Evan Schuman's StorefrontBacktalk

In what one executive of the $9 billion 26,000-restaurant Subway chain dubbed "the single largest integrated cash card program in the world," the new card handles payment, instant loyalty rewards and highly-targeted promotions that can be tracked by customer.

The program takes a very basic mag-striped giftcard and, through a unique 16-digit identification number, takes the card through Point Of Sale (POS) through to CRM. "It's a very sophisticated CRM program," said Marina O'Rourke, Subway's director of retail technology. "It has the ability to target consumer behavior and reward and entice that behavior. It can look at cardholders in a geographic area. We can drill down to the store level. We want to understand if we can change behavior by offering, let's say, a free cookie." Read more...

Although Google itself has been clever in its click fraud battles, it's issued a report saying that clickfraud claims are overblown. The message is legit, but I wish it was another messenger.

Click fraud claims--as opposed to actual click fraud--are a huge threat to the massive but not especially stable Web advertising market. Ad-hawker-extraordinaire Google is doing its best to combat that threat. Unfortunately, the threat they are focusing on are the claims as opposed to the fraud itself.Read more...

A new mobile payment system–called PayCash Mobile, from Cyphermint–will make its appearance at Regal Cinema and Barnes and Noble.com soon, according to Cyphermint CEO Joe Barboza. The new system will charge retailers about 2 percent of a transaction and will use a cellphone number and a PIN to authenticate transactions that are then paid for with a traditional credit card.

The benefit of this system compared with others from rivals such as MobilLime, Barboza said, is that it processes payments in a matter of seconds compared with hours for MobileLime.…

Eight days after it said it was preparing for an IPO on a day-to-day basis, Alien Technology--which had been granted the RFID trading symbol--has given up the attempt, according to a statement the company issued on Friday.

"Alien Technology Corporation today announced that the company has withdrawn its Registration Statement on Form S-1 with the Securities and Exchange Commission and has determined not to proceed with the registration and sale of its common stock at this time" the statement said. Read more...

This week’s audiocast panel discussion of the StorefrontBacktalk retail technology week that was …. was decidedly global in topics. This week’s group of retail technology analysts that sat down late Thursday was Patti Freeman Evans from Jupiter Research, Sucharita Mulpuru from Forrester Research and Paula Rosenblum from the Retail Systems Alert Group. StorefrontBacktalk’s Editor Evan Schuman moderated.

The group opened with a hard look at the German Metro Group’s Item-Level RFID plans and whether Wal-Mart can survive as a retailer outside (and, as one panelist argued, inside) the U.S.

The group also discussed retail attempts at mobile marketing, focusing on the Subway chain’s experimentations with cellphones, which raised issues of how far ahead of the U.S. much of Asia and Europe are and how that should impact retailer’s global IT strategy.

The panel also jumped into a report expected next week from Jupiter Research that looked at how e-tailers—including Netflix–are making some surprising decisions about incorporating user-generated product reviews.…

Phones that can ring with coupons, beam payments and deliver true multimedia interactive experiences are already in the pockets of most consumers. How far will—and should--retailers go?

A free product coupon is a free product coupon, right? If it's for the same product at the same merchant and the pricing and timing are roughly the same, it shouldn't matter how that coupon is given to the merchant. Andrew Kamps, the VP of operations at a New York restaurant chain, recently learned otherwise.Read more...

With a year of charges under its moneybelt, JP Morgan Chase on Monday released first-year statistics for its contactless Blink cards, trying to bolster the argument that the cards deliver better than traditional magstripe cards and cash.

The stats gathered from the seven million contactless Chase cards issued do indeed show strong improvements over older options, but there is some question about how much of those improved numbers are because consumers liked the contactless cards better than the alternatives or because of the cards' novelty. If those statistics hold or improve in the next year or two, as the contactless payment's gee-whiz factor fades, that may be much more meaningful. Read more...

After stepping back from its planned IPO last Friday to "when market conditions improve," an Alien Technology executive stepped through the quiet period curtain long enough to defend the company's manufacturing yield and how the company's IPO was delayed.

Linda Prosser, Alien's corporate marketing VP, said the company had always been slated to go IPO last Friday and that the decision to move it to day-by-day status—where the company is not saying that it will go public on any particular day, but is awaiting better market conditions—was not related to anything about Alien's financial health or product status and that the only influences were "geopolitical events."Read more...

I hate to take a brief respite from this retail technology excitement, but when I saw this popular Web video–supposedly depicting Darth Vader’s younger brother as a retail manager–I had to share.…

Look for Metro AG in September to start making noise about its item-level RFID efforts, working with Intermec. Germany’s Metro is not only of Europe’s largest retailers, it is among the most technologically-sophisticated retailers in the world.

Although Metro has always been a retailer that needs to be watched, that is even more of the case now because Metro has done something that almost no other retailer has ever done: beaten back Wal-Mart. Wal-Mart moved into the German market some nine years ago when it bought the Wertkauf and Interspar chains. On Friday, Wal-Mart blinked and agreed to sell all of its 85 German stores to Metro…

Alien Technology, which grabbed the coveted RFID trading symbol, had been scheduled to launch its IPO on Thursday, which then moved to Friday. It has now “decided to postpone its IPO due to market conditions,” Alien spokesperson Sue Barnes said in an E-mail to reporters.

