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Will Warranty Enforcement Be Amazon Marketplace's Achilles' Heel?

When it comes to competing against Amazon, eBay or even Japan's Rakuten, one of the more challenging aspects is their third-party marketplaces, which give each a seemingly endless inventory at minimal risk. But the odds may be getting more even, as shoppers are starting to notice that some manufacturers are strictly enforcing their authorized reseller rules.

The immediate impact on shoppers is they may find that the expensive flat-screen TV, surround-sound speakers or refrigerator that looked like such a bargain on Amazon voids the warranty. The arguably-unrealistic expectation from consumer goods manufacturers—which sharply strengthens the hands of traditional e-tailers trying to fight against these third-party marketplaces—is that shoppers would not only notice the actual name of the merchant shipping the item, but would take the time to run that name on the manufacturer's site to see if they are truly an authorized reseller. Or they could just make the purchase from Target.com or Bestbuy.com and know for certain.

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Japan’s Rakuten Prepares To Enter The U.S.—And Amazon Prepares To Greet Them

June 5th, 2013
The CEO of Rakuten, the $4.7 billion global retailer (although it's preparing to be in 27 countries, the bulk of its current revenue is in its native Japan), used his keynote speech at the Internet Retailer show in Chicago on Wednesday (June 5)to make a pitch to American E-commerce companies to join Rakuten and sell through his site. The not-so-subtle subtext: Amazon (NASDAQ:AMZN), we're coming for you.

Rakuten wouldn't be the first to make such a move, but its results in other countries coupled with its non-traditional way of working with retailers gives it a fighting chance of making a difference. Although we'll touch on the advantages and challenges Rakuten will have, one thing is clear: Rakuten and Amazon's approaches are 180 degrees different. For starters—and this will get the attention of the Jakob Nielsen devotees among the Web designer crowd—Rakuten wants long initial Web pages with lots of video, opting for the "scrolling is better than clicking" school of thought.Read more...


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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...


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Target Quietly Running Four Fulfillment Trials, But The Reason Why Is Far More Interesting

June 5th, 2013
Target CFO John Mulligan has confirmed that Target is in the middle of not one but four different fulfillment pilots, including acting as a guinea pig for the same-day-delivery trials of both Google and EBay. The other Target trials involve pay-online-pickup-in-store, pay-in-store-pickup-at-another-store and pay-online-ship-from-store.

The interesting background to these trials is that Target—as its name implies—has always been precisely focused. These trials, as the CFO pointed out, are the chain admitting that many fundamental shopper assumptions may no longer be valid. "We spent 50 years honing, moving products one direction to our supply chain and ultimately to the back door of the store. Then through the front door and trying to do that as quickly as possible. Now we're moving product different directions depending on what our guest wants and for us, we need to learn how to operationalize that," Mulligan said.Read more...


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Grocery Loyalty Actually Lost Members From 2010 To 2012

June 4th, 2013
What happens to CRM when loyalty programs hit a wall? Grocery chains may be about to find out. After years of steady growth, memberships in U.S. grocery chain loyalty programs fell by about 1 percent between 2010 and 2012, according to the 2013 Colloquy Loyalty Census. Yes, total membership really did shrink, from 173.7 million in 2010 to 172.4 million in 2012.

In practical terms, that's not exactly falling off a cliff. But loyalty programs have been growing at a rate that means memberships would double every decade. If your CRM plans were based on needing the processing power to handle all those extra members' data, it's time to adjust those plans.Read more...


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Flaws in the Carbon Layer: Is a Penetration Test Without a Social Engineering Component Really a Penetration Test?

June 3rd, 2013
Every QSA gets asked the same question about penetration testing: What is acceptable (translation: what is the least I can do) for PCI compliance? In the current environment of criminal (and state-sponsored) hacking, that is the wrong question. Instead retailers should ask: How do I get the greatest value from the penetration testing I am already required to do? I would like to make the point that at least part of the answer is for every retailer and payment card merchant to include some form of social engineering as a part of their pen testing.

PCI DSS Requirement 11.3 has a lot of detail on when retailers need to conduct pen tests. It recommends, for example, "at least annually and after any significant changes to the environment." In practice, this means retailers need to perform and/or re-perform pen testing after such events as upgrading their operating system, adding a sub-network to the Cardholder Data Environment (CDE), or even adding a Web server to the CDE. However, the requirement does not specify details on what the pen test should cover other than it should include "network-layer" and "application-layer" testing, pens PCI columnist Walt Conway.Read more...


