buy Give Up On Used Video Games

February 4th, 2010

Some major retailers have been debating whether the buying and selling of used merchandise (please shoot me if I ever say “pre-owned”) is a business model worth pursuing. Wal-Mart and Best Buy, after pushing the idea for about six months, have surrendered plans to buy and sell used video games. But Amazon, always the more adventurous of E-tailers, thinks the idea has huge potential. A Financial Times of London story cited an Amazon ad for programmers: “As people upgrade to the latest and greatest there is a plethora of valuable, perfectly good products that need a new home. We help facilitate the pairing of new owner with device, while also creating an open marketplace.”

What makes the Amazon concept so intriguing from an IT perspective are the CRM implications. Instead of tracking purchases to merely profile the customer, the new requirement is to also profile the products purchased. What is each product’s life expectancy? What is the optimal point to make an offer to a customer who might be starting to get bored with that product? How much of an upgrade can that consumer afford? Should the company start pitching new prospects based on a software projection of what already-sold merchandise will likely come back into play? And you thought Amazon needed a huge data warehouse before?…

Target Denies IT Layoffs In India While Borders Promises Them

February 1st, 2010
This has been a difficult—and truly odd—last few weeks in the retail IT world. Target CIO Beth Jacob made the highly unusual move of issuing a statement denying that the retailer planned to sell its Target India IT operation. (What does it mean when the executive vice president of a $63 billion retail chain publicly reiterates its commitment to your team? Update your resume.)

“Our captive center in Bangalore continues to be an important part of our long-term strategy and is highly integrated with our work and team in Minneapolis,” said a statement attributed to Jacob, who is a Target executive vice president in addition to being the chain's CIO. Added Tim Baer (another Target executive vice president and general counsel): “We do not know the source of this ridiculous speculation, but we can absolutely reaffirm that it is unequivocally not true.” If the speculation is so ridiculous, why issue a statement quoting two executive vice presidents? The only sentence in the execs’ statement that describes these rumors says: "The company emphatically refutes the irresponsible rumor that it is engaged in any discussions, or has any plans, to sell its Target India operations." This is where things get scary.Read more...

Cambridge University Calls Verified By Visa Secure Protocol Terrible Security

February 1st, 2010
At a presentation at the Financial Cryptography and Data Security conference, a Cambridge University computer lab team dissected the recent 3-D Secure (3DS) protocol—branded as Verified By Visa and MasterCard SecureCode. The team found that not only was the security lacking, but it sharply undermined other security mechanisms.

"3-D Secure has so far escaped academic scrutiny, yet it might be a textbook example of how not to design an authentication protocol," wrote Cambridge University's Steven J. Murdoch and Ross Anderson. "It ignores good design principles and has significant vulnerabilities, some of which are already being exploited. It's bad enough that EMV Verified by Visa and MasterCard SecureCode have trained cardholders to enter ATM PINs at terminals in shops. Training them to enter PINs at random E-Commerce sites is just grossly negligent." The pair, however, found that 3DS did get one part right: the money and where it comes from. Although "other single sign-on schemes such as OpenID, InfoCard and Liberty came up with decent technology, they got the economics wrong, and their schemes have not been adopted. 3-D Secure has lousy technology but got the economics right, at least for banks and merchants. It now boasts hundreds of millions of accounts."Read more...

And The Award For The Most Overly Complicated Auction Site Goes To Biddees

February 1st, 2010

As eBay has discovered, there’s a lot of money to be made in them thar online auctions. So it’s no surprise that lots of startups are trying to creatively find their own slice of the auction pie. But a site called Biddees, from the people who brought you, is taking an unusual approach that just may prove to be the most needlessly complicated auction site in quite some time.

This wonderful story from Internet Retailer does a nice job of detailing this cocoon of complexity: “In order to see the current price of a prepaid card, which is guaranteed to be at least $1.50 less than the card’s face value, shoppers first have to use a token called a Little Biddee Thing, which costs 99 cents. Each time a customer views the current price of a card, the price automatically drops 50 cents. If the shopper is the only person viewing the card, he has 30 seconds to buy the card at the current price,” the story said. “If another person is already viewing the card, the shopper enters a queue before he can see the card’s price. If the card is purchased while the shopper is still in the queue, the shopper will be transferred to the next auction for the same product. An auction ends when someone purchases a card or when its price reaches zero. The last shopper gets the card for free.” Of course. What could be more natural?…

The CIO’s Job Description: Top-Notch Sales Executive

January 28th, 2010
At an NRF panel earlier this month, McDonald’s CIO David Grooms was asked by the moderator what he would tell people his primary job is. Grooms said, "I'm in sales," and then added that he wanted his staff to say, "We make hamburgers." Grooms is right that a CIO needs to be a master of sales, but that's mostly because the CIO needs to sell both upstream and down.