Barnes stressed that this is not necessarily a permanent move and other Wall Street observers said the company seems to evaluating on a day-by-day basis. “It has not withdrawn or cancelled the offering, and will complete the offering when market conditions improve,” Barnes said.

The IPO has been watched closely as it will give Wall Street an opportunity to comment on its RFID sentiments through this signature trading symbol, which will let Alien enjoy the fruits–and suffer the punishments–of an RFID movement with an uncertain future. The StorefrontBacktalk Week-in-Review analyst panel discussed Alien’s move Thursday afternoon, shortly before the company decided to postpone again.

Pete Abell, a veteran RFID analyst who now works for IDC, is skeptical when—and whether—Alien’s IPO will happen. Even though Alien’s statement says it will happen when market conditions improve, Abell said, “They always say that, but with no next date, they better have some great new news, which is highly unlikely.”

“The key problem is that they continue to hemorrhage money. Their highly self-touted FSA manufacturing process gets yields in the 15 percent range and they currently sell readers to Wal-Mart at $200 below manufacturing cost,” said Abell, the program director for RFID at IDC’s Manufacturing Insights. Texas Instruments “has a great new UHF chip just certified by EPCglobal, which will compete with Impinj and Alien’s is an also ran.”

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Another group of retail technology analysts sat down Thursday late afternoon to look at the retail technology week that was. This week’s panel independent retail technology consultant John Fontanella—veteran analyst with the Aberdeen Group and AMR Research—along with returning guests IHL President Greg Buzek and the Retail Systems Alert Group’s Paula Rosenblum. StorefrontBacktalk‘s Editor Evan Schuman moderated. This week’s topics were Alien’s delayed IPO and the problematic ROI picture of kiosks. If some disappointing earnings and a few economic darkclouds are any indication, the retail tech sector may be in for a serious downturn. If so, what segments will fare well and which will likely get bloodied?

A few vendors have been pushing digital watermark technology—somewhat equivalent to a 21st Century microdot—as a clever way to bridge the physical store and online worlds, without the need for keyboard interactions. The cellphone becomes the remote control. Is this where much of retailing is headed? Will it work? What are the practical implications for customer service?

Are there topics or panelists you’d like us to consider for next week? Please don’t be shy.…

A new study of retail kiosks found a very short lifespan, but it’s mostly due to new technology and a retailer’s desire to upgrade. But since that is a trend unlikely to change in the next few years, it’s something for a kiosk-purchasing retailer to remember when negotiating price and calculating both a Return On Investment and Total Cost of Ownership.

The average kiosk replacement time was 2.3 years, the lowest of the retail packages examined. including loss prevention equipment (3 years), CRM/Loyalty (2.7 years), Labor Scheduling (2.6 years), Inventory (3 years) and POS Backoffice (2.4 years), according to the IHL Consulting Group report. By an even greater margin, the kiosks examined were much younger, typically 1.8 years old compared with the other products, which ranged from POS at 5.5 years old to Loss Prevention, at 3.6 years old.…

We're starting to hear about more digital watermark applications, where the image-capturing (camera) and communication capabilities of cellphones make them ideal tools to connect printed material with Web sites. We reported last month about NeoMedia and its digital watermark flavor called iPOS (Interactive Point of Sale). This week saw an Oregon company called Digimarc roll out its version in a series of cafes in Japan.

The two approaches illustrate the versatility of this hybrid, which literally is multi-channel as it bridges a customer experience from a purely brick-and-mortar activity--such as looking at a poster in a promotion display--to online. But it does it with virtually (no pun intended) no physical activity on the part of the customer. Read more...

Here’s a discomforting statistic. Despite the sales pitches of payment processing companies telling retailers to avoid errors and costly credit card problems by outsourcing those efforts, new data finds that about 60 percent of data compromises are because of third-party processing errors and only about 40 percent are merchant mistakes.

The figures, released this week by Ambiron TrustWave, a Chicago-headquartered PCI security audit compliance firm. “POS developers, integrators and IT firms are not following PCI DSS and are leaving merchants at risk,” according to a slide Ambiron prepared for a conference. “The Majority of the compromises were caused by a fault in the service provided by a third-party to a merchant.”…

One problem that has come with E-Commerce’s love affair with multimedia is tracking royalties. Even assuming that all electronic storefronts are honestly and completely reporting music and video revenue, the huge array of different formats and specs make the process difficult at best for content creators. With multimedia sales now becoming a key part of the mobile experience, the data-incompatibility issues are likely to grow.