Visa To Genesco: PCI Compliance? What PCI Compliance?

May 31st, 2013
The predictable other shoe has dropped (please forgive that heel of a play on words) in the legal battle between apparel chain Genesco (NYSE: GCO) and Visa over PCI penalties, with Visa officially asking a federal judge to dismiss the retailer's lawsuit. The $2.6 billion Genesco chain, which owns Journeys, Lids and Johnston & Murphy, had been breached in 2010 and later had to reimburse its acquiring bank for about $13 million in fines charged by Visa. It sued Visa—with its acquirer's permission and blessing—saying that it hadn't violated any PCI rules.

Visa has now reacted, arguing to a federal judge that Genesco's complaint should be dismissed for three reasons. First, Visa said that Genesco cited the wrong California state law, one that cannot be used in cases where there is a contract dispute. Second, Genesco didn't claim sufficient facts to make its case. The third Visa argument was that one claim—that Visa had made fraudulent statements—wasn't valid as the statements didn't influence "consumers or the public," nor did even Genesco rely on them. (It's an interesting defense: Our lies didn't harm anyone because nobody ever believes us anyway. For the record, of course, Visa hasn't conceded that it lied, arguing that the law in question only envisioned lies that deceived the public.)Read more...


The Case Of The Walmart Drunk: Big Data, Big Duties, Big Headaches

May 30th, 2013
Walmart was very recently sued by a woman involved in a car accident. The driver of the car that hit her wasn’t a Walmart employee, it wasn’t a Walmart vehicle, and it didn’t happen in a Walmart parking lot. Rather, the victim alleged that the driver had recently been in a Walmart and had been kicked out for being drunk. The victim alleged that Walmart, knowing that its customer was both drunk and driving, had a duty to prevent the customer from driving, or to report that person to the police. The court considering the case refused Walmart’s efforts to have the case dismissed on summary judgment, finding that there was at least enough evidence of "negligence" to allow the case to go forward.

Even though nobody alleges that Walmart got the patron drunk, the idea is that Walmart was in a position to know about the potential harm and could have stopped it. Here’s where technology makes things messy. Once the drunk is tossed out of the Walmart, there’s a good argument that Walmart’s duty to third parties ends. Unfortunately, Walmart has installed and routinely monitors parking lot cameras. That's where data creates legal duty.Read more...


Walmart: Settlement ‘Worse Than Losing’

May 29th, 2013
In a last-minute interchange settlement objection filed on Tuesday (May 28), Walmart and more than 60 other retailers described the proposed settlement as worse than actually losing the case. The settlement will block future lawsuits over Visa and MasterCard rules, practices or actions—and that includes PCI and breach penalties.

That goes far beyond the original lawsuit, which only covered default interchange rules, honor-all-cards rules and anti-steering rules. If the case went to trial and lost every claim, that would still just lock in the card brands' control of interchange and card-acceptance rules. But the proposed settlement would go far beyond that—extending to block any challenge to PCI and breach penalties.Read more...


Neiman Marcus Pushes Back—Hard—Against A Patent Troll

May 29th, 2013
Retailers are finally fighting back against so-called patent trolls, firms that buy patents and then threaten retailers to get whatever licensing fees they can. These firms generally don't want to go to court. They'd rather send letters and make a nice living from the checks of chains that can't be bothered to fight. Sometimes, these retail efforts work—such as with Newegg and Overstock—and sometimes they don't—such as the recent case with Best Buy, Home Depot and Gap.

But a recent case with Neiman Marcus takes these retail defenses to the next level. When Neiman Marcus received its letter, the retailer didn't respond. It sued immediately, even before knowing the name of whom it was suing. And as if to underscore how big a mess this all is, the day Neiman Marcus sued that patent troll, an unrelated patent troll sued Neiman Marcus.Read more...


Walmart Asked CA Shoppers For Zip Codes. Now It’s Ordered To Send Them Apology Giftcards

May 29th, 2013

What’s the big deal with a retailer asking for Zip Codes in states where such things are frowned upon? Walmart (NYSE:WMT) this week finalized a federal court settlement that will have it sending $25 giftcards to 519 shoppers who were asked for their Zip Codes. It will also be sending $3,500 checks to other shoppers who acted

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as class representatives in a class-action lawsuit, not to mention about $369,000 to the Consumer Federation of California and about $369,000 to the Privacy Rights Clearinghouse. And don’t forget the $420,000 check to pay the legal fees and court costs of the attorneys for the shoppers.

