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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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Will Amazon’s Cursor Patent Lead To Manipulated, Unintended Clicks?

March 4th, 2013
In online, when does anticipating a user's likely move and making that move easier morph into imposing what the retailer wants the shopper to do? Can the programming power to make a site visitor's cursor go where the retailer wants—and to specifically click on what the retailer wants clicked, such as "click here to purchase"—be something merchants can be expected to be disciplined about using? This ethical and marketing question (now there are two words rarely seen together) is prompted by a patent granted to Amazon on February 26.

That patent discusses using what Amazon (NASDAQ: AMZN) calls "gravity-based link assist" to guide a cursor to where the system thinks the shopper wants it to go. And to do so more quickly than some systems can. Although the patent specifies that this approach can be used in laptops, tablets and a wide range of other devices, its initial focus is on ebooks. That is because of a very specific technical issue: ebooks often have much slower refresh rates, so slow that shoppers can be confused about whether they have successfully clicked a link.Read more...


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Is Customized Pricing Brilliant Or An Imminent Disaster?

March 1st, 2013
A recent patent by search giant Google (NASDAQ:GOOG) may fundamentally change the sales process from a 21st Century marketplace back to a 7th Century shouk, with prices based on sellers' perceptions of who their customers are and what they are willing to pay, argues Legal Columnist Mark Rasch. There is a huge difference between "dynamic advertising" and "dynamic pricing." In the case of the former, he says as an example, he got an ad for a Toyota while his more affluent friend got an ad for a Lexus. Fine, he didn't want the Lexus anyway. In the case of the latter, he and his friend each got ads for the same Toyota Camry, but his friend's price was different from his. And that is based on what Google, and possibly the Internet, knows about his friend.

And if you go online to search for a better price? The results are "rigged." If you are showrooming at a Best Buy (NYSE:BBY), see a 60-inch LCD for $950 and scan the barcode for an Internet search for a lower price, Best Buy could pay Google (or others) not to deliver lower prices—either to the world or to certain profiled individuals.Read more...


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At JCPenney, Everybody Gets A POS iPod In March

February 28th, 2013
All JCPenney (NYSE:JCP) associates will be able to do in-aisle checkout "within one month," the troubled chain's CEO said during an earnings call on Wednesday (Feb. 27). The move comes as 25 percent of sales transactions in the stores are already being done on mobile POS.

The 1,100-store chain is also a few months away from going live with a new financial system from Oracle (NASDAQ:ORCL, to be followed before the end of the year by merchandising, planning and allocation systems, all of which will replace legacy systems. That's presuming the board's patience with CEO Ron Johnson holds out—unlike most big chains, JCPenney's E-Commerce site isn't doing any better than in-store, and the chain lost $552 million during the last three months.Read more...


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Macy’s Stops Reporting Online Stats, Blames Too Much Channel Blur

February 27th, 2013
Arguing that "the line between stores and the Internet is blurring so much," Macy's (NYSE:M) has become the first major publicly held retailer to stop reporting its E-Commerce stats. Setting aside the fact that Macy's would always see less disclosure—especially to rivals—as a nice thing, the move signals an important step for omni-channel/merged-channel retailing. The day when in-store, mobile and online are so intermixed that they can't be meaningfully broken out is the same day true merged-channel retailing has happened. For Macy's, that day happened on Tuesday (Feb. 26).

"Candidly, it's getting so hard to know what's a store sale and what's a mobile sale and what's Internet. It's getting harder to figure out the lines between them," Macy's CFO Karen Hoguet told analysts on Tuesday. When asked for some E-Commerce projections, she said: "I really can't give you that number. I mean, I don't know it. But clearly, the growth is continuing very aggressively. But sometimes, it's being bought on a mobile device sitting in a store. So I'm not sure how to define that."Read more...


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Best Buy Pricing Glitch Raises Reasonableness Issue

February 27th, 2013
When a California county judge hit Best Buy (NYSE:BBY) on February 22 with an $875,370 fine for having the wrong price on an item, it re-raised an old debate: What is fair, reasonable and practical when it comes to precisely updating every price in every store in a major chain? With municipalities starving for budget, and given the fact that no one ever lost votes by squeezing fines from chains accused of posting the wrong price, does it make sense to set up any type of practical test?

