Evan Schuman's StorefrontBacktalk

ISPs have been quietly expanding their use of deep-packet inspection. They are capturing everything a user does–to the point where “at least 100,000 U.S. customers are tracked this way, and service providers have been testing it with as many as 10 percent of U.S. customers, according to tech companies involved in the data collection,” said a new report in The Washington Post.

The service providers exploring and testing such services have largely kept quiet–“for fear of customer revolt,” according to one executive involved who was quoted in the Post story. Each company allows users to opt out of the monitoring, though that permission is buried in customer service documents.…

Although the merchant behind the program—Chockstone—stresses a variety of security mechanisms, the nature of the program itself seems to fly in the face of PCI guidelines that discourage using credit card numbers for anything other than payment transactions, similar to the unsuccessful attempts to get American businesses to stop using Social Security numbers as defacto employee and customer identification numbers. Read more...

The retail move to embrace 2-D barcodes that began with a Sears trial in December and strong interest from BestBuy, the Gap and Target is inching forward, with a 500-store trial starting Thursday in San Francisco.

The trial, involving CitySearch, Antenna Audio and Scanbuy, is a fairly basic mobile integration effort. “More than 500 restaurants, shops and businesses reviewed by Citysearch are placing printed bar codes in their windows, and people who have Scanbuy software loaded on their phones can simply take a picture of the code and their phone’s Internet browser will immediately take them to the restaurant’s corresponding Citysearch page,” said a statement from the group.…

Saks is seeing how far it can take Web multimedia, by trying to morph its online catalogue with live video and creating a live model runway show.

The test focuses on Saks’ three best-selling departments: Contemporary ready-to-wear, handbags, and shoes, according to this MediaPost story. “Since Saks knows that about 99 percent of its shoppers have broadband access, ‘it’s been great for us,'” said Denise Incandela, president of Saks Direct. “You can have movement, voice-over, music and information, with narrators talking about what’s important in each look.”…

The change to the Starbucks Card Rewards program shows not just an understanding of customer service, but a realization that the best way to make a CRM program successful is to focus on benefits—true benefits—for both the customer and the retailer. Instead of merely tracking purchases and offering small discounts (adjusting the price of a cup of flavored coffee down from ludicrously overpriced to merely absurdly overpriced. Buy one more croissant and tomorrow you can enjoy a cup of Joe that is only insultingly overpriced), Starbucks is getting creative about rewards. Read more...

The bill had been pushed by Assemblyman Jeff Morris. The final version of the bill—which Morris said he expects Washington Governor Chris Gregoire to sign into law on Tuesday—makes anyone guilty of a Class C felony if they "intentionally scan another person's identification device remotely, without that person's prior knowledge and prior consent, for the purpose of fraud, identity theft or for any other illegal purpose." Read more...

Among the retailers that are referenced as most intelligently embracing merged channels–the true channel-agnostic merchant–is Borders, whether it’s with their new concept stores or their breakup with Amazon.com.

It’s therefore an especially troubling note that they are having financial difficulties, as detailed in this New York Times piece. It’s an age-old business belief that few chains truly buy into and adopt major strategic changes until it’s too late. I hope that Borders turns out to be the exception.…

During the breach, "no personal information, such as names or addressed, was accessed or obtained" but the breach did expose customer credit and debit card numbers along with their expiration dates, said Hannaford CEO Ronald Hodge.Read more...

"We need to do a little more training," said Michael Verdesca, the chain's VP for systems development. Read more...

Hello, blog readers! We’ve been approached by a company that wants to create a 3-D environment for StorefrontBacktalk, complete with avatars for all readers. Before we explored this more seriously, we wanted to ask our readers whether we should proceed. Therefore…

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The Metro Group’s RFID trial efforts have been well-known, but this is an interesting International Herald-Tribune story discussing some of the privacy debates within Europe on their efforts.