And, yes, we do have to point out that out of all those fees, the lawyers get the biggest check and the shoppers get the smallest.…


Saks Makes Some Curious Tablet Choices When Upgrading Its Flagship Store

May 29th, 2013
Trying to boost Saks Fifth Avenue's flagship store—which Citigroup reported has underperformed the chain's store-revenue average for three of the last four quarters—the retailer has turned to iPads and some old-fashioned customer service improvements. But the chain has made some curious tablet deployment choices. The first move, which should be applauded, is equipping associates with the devices to try and show the hypothetical "single view of the shopper" through multiple channels. So if a shopper routinely logs in—and logs in with the same ID—in all channels, that customer's data could be accurate, assuming an associate is able to nonchalantly ask for the shopper's full ID. It's an ideal step in the right direction.

But Saks, according to Citi, is only deploying one iPad for every three associates. That suggests some 66 percent of associates either won't have a tablet to help their customers or they will have to awkwardly borrow one from another associate. But one associate can't borrow a tablet from another associate who is working with a customer, so an idle associate will have to be located. On a busy Saturday afternoon, that could be almost impossible. Does Saks really want some of its associates to have tablet-powered capabilities while others do not? Will some shoppers be at a disadvantage? Wasn't the whole point of tablets that their pricepoint is such that it's economical for every floor associate to have one while they are actively working the floor?Read more...


Target.Com Glitches, Asks Shoppers To Report “Anything You Might Have Done That May Have Caused The Error”

May 29th, 2013

On Wednesday (May

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29) morning, we ran into a strange error on Target.com (NYSE:TGT) that seemed to be more accusing of the retailer’s shoppers than it probably intended. The problem was a big one, namely that products marked to be purchased were not showing up in the shopping cart. When we clicked New Guest, it delivered this delightfully phrased text-only Internal Server Error: “The server encountered an internal error or misconfiguration and was unable to complete your request. Please contact the server administrator (no address given) and inform them of the time the error occurred, and anything you might have done that may have caused the error. More information about this error may be available in the server error log.”

Beyond the obvious that this is not an error message a retailer wants to show its shoppers—who hopefully don’t have access to its server error logs—the best part is the “anything you might have done that may have caused the error” line. Love how the system just assumes it’s the shopper’s fault. This is like a bank that automatically responds to any error with a form to the teller that asks, “OK, what the —- did you do this time?!” (The glitch seemed to go away about an hour after we first detected it.)…


Chicago, The City Of The Big HREF Shoulders

May 29th, 2013

A quick ping to all ye browser lovers (and, I suppose, some browser haters) out there who are planning to drop by Chicago next week for Internet Retailer‘s E-Commerce show (IRCE 2013): StorefrontBacktalk editorial will be at the show, so if any attendees know of the best places in town to deepen our understanding of the nuances of e-tail strategy (i.e., to get truly and reliably drunk), I’d love to hear from you at eschuman@storefrontbacktalk.com.

Looking forward to connecting with as many readers as possible while there. Also, if you see anything especially noteworthy at a booth or hear a strange utterance from a panel, I would love to hear about that, too.…


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.)…


Walmart’s Auto Shopping List: The Next Killer Mobile App?

May 29th, 2013
Gibu Thomas, the SVP for mobile/digital at Walmart, recently floated the idea of a mobile shopping app that uses POS and CRM files to prepopulate a shopping list, filling it with things that the customer is likely to run out of very soon. At a glance, this may seem like a throwaway idea his team is toying with. But for quite a few reasons, this seemingly innocuous functionality idea could truly be the killer app that retailers often strive for.

The idea, which Thomas made a passing reference to during a keynote speech at CTIA Wireless, was referenced this way: "The best shopping list is the one you don't have to create and that's what we're working on." (Technically, the best shopping list is the one that someone else has to shop and pay for, but I digress.) Presumably, this mobile app would be built atop the chain's experimental Scan & Go mobile app, which prepares in-aisle checkout leveraging existing self-checkout units. Given that Scan & Go—by its very nature—requires the shopper to register beforehand and to be associated with a verified payment method, it delivers an ideal CRM platform. This is a nice backdoor way to get into CRM for Walmart, which doesn't have a traditional CRM program and never has had one. That is a crucial element of Thomas' self-populating shopping list.Read more...