The bigger the chain, the better the target, as Walmart (NYSE:WMT) knows only too well. Just last month, another judge in this same California county hit grocery chain Fresh & Easy with a bill for $833,136 for similar price-tag problems. How about drawing legal distinctions between intent to defraud and unintentional human error or computer glitch? Frustratingly, these weights-and-measures cases are usually painful enough to sting but not financially worth fighting. That cost-of-doing-business reality is something cash-strapped agencies rely on.Read more...


Barnes & Noble Founder: It’s The Stores, Stupid

February 26th, 2013
One of the delicious ironies of merged-channel retail is how easy it is to lose track of the real business. When Barnes & Noble (NYSE:BKS) Chairman Leonard Riggio said on Monday (Feb. 25) that he wants to buy the chain's regular bookstores and E-Commerce operation, everyone suddenly took another look at what was presumed to be a dying brick-and-mortar business. Surprise! The stores are profitable. It's the Nook that's been bleeding the retailer dry.

The Nook was supposed to be merged-channel perfected: Buy anywhere, instant delivery, no DCs required. The physical stores were expected to be steamrolled by Amazon (NASDAQ:AMZN). Instead, Amazon has crushed the Nook, while B&N's stores (with no more competition from Borders) are hanging on. Welcome to Merged Channel 2.0—or possibly Merged Channel II: The Showroom Strikes Back.Read more...


Visa’s Mobile-Payment Moves: Still Solving The Wrong Problems

February 26th, 2013

The big announcement Visa (NYSE:V) made at the Mobile World Congress on Monday (Feb. 25) was a deal to put its mobile-payments app on Samsung’s NFC-equipped smartphones, and for banks to easily install payment-card numbers in the phones’ NFC Secure Element. Analysts made the usual noises about how these moves will give NFC a much-needed boost. Are these people delusional? We hope not, but it remains true that there’s only one show-stopping problem facing pay-by-tap: Customers just don’t want it. Solve that one, and the other problems are trivial. Fail to solve it, and nothing else matters.

Actually, Visa probably isn’t delusional, just desperately optimistic, like it is when it reports contactless payments of all types (including NFC) have quadrupled in the past year, to 13 million per month. The missing context: VisaNet handles 130 million transactions per day. That means contactless is roughly one-third of 1 percent of the total. Visa knows that’s pathetic. It just doesn’t know how to convince chains to train cashiers to encourage customers to use contactless and mobile payments. Maybe Walmart (NYSE:WMT) will actually do that when its MCX finally arrives. After all, in retail, nothing cuts through the fog of optimism—or delusion—quite like hatred of interchange.…


Another Grocery POS Attack, Compromising Compromise

February 26th, 2013
Add Sprouts Farmers Market, a 151-store regional grocery chain that sells in eight U.S. states, to the list of chains learning that POS attacks are today's favorite cyberthief way to get card data. Sprouts confirmed on February 22 that it found spyware in the POS systems of 19 stores (13 in Arizona, six in Southern California), during a five-day sweep between January 25 and January 29. The statement included this wonderfully comforting line for Sprouts' shoppers: "After an investigation conducted by Sprouts along with FishNet Security, a nationally recognized data security firm, Sprouts is unable to confirm with certainty at this time whether any accounts were compromised."

That's a rather perplexing utterance. Given that the chain said data-capturing software was found in the POS systems of some 19 stores, it's pretty easy to declare the security of every card used in those machines during that timeframe was compromised. That's not to say that the thieves successfully captured that data in a usable form or that they have actually tried to use that data yet. But in terms of the data being compromised, that debate was pretty much over when the software was found.Read more...