In this industry, though, wherever there’s a problem, there’s someone around trying to make money off of the problem and perhaps whittle the problem down in the process. A vendor called RoyaltyShare next week will launch a service for aggregating and monitoring digital sales data and will also announce deals with a few mid-sized independent record labels. The company is run by Bob Kohn, who had co-founded the eMusic music download site and had also been a vice chairman of Borland Software. Product details were scarce, other than it being Web-based and that it is tweaked to grab sales data sites including iTunes, Napster, eMusic and Rhapsody.…

Here’s a piece of retail technology that’s more chemical than digital: For about a penny each, retailers will–within two to three years–have the option of placing stickers on a piece of fruit or vegetable to reveal if it’s ripe yet, thanks to a University of Arizona assistant professor of agricultural and biosystems engineering named Mark Riley.

The story, coming to us from the Arizona Daily Star, says that a marker on Riley’s RediRipe stickers detects ethylene gas, which is released by fruit or vegetables as they ripen. As that happens, the sticker turns from white to blue. The more ethylene the fruit produces, the darker the blue. The color shift needs about 24-48 hours, depending on how fast the fruit is ripening. A few bugs that still need to be peeled away: The stickers do not change color to reflect an over-ripe or rotten piece of fruit and not all fruit produces enough ethylene to be detected by the the sticker. But given the tons of product discarded every year and the burden on the supply chain to quickly move the produce from where it goes to where it’s eaten, this looks like one academic effort that may truly bear fruit.…

When Wal-Mart corporate wants to change a policy or procedure, it's fond of trying it in a small way in an out-of-the-way place to see if it works. Read more...

In what's been called the self-checkout diet plan, retailers are learning the unintended consequences of self-checkout systems, as they see sales of candy, Hollywood tabloids, batteries and other checkout lane impulse items plummet.

A very small part of the answer for this phenomena is that retailers are typically opting to not put such impulse items next to self-checkout systems, said Greg Buzek, president of the IHL retail consulting firm, which has just completed a self-checkout study. The core of the problem is simply the way consumers interact with self-checkout systems. Typically, they have to pay much more attention to choosing a lane and to watching their products and scanning them, thereby leaving almost no time for browsing magazines or otherwise being tempted. Read more...

The $9 billion Subway chain of more than 26,000 sandwhich restaurants is going to be ringing customers up with its six grams of fat or less messages in August, as one of its franchisees experiments with mobile marketing.

The franchise has struck a deal with mobile payment vendor MobileLime "to market to preferred customers in real-time by offering alerts and discount coupons to cell phones," according to a MobileLime source.Read more...

Visa on Friday changed its retail security requirement structure, which will—because of a change in definition of what a qualifying transaction is--have the impact of forcing more retailers to use its more stringent security procedures.

The core change is including all transactions when determining what level a retailer should be. Before, the criteria was limited to online purchases. "The most significant modification involves the Level 2 merchant category, which previously only applied to merchants processing between 150,000 and 6 million Visa e-commerce transactions per year," a Visa statement said. "Level 2 has now been broadened to include all acceptance channels and applies to any merchant processing 1 million to 6 million Visa transactions per year."Read more...

At the end of every week, StorefrontBacktalk.com will assemble some of the industry’s top consultants, analysts and IT executives to discuss that week’s retail tech developments. We inaugurated our StorefrontBacktalk Week In Review on July 21.

The July 21 panel included Pete Abell from IDC, Paula Rosenblum from the Retail Systems Alert Group, Greg Buzek of IHL and Mark Rasch, a former federal prosecutor who today serves as VP for Solutionary.

The panel–moderated by StorefrontBacktalk Editor Evan Schuman–ripped into a wide range of topics. Listen to Rasch, Rosenblum, Buzek and Abell discuss the new PCI changes announced by Visa or Rosenblum, Rasch and Buzek debate how multi-channel will likely do this holiday shopping season. Abell tackled HP’s RFID-rival Memory Spot alone while Rasch, Buzek and Rosenblum ganged up on self-checkout trends, including a fascinating discussion about self-checkout obliterating impulse purchases. Rosenblum and Buzek also argued about workforce management technology, concluding that the larger companies are–much more than they initially thought–avoiding workforce technology.

Please listen and shout your feedback to us.…

Outsourced live chat is nothing new and as long as there is no law passed requiring live chat personnel to answer the questions being asked and not just read from a script, its value will be limited. But one veteran provider of these typing services has been toying with an interesting twist. Live Person is now pushing a database-driven process that automatically pops up a live chat session when it concludes the customer is having some difficulty, such as with an abandoned cart or he/she seems to be waffling between two similar products.

But the interesting part is that the software looks at the nature of the products involved in the confusion and assigns an appropriate product specialist to handle that query, to allow–in theory–a much more sophicated and specific exchange. Said one company exec: “If you’re buying a snowboard, you’re matched only with a snowboard gearhead.” This is an effort we’re going to be watching.…

Coupons are a time-honored retail tradition, but like secret Black Friday promotions and regional pricing, there is a good argument that they may no longer make sense. There are many Web sites today that are designed to empower consumers, often ostensibly against the interest of big business, whether those are major retailers, government agencies or large publishers.

Some of the more interesting ones help consumers get around mandatory free site registration—such as www.bugmenot.com--or get to a human voice when locked inside a voice-system hell (www.gethuman.com).Read more...