Hispanic Shoppers Tend To Be Younger And To Crave Mobile More, Report Says, But Taking Wise Action From That Data Is A Lot Trickier Than It Seems

May 29th, 2013
A new study finds that Hispanic shoppers are more likely than their non-Hispanic counterparts to use mobile and that's partially because the average Hispanic shopper today is 10 years younger. The report from the Integer Group also suggests that Hispanic customers are more likely to embrace mobile's interactive capabilities with friends and family—and to do so in greater numbers.

Like many reports, the statistics here do not strongly support the report's conclusions. The report found that "16 percent of Hispanic shoppers are using their mobile device to make purchases compared to 12 percent of general market shoppers" and the report had a margin of error of plus or minus 3 percentage points, making such a distinction razor-thin at best. But the group has done enough reports in this area and has found this distinction consistently shows up when doing head-to-head comparisons. Martin Ferro, a senior account planner for Integer and one of the researchers of the report, said the differences make sense given what he has seen in other reports about U.S. Hispanic shoppers. "They are for sure younger. It's really the new generation of (Hispanics) that are U.S.-born," Ferro said. "They tend to be the very early adopters of mobile technology. Besides the youth, the culture is a lot more comfortable with connectivity."Read more...


First Data Could Scuttle Interchange Settlement

May 28th, 2013
First Data Corp. has broken ranks with Visa and banks in the escalating interchange war. The card-processing giant formally objected to the $7.25 interchange settlement last Friday (May 24), saying the fact that it accepted credit cards in its cafeteria would make it a "merchant" under the settlement and prevent First Data from protecting itself against unfair dealings by the card brands. Bottom line: First Data wants the settlement changed, which could open the door to the whole deal unraveling.

Also on Friday, Visa and MasterCard sued a group of merchants and trade groups who have opted out of the settlement—but that's less impressive than it looks. The card brands' suit is a mirror image of the lawsuit that Target and 16 other retail chains filed last Thursday (May 23), which claimed the card brands' entire rule structure violates antitrust laws. The card brands are asking a court to declare that its rules don't violate antitrust laws.Read more...


The Pronunciation Debate: GIF Me A Break

May 24th, 2013
In the high-tech and retail worlds, there is a small group of marketers who seem to believe that they control branding and that even after decades of use, pronunciations and nicknames can be changed by marketing dictate. These people are what is known in retail IT circles as "Wrong. Dead Wrong. Absolutely and forever wrong and they were never even the teensiest bit right." (IT knows not nuance.)

What brings this up is the recent debate—best articulated by our friends at The New York Times—about whether the graphical standard GIF should be pronounced as a homonym with Jif, the peanut butter. (Never quite understood the campaign "Choosy Mothers Choose Jif." Did that mean that less uptight, less anal-retentive mothers chose Skippy? But I digress.) For decades—since 1987—it's been pronounced with a hard G, as in the word graphic. Seems that Steve Wilhite, the inventor of the popular graphic approach back when he worked at CompuServe, now has opted for the peanut-butter pronunciation.Read more...


Virtual Retail Currency Could Translate Into Not-So-Virtual Legal Nightmares

May 23rd, 2013
In a bid to attract new customers, Amazon recently announced a new program in which it would give customers 50 Amazon "coins" to use in playing games and for other purposes. The idea is sort of like what happens at the boardwalk in the summer or at the gaming tables in Las Vegas. Rather than playing with real money (and risking losing real money), gamers play with coins or chips with an artificial "value." It’s easier to lose 500 Amazon coins than it is to lose actual cash.

But in creating an artificial currency, and allowing it to be transferred and exchanged, retailers like Amazon may be getting themselves into potential legal trouble, writes Legal Columnist Mark Rasch. In fact, they may be making themselves into an illegal unregistered money transfer company or even an unlicensed bank. Such is the problem with digital "money."Read more...


The Long—Make That Really Long—Goodbye To Google Checkout

May 22nd, 2013
Is Google Checkout finally ready to checkout? We know all about the traditional Hollywood fondness for the long goodbye scene, but even by movie standards, Google is pushing it. Google has been trying to say goodbye to GoogleCheckout for years. It was mid-June 2011—just about two years ago—when Google officials threw in the towel on Google Checkout publicly, admitting that it was being allowed to "stagnate through a starvation of marketing and engineering resources." That's a slow death scene that Cleopatra would have been proud of. (We ran a story back in 2009, asking if a then-recent fee increase was "the dying gasp of Google Checkout.")