Germany Wants Amazon To Loosen Its Third-Party Seller Restrictions

February 25th, 2013
German anti-trust officials are investigating the non-price-compete contract clauses at Amazon (NASDAQ:AMZN), which require third-party sellers to not sell anywhere else for less. If the agency finds against Amazon—the Associated Press quoted the agency head as saying there was "considerable" evidence that Amazon is indeed breaching cartel rules—and if the ruling spurs other agencies in other countries (including the U.S.) to act, then this has the potential to be very disruptive to Amazon. Those third-party sellers are crucial to Amazon's seemingly infinite inventory, and the ability to offer the lowest price is critical to Amazon's strategy.

"Amazon's price parity clause, under which sellers are deprived of their freedom to sell a product offered through Amazon cheaper on another Internet sales channel, could violate the general ban on cartels," said Andreas Mundt, the head of Germany's federal antitrust office (the Bundeskartellamt), on February 20.Read more...


British Department Store Allowing Online Shoe Returns At Gas Stations

February 25th, 2013

John Lewis, the huge British department store

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chain, is taking an interesting twist on E-Commerce returns. The idea of having free unlimited returns for online-purchased clothing and shoes (especially shoes) is well known, but the chain is trying to make it more hassle-free by allowing those free E-Commerce returns at more than 5,000 convenience stores, gas stations (OK, petrol stations) and newsstands. Returning too tight sneakers when you fill up for gas on the way to work?

The initial deal is limited to online purchases (no trying to return stuff purchased from a physical John Lewis store) and is further restricted to clothing, shoes and “fashion accessories.” (Wonder if the argument that an iPad Mini or a coffee machine is a fashion accessory would fly?) The John Lewis free shipping deal comes through a partnership with CollectPlus, a large U.K. parcel service. Completely non-coincidentally, the incoming E-Commerce chief for John Lewis—Mark Lewis—is the former head of CollectPlus. Regardless of where the idea came from, having a relatively quick and painless way to return those “looked good on screen but are in reality stunningly ugly patent leather pumps” is a good one. Anything that makes shoppers more comfortable with buying a lot of clothes on the chance that they’ll keep some …


Showrooming Showboating: If It’s In Context, It Wouldn’t Sound Good

February 25th, 2013
A showrooming study published on February 22 tries to make the case that Best Buy (NYSE:BBY), Target (NYSE:TGT) and Walmart (NYSE:WMT) are winning their battles against showrooming. But the lack of context makes a better case that showrooming is almost impossible to measure and might not even meaningfully exist. The study, done by ClickIQ, reported that all three chains saw fewer in-store shoppers eventually purchase online, when comparing 2013 data with 2012 data. What the study didn't explore was whether more shoppers were simply doing their online research first and then choosing to buy from an E-tailer.

To be blunt, the retail concern is whether Walmart and the like are losing more or fewer sales to Amazon (NASDAQ:AMZN) and the like, and this study simply didn't try to address that.Indeed, answering that question is the more likely next step for shoppers if these chains are losing the battle against so-called showrooming. After shoppers come into, let's say, Target repeatedly and then find that E-tailers repeatedly offer the same for less, those shoppers would simply stop bothering to even drive to Target and would go straight online. This study would interpret that outcome as a win for the physical stores—because the percentage of people who go into the store and then buy from the store would go up—when it's actually a clean loss.Read more...


Amex Experiment: Replace Cards Online With Passwords

February 22nd, 2013
American Express on Thursday (Feb. 21) took a page from both Apple iTunes and Amazon 1-Click, launching a program in India that allows online shoppers to use a password instead of having to type in card number, expiration date and security verification number. Beyond speed for shoppers, this approach takes all of that sensitive data out of the retailer's servers. The India rollout is the first test of this tactic worldwide.

The program, called ezeClick, was developed by the Amex India group and is being closely watched by Amex corporate. "We let each market develop what they need and what they think will work for them," said American Express Spokesperson Jim Tobin. "I assume it will start showing up in other markets."Read more...


Phone Tracking And The Law: Clear Sailing

February 21st, 2013
In the ongoing Nordstrom/Euclid cell phone tracking debate, it seems that Nordstrom (NYSE:JWN) failed to ask all three necessary questions when using any technology that might raise a privacy concern. These questions are, in no particular order: Is it legal? Is it profitable? And is it wise? Ask only two of these three questions, and you can be in deep trouble, pens Legal Columnist Mark Rasch.