The CIO needs to sells ideas upstream to senior management and sideways to line-of-business peers, convincing them that the technology is the right move and that it needs to be approved and funded. If that works, it's barely 30 percent of the battle. If the stores aren't sold on the idea, Franchisee Columnist Todd Michaud opines, the data won't be used and the project is doomed to fail. And you're to blame.Read more...

Burger King Sues Franchisees Who Didn’t Upgrade POS

January 28th, 2010
Fearing it would lose control over all of its franchisees, Burger King has now sued hundreds of its franchisee stores because they missed a chain deadline for purchasing new POS systems. The litigation highlights—albeit acrimoniously—a difficult franchise IT issue: Chains mandating equipment investments that most franchisees believe do not benefit them enough to merit the cost.

One key issue that both sides are arguing is timing. Some of the franchisees have argued that Burger King is being punitive by moving so quickly. They are pointing out that the chain's deadline was Dec. 31, 2009, and that the lawsuits started being filed within a few days of the deadline passing. Burger King argues that it has been extremely patient, having informed its franchisees of the POS upgrade rule back in April 2008--giving the stores a rather generous 20 months to arrange for and make new POS purchases. Indeed, Burger King is saying that it was even willing to give franchisees more time if they needed help raising the money, as long as they were truly trying to follow corporate's edict.Read more...

In Citi’s View, Costco Is The Least Sophisticated Retail IT Shop, CVS The Most

January 21st, 2010
One of the most respected retail technology trackers on Wall Street, Citi, has put out a list of major retail IT leaders, ranking them from the most sophisticated and advanced to the least sophisticated. The most worldly ones include, in order, CVS, Walgreens, JC Penney, Target and Kohl's, while the more hick-like chains are Costco, BJ's, Family Dollar, SuperValu and Safeway.

"We consider CVS and (Walgreens) to be the most advanced, as they have already implemented chain-wide computer synchronization, advanced inventory management and pharmacy workflow optimization systems," said Deborah Weinswig, from the Citi investment research and analysis group. "The warehouse clubs are considered to be the least sophisticated of the group. However, BJ and (Costco) have fewer inventory management needs as a result of their unique business model."Read more...

Forget Your Well-Thought-Out Mobile Strategy: You Now Need Three

January 21st, 2010
The most popular parlor game in retail tech circles these days is plotting out mobile strategies. For some, that strategy may be little more than "not now." But the simple act of trying to craft a single, coherent mobile strategy may itself be flawed. Most retailers now need to prep three distinct strategies for dealing with the three separate ways mobile devices will be used.

The mobile retail world has now neatly morphed into three categories: consumer-used (with true M-Commerce, mobile research from home and on the road, etc.); retailer-used (for price checks, inventory inquiries, in-aisle supply chain inquiries, etc.); and consumer-in-store (2D barcodes, price comparisons, SMS communications with the chain, watching demos, mobile research from within the store, direct payment, etc.). To make matters worse, some applications sit in multiple categories, such as a retailer-used device that is temporarily given to a consumer for checking online inventory or seeing a demo.Read more...

Home Depot’s $60 Million PDA Investment

January 18th, 2010

Home Depot will spend about $60 million on more than 10,000 handheld units that are designed to help associates perform mobile checkouts, process payment cards, stock shelves and make phonecalls, according to BusinessWeek. “This is the first big customer-service tool we’ve given our associates in a very long time,” said Home Depot CIO Matt Carey.

The chain has been trialing these devices since 2008, when we reported that they were initially tested along with an RFID-based loyalty card that flagged associates when certain high-priority customers entered the store and set off a door-based reader.…

Want To Talk Back To StorefrontBacktalk At NRF?

January 7th, 2010
For those of you are venturing to New York City's Javits Center for the NRF show next week, I want to first assure you that your fears that it will be freezing in the Big Apple in mid-January are unwarranted. The latest forecasts have high temperatures staying below 32 degrees so freezing it will not get. On Sunday, it will be a balmy 26 degrees.

But as long as you're coming, we'd love to ask you to drop by some of the StorefrontBacktalk events and do what our readers do best: yell at us. The first shouting opportunity will be at the RetailROI event at the Marriott East Side (Lexington and 49th) on Saturday at 2:45 PM. This charity event ( is designed to raise money for global orphan care and adoption support. But to do that, we get geeky for awhile. Our panel is on retail security and it starts at 2:45 PM and features the CIO of the world's largest restaurant group: Delaney Bellinger from Yum Brands (Pizza Hut, KFC, Taco Bell and Long John Silver's, among others). Also on the panel are two of our esteemed columnists (Franchisee Columnist Todd Michaud and PCI Columnist Walt Conway) plus Mark Rasch, the former head of the U.S. Justice Department's high-tech crimes division.Read more...


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