Yes, it's the same goldie oldie plot: Search Engine Loves Payment App, Search Engine Loses Payment App, Search Engine Prays That No One Finds Payment App, Search Engine Wonders If It Can Get Away With Doing A Jodi Arias On Payment App. On Tuesday (May 21), Google again tried killing Google Checkout. In a "We really mean it this time. Dead. We promise" statement, Google said: "Today, we're letting web merchants know that in six months, Google Checkout will be retired as we transition to Google Wallet." Really?Read more...


Mobile Point Of Sale Is Growing Fast And Turning Up Surprises

May 22nd, 2013
Use of tablets and iPods as point-of-sale devices is growing rapidly, but it's not going to knock cashwraps out of most stores anytime soon, according to an IHL Group report released Tuesday (May 21). More than 85 percent of big retailers say that for the next three years, mobile POS devices will be add-ons to—not replacements for—traditional fixed checkouts.

The most likely users of those devices: specialty retailers (both mall-based specialty chains and small independents), who are deploying about 45 percent of all tablets shipped to retail for POS, IHL said. But only 28 percent of U.S. retailers plan to roll out any mobile POS devices by the end of 2013, a drop from previous estimates. That suggests the reality of mobile POS is beginning to set in for early adopters, who are beginning to see some of the limits—and counterintuitive aspects—of the technology.Read more...


Walmart, Starbucks, Others Say No To Interchange Settlement

May 22nd, 2013
With a week to go before the deadline for merchants to opt out of the $7.25 billion interchange settlement, a group of major retailers said on Tuesday (May 21) that they're not playing. Walmart, Costco, Starbucks, Gap, Lowe's, 7-Eleven and Nike filed paperwork with the U.S. District Court in Brooklyn that's handling the case, all saying they both objected to the settlement and were opting out.

The group also said its members were considering "additional legal action to recover damages from Visa and MasterCard under U.S. antitrust laws." A key point in the settlement is that Visa and MasterCard won't be subject to future interchange-related litigation. K. Craig Wildfang, one of the attorneys who negotiated the settlement, said he wasn't surprised by the announcement from Walmart and the other chains. "These merchants have been publicly critical of the settlement, and we always thought that many of them were likely to opt out," Wildfang said. "We remain confident that the vast majority of merchants in the class will not opt out."Read more...


Nordstrom Halts Mobile Customer-Tracking Trial

May 21st, 2013
Eight months into a controversial customer-tracking mobile trial, Nordstrom (NYSE:JWN) has halted the effort. Although Nordstrom took a lot of criticism for the mostly misunderstood program from consumer media, it's not clear whether the project ended as a result of the criticism or the trial had simply run its course. The trial's purpose was straightforward: to use routine signals coming from shopper's mobile devices to count how many people showed at Nordstrom and, critically, which were repeat visitors (and, if so, how many times they had previously visited, dates they visited and where in the store they went). Nordstrom had maintained that it was only seeing anonymous data, meaning that it didn't know the names of the shoppers being tracked.

The trial was controversial for a reason other than consumers' fears that their privacy was somehow being invaded.The problem is that Euclid was able to see cross-retail activity. That means that it saw when, for example, a Nordstrom shopper left Nordstrom without visiting POS and then her mobile signal appeared 20 minutes later inside Macy's, where she ended her visit with that always-desired visit to POS. (Note: That was just an example. Other than Nordstrom, we're not identifying which retailers are using Euclid.) The fact that Nordstrom is only receiving anonymous data (or so it says) doesn't mean that its rivals all are similarly limited. This is a key industry problem with many forms of mobile information gathering. Read more...


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...


How Victoria’s Secret, Nordstrom Came To Opposite Decisions

May 21st, 2013
Sometimes, doing the right thing can mean saying no to what shoppers might think is the right thing. Victoria's Secret (NYSE:LTD) recently found itself in the middle of a challenging issue when the daughter of a breast cancer survivor started campaigning vigorously—including helping to get 120,000 signatures on a petition—to get the apparel retailer to start offering mastectomy bras.

The truth is that Victoria's Secret has been a longtime champion of cancer issues, having donated more than $1.6 million to the Susan G. Komen Breast Cancer Foundation and the American Cancer Society to fund breast cancer research, education, screening and treatment. It’s also donated some $10 million (over two years) to fund cancer research at the Ohio State University Comprehensive Cancer Center. But the company was in the awkward position of knowing that it couldn't do mastectomy bras in the proper way. Read more...


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