The debate surrounds the Seattle-based retailer's use of a vendor called Euclid, which captures information from the Wi-Fi signals of both customers and passersby. Is it legal? There is no specific U.S. law on whether MAC addresses are "personal information" entitled to legal protection. Moreover, U.S. law regarding things like access to cell phone records and cell phone usage probably don't apply to the Wi-Fi portion of the device. So although it may constitute an unlawful "trap and trace" or "pen register" to capture a cell phone number or IMEI of a cell phone, these laws likely don't apply to capturing the MAC address of a Wi-Fi-enabled device. Put simply, your iPad or Wi-Fi-enabled iPod isn't a phone, nor is the non-phone portion of your iPhone, Blackberry, Android or Windows mobile device.Read more...


Copyright Quagmire: Amazon’s Cloud Music Legal Dilemma

February 20th, 2013
In the retail legal quicksand that today's constantly evolving digital content rules are creating—remember California's Supreme Court saying this month that E-tailers can ask for Zip codes but physical stores can't?—Amazon (NASDAQ:AMZN) is now rediscovering that nothing is so complex and muddied that lawyers can't make it worse. The issue: downloadable content copyright and a delightful unintended consequence.

For years, Amazon has allowed shoppers who have purchased music CDs from Amazon to download and otherwise listen to audio tracks on an Amazon cloud for free. The legal copyright prerogative for Amazon to do this stems from the shopper owning the physical CD. But what happens when that customer no longer has possession of that CD? What if it's been given away or sold or destroyed or lost or stolen? All of a sudden, the legal basis for that copyright permission has vanished. And this gets a lot worse.Read more...


Why Would Google Open A Chain? Ask Apple

February 20th, 2013
Rumors this week that Google (NASDAQ:GOOG) is on the verge of launching its own chain of brick-and-mortar retail stores mostly seemed to focus on how much better Google is at creating buzz than Microsoft (NASDAQ:MSFT), and how the search giant could give Apple (NASDAQ:AAPL) real competition in the tech-vendor retail-chain sweepstakes. We also liked hearing pundits not insisting, for once, that Amazon (NASDAQ:AMZN) will be the next online retailer to jump into physical stores.

But largely missing from the rumor mill is a blunt reality: Google isn't actually a retailer at all. It could probably put up a chain of good-looking stores and find things to put in them—Nexus phones and tablets, Chromebook computers, Google Glass electronic glasses, driverless cars. But what, exactly, would what is fundamentally a huge online advertising company get from opening its own chain? One possible answer: some actual payments.Read more...


Burger King, Jeep Tweet-Hacks Show It’s Time For A Social Kill Switch

February 20th, 2013
The Twitter takedown of Burger King (NYSE:BKW) on Monday (Feb. 18), followed by an almost identical attack on Jeep's Twitter account the next day, underlines a basic problem with social media: It's almost never under a retailer's control. It's not just that interacting online with customers is inherently unpredictable. The key social media sites themselves—Twitter, Facebook (NASDAQ:FB) and others—are always under someone else's control, and a chain is just another user.

That means when a retailer's social media presence is under attack, the difference between being down for more than an hour (like Burger King) or just 10 minutes (like Jeep) can be a matter of setting up the equivalent of a kill switch—and that's going to take some work.Read more...


Abu Dhabi Addresses Go E-Commerce Friendly. Only 6 Billion More Addresses To Go

February 20th, 2013

Abu Dhabi is going to an E-Commerce-friendly street address system. The capital of the United Arab Emirates announced on Sunday (Feb. 17) that, over the next 30 months, every building will get a number and every street will get a unique name (in many cases a much shorter name, in part to satisfy the needs of online forms), along with a short postal code. Currently, streets may be known by multiple names. For example, 7th Street is also Zayed the First, but it’s commonly known as Electra. And although the street Abu Dhabians call “Bank Street” is lined with banks, it’s formally named Khalid bin Waleed Street. Even some new glass-and-steel hotels have addresses like “Between the Bridges.”