The piece quotes a Metro person as saying that a recent European Union effort to force the tags to be deactivated at POS as the kiss of death for consumer-facing RFID. “If we have to deactivate at the check-out, then the technology is going to stay within the logistics process – to say where is a box or where is the pallet in the distribution center. It won’t come on consumer items. They’re going to kill the technology with that.”…

The reality is, though, that brands still matter very much. Those brands come with all of the good and the not-so-good reputations of that retailer. Will Wal-Mart The Usurper's reputation be tamed with a friendly and candid blog face? Read more...

First up was a gift card exchange site called Leverage. Leverage didn't offer to make good on the Sharper Image gift cards, but it did offer to make whole any of its own customers who bought Sharper Image gift cards through Leverage's site. That move will cost Leverage "a few thousand dollars," said Leverage CEO Mark Edward Roberts. Read more...

The potential is absolutely there, with retailers collecting molecular mountains of shopping history—sometimes more than a decade's worth—and law enforcement seeking creative ways to find criminals (or people they think are criminals) who are quite determined about not being found. Read more...

There are several reasons for the unexpected spike, chief among them PCI demands hitting smaller retailers and new profit-enhancing techniques that require current POS equipment, said IHL President Greg Buzek. Read more...

For example, one of the digital services for their in-store kiosk was from an E-Commerce site called Shutterfly.com. That decision went beyond the attraction of digital photos, said Kevin Ertell, Borders' E-commerce chief. Read more...

But it's been difficult to quantify the ROI of such chat functions, mostly because it's impossible to know reliably what the customer would have likely done had a chat session not happened. Forrester Research this week this to quantify the slippery ROI arguments for interactive chat and made an eloquent case for chat investment. Read more...

That conclusion came out of a Borders analysis of a weekly newsletter it has been sending to most of its loyalty program members. Although newsletters drove people into the stores, those consumers who wanted coupons were 31 percent less satisfied—and were 13 percent less likely to make a purchase—than those who sought content. Read more...

Breach letters are being sent out so frequently that I wonder if it's going to pique the business interests of Hallmark. A card for every occasion, when you care enough to breach the very best. Perhaps a merger with their Get Well cards? "Sorry to hear that you're not getting around these days.... [open card] .... but your CVV sure as heck is. Call 1-800-DATA-OOPS for your free year of credit monitoring, courtesy of your neighborhood retail chain." Read more...

But, for better or for worse, that's not a long-term situation. Like the presidential candidates who had to fly South for the winter (or fly the coop entirely), these compliance salesfolk have a limited lifespan. Within the next year or so, retailers are going to shift from trying to become PCI compliant to having to maintain PCI compliance. Read more...

The point that these vendors make is that if you don't have the data, then you've outsourced your risk. But Taylor writes that he's always lived by the principle that "you don't outsource risk" because when it comes time to file lawsuits, the merchant will still get named. Read more...

The trial with the Bay Area Rapid Transit (BART) commuters started Tuesday and is expected to continue for four months, said Mohammad Khan, the CEO of Vivotech, which is one of the technology vendors involved in the trial. Sprint is also a key partner in the project. Read more...

The 389-store grocery chain—employing about 59,000 in Massachusetts, Connecticut, Rhode Island, Maine, New Hampshire, New York and New Jersey—has been running this trial since October at 90 of its stores in Massachusetts, Connecticut and Rhode Island. Read more...

The panel included Google's head of retail, John McAteer, Borders' E-Commerce chief, Kevin Ertell, the corporate development VP at Bill Me Later, Mark Lavelle, Ursula Milan, an E-Commerce manager at the Museum of Modern Art, and the dean of the E-Commerce analytics corp, Jupiter Research's Patti Freeman Evans. Read more...

The biggest current concern—which is also likely to be the most short-lived—is that the service is available on a relatively few number of phones in the U.S.. That concern—a shortage of supported phones—was mentioned by a Sears manager involved in the trial. Read more...