Although local couriers are currently able to navigate the city to make deliveries, U.S.-style addresses should simplify things for E-tailers using addresses or postal codes for things like payment-card verification. It’s also a useful reminder for E-tailers that online forms designed for U.S. addresses aren’t necessarily going to work well in the rest of the world. With its population of 2.4 million people and a per capita income just below that of the U.S., Abu Dhabi is hardly a little desert oasis. But having three names for every street may not be so bad—just ask anyone who has tried to find an address on Peachtree in Atlanta.…


Why PCI DSS Compliance Is Not Like The Flu

February 20th, 2013
PCI DSS compliance is not like the flu. You can't "catch" it from your service provider, even though that provider might be PCI compliant. Merchants must go beyond reading the marketing materials and taking a quick glance at the service provider's attestation of compliance (AOC). The path to PCI compliance starts with PCI-compliant service providers, but it then takes the extra step of performing effective due diligence.

This lesson has been reinforced at least three times in the past few weeks in separate PCI Security Standards Council (PCI SSC) guidance documents. One question is whether merchants—particularly small and midsize merchants—will ever hear this advice. As a QSA, PCI Columnist Walter Conway occasionally gets the impression that clients might not spend more time researching their next smartphone, laptop or sailboat than they do reviewing service provider contracts and service-level agreements (SLA). It is particularly important for merchants to realize the source of the advice. It comes not from the PCI SSC staff but from active PCI practitioners with first-hand experience. Read more...


An EAS Tag That Can Take A Nuking And Keep On Looking

February 20th, 2013

Shoppers do the darnedest things, such as taking home packaging with attached EAS labels and then throwing it into the microwave oven. We’re not just talking about reheatable soups but about things like hamburger meat, complete with the styrofoam and ultra-meltable shrinkwrap plastic. Although the molten plastic is poisonous and smells awful, the EAS tag can catch fire. (Note: Fire, plastic chemicals, styrofoam and plenty of radiation is a recipe for a new microwave—and possibly a new kitchen.)

“Typically, people are trying to defrost beef, chicken, etc., in the original package after it is frozen and it’s difficult to remove the plastic,” said George Cohen, a spokesperson for EAS vendor Checkpoint. Checkpoint on Tuesday (Feb. 19) rolled out what it says is a microwave-safe EAS label. That may sound like a great idea, but when you’re faced with an EAS tag or label that refuses to stay deactivated, the idea of frying it in the breakroom’s microwave oven was always a nice failsafe.…


Best Buy’s Cure For Showrooming? Not Exactly

February 19th, 2013
On February 15, Best Buy (NYSE:BBY) put out a statement saying it had ended showrooming, and the sword it said will kill this merged-channel dragon is a new price-match program. Despite quite a few reports that Best Buy was making the price-match it launched in 2012's holiday season permanent, the new program—set to kick in March 3—has very little in common with its holiday price-match effort. First, this program will clearly not eliminate showrooming, and Best Buy knows it. The new program cuts in half how long regular shoppers have to return merchandise for refunds, from 30 days to 15 days. The rest of the changes are making the program much stronger, eliminating many of the non-shopper-friendly elements from last year, such as making the price-matches conditional on associate discretion, limiting price-matches to appliances and electronics hardware, and even exempting all electronics accessories.

Is it a better program (other than the strange halving of the time for a return)? Absolutely. Will it likely reduce Best Buy sales lost to showrooming? Yes. Will it eliminate all showrooming losses? Of course not. And the fact that Best Buy is trying to argue it will is mind-boggling.Read more...


PCI’s New Mobile Guidelines Acknowledge Huge Hurdles

February 15th, 2013
The PCI Council officially released its mobile payment guidelines Thursday (Feb. 14), a document that turned out to be anything other than a Valentine to retail IT execs who'd love to know the "all-clear" path to doing mobile payments and staying PCI compliant. Instead, it's more of a pragmatic acknowledgement of the various mobile hurdles that the council sees as currently insurmountable.

The recommendations, of course, also offer the generic list of best practices for mobile device security (such as strongly encouraging full-disk encryption), which is certainly a handy checklist for chains just starting to seriously explore mobile payments. One key point of the report is to acknowledge the very complex nature of mobile systems, which have far more players than traditional fixed POS systems. For example, the report speaks of the desirability of lab validation for mobile devices and why it's simply—and regrettably—not practical.Read more...


eBay’s Day In Court: No Soup For You

February 14th, 2013
Some retailers sell products. Some retailers sell services. But companies like eBay (NASDAQ:EBAY), Amazon (NASDAQ:AMZN) and Craigslist sell something more—a marketplace. They are not simply a "store" but the entire mall—the downtown retail zone. If you can't sell on eBay, Amazon or Craigslist, then, to a great extent, you can't sell online. So what happens if you are banned for life from one of these marketplaces? A recent California Appellate Court decision substantially impaired the rights of consumers to have access to these marketplaces when the merchant/marketplace owner determines that the consumer did not follow the rules, pens Legal Columnist Mark Rasch.

Linda Genesta was a long-time eBay seller. For 18 years, beginning in 1999, she sold what she described as "high-end, high-quality, imported authentic European and American antique and vintage textiles, fabrics, pillows and trims," Everything was fine until July 2008, when eBay allegedly removed Genesta's items from the marketplace, alleging "unspecified 'misrepresentations'" in violation of its Terms of Service. As a result, Genesta says, she is effectively "out of business."Read more...


Stealing The Keys: Bit9 Breach Means It’s Time To Throw Out Old Thinking About Security Products

February 13th, 2013
In another sign that investing in security isn't enough, three customers of security vendor Bit9 ended up with malware in their systems. This happened after a digital code-signing certificate was stolen from the vendor—and that, in turn, happened because Bit9 failed to use its own product on some of its systems.

Never mind the physician-heal-thyself aspect of this incident (which is a little tough for us because, well, Bit9 did do exactly what it tells its customers not to). More to the point, it's another sign that retailers need to stop trusting security and start thinking securely.Read more...


U.K.’s John Lewis Trials Electronic Shelf Tags That Don’t Look Like New Technology. Will This Reverse Psychology Work?

February 13th, 2013

Electronic shelf tags have gone pretty much nowhere in recent years, but U.K. department store chain John Lewis is doing an interesting trial at one of its newest stores. The Exeter location, which the 39-store chain uses as a testbed for new technologies, has put in hundreds of e-paper shelf tags that will display both prices and QR codes that customers can scan to get offers and product information. John Lewis is calling this an omnichannel test, the idea being that if customers are going to have their phones out in the store, shelf tags are a good thing for them to scan.

True, there’s nothing in that part of the trial that couldn’t be done with paper tags, and that is part of what’s so interesting: Unlike a more traditional electronic shelf tag, customers won’t necessarily notice that these tags are electronic. That makes them less distracting and possibly less likely to be stolen, both of which have been problems with electronic tags in the past. In-store technology that all but hides the fact that it’s new technology sounds strange, but if it finally gets easy-to-update electronic tags on shelves—and maybe eventually into John Lewis’ 290-store Waitrose grocery chain—so much the better.…


PCI Security Problems: The Practical Versus The Perfect

February 13th, 2013

Security rules are wonderful things, and nowhere are they more needed than in retail and payment-card data. But a common criticism of the organization handling such matters—the PCI Council—is that it delivers security edicts in a vacuum, with minimal regard to how different types of merchants function in the so-called real world. Such critics were given three golden examples this month. The examples, in the areas of cloud guidance, P2PE validations and Windows XP end of life, illustrate the types of collisions that are inevitable when committees seeking ideal security approaches run into chains with razor-thin margins (or losses), workforce reductions and store closings. Put more bluntly, it’s the age-old battle of the ideal versus the pragmatic.

This is explored in StorefrontBacktalk‘s February monthly column in Retail Week, the U.K.’s largest retail publication. The column lives here at Retail Week. For those who don’t have a Retail Week subscription—shame on you!—here’s a copy at StorefrontBacktalk. You can also check out all of our recent Retail Week columns here.…


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