Evan Schuman's StorefrontBacktalk

In a sign of the times for beleaguered RFID, when $8 billion apparel and home furnishing chain Dillards announced Tuesday that it was beginning an RFID pilot, it spent most of its short statement detailing various restrictions on its trial efforts. It’s sort of like announcing a brand-new hire by telling employees all of the things you won’t permit the new person to do.

The item-level RFID/Electronic Product Code (EPC) trial will feature “tags designed to be removed at the time of purchase. They are not required in the event that the customer wishes to return the garment. No link will be made between the garment information held by the tag and the customer’s personal information,” said the retailer’s ultra-happy news release.…

Visa on Wednesday introduced what it said was its smallest payment device ever. The Visa Micro Tag is a contactless fob designed to hang off of a keychain.

Visa has waived the requirement to have an account number embossed or printed on the device, in an attempt to boost security. The new payment device will be issued as companion devices to existing credit, debit and prepaid cards, Visa said.…

Giant pizza chain Domino’s has placed an order for mobile marketing for go, hold the reboot. On Thursday, the $5 billion pizza parlor group said that customers with web-enabled cell phones could place their order from almost 2,500 of Domino’s 5,128 U.S. stores on mobile.dominos.com.

With a password, “all orders saved on the system will carry-over to their mobile device — including any coupons associated with the order,” said a Domino’s statement. Designed for the mobile screen, the statement claims the service “automatically adapts to the size of any cell phone screen, no matter what service carrier customers use.”…

Consider: In the early days of E-Commerce, a typical retailer and manufacturer might have between eight and 12 products that it is actually marketing, especially with search engine links. Today, that same company would typically be doing the same kind of Web marketing with some 12,000 products, said Tim Armstrong, who serves Google as its president of advertising and commerce for North America.

Armstrong argues that this is morphing ad budgets into operational budgets. Is a Google ad akin to a traditional piece of advertising—something that an ad budget should fund—or closer to the cost of a car dealer building a new showroom and dealership?

TJX is still retaining customer data for far too long—18 months—and for the wrong reasons, although it's current wireless efforts appear adequate, according to a report issued Tuesday by the Office of the Privacy Commissioner of Canada and the office of the Information and Privacy Commissioner of Alberta.

Even after deciding in September 2005 to move to WPA, the report said, it didn't complete the rollout until mid-January 2007, which was the exact point when TJX announced to the world the largest retail data breach ever.

The Canadian privacy officials were not pleased with TJX's encryption efforts. "There were flaws. TJX relied on a weak encryption protocol and failed to convert to a stronger encryption standard within a reasonable period of time," the report said, adding, "While TJX took the steps to implement a higher level of encryption, there is no indication that it segregated its data so that cardholder data could be held on a secure server while it undertook its conversion to WPA."

The good news is that major companies are now actively pushing mobile. The bad news is that they're pushing in different directions. The mobile phone e-commerce activities you're seeing today are going to fall victim to the same amnesia fog that envelopes all of those early Web searches done on text-based browsers.

Although the Web had been around for years, it was the graphical browser that got the industry to agree on one way to create Web pages that could fire the imagination of businesses and consumers. That defining moment has yet to hit mobile commerce. Forget design and programming issues. There hasn't yet even been broad agreement on how m-commerce is supposed to work. Let's start with simple payment.

McDonalds is experimenting with the ultimate line-buster in South Korea, where customers purchase food on their cellphones, which then ring when the order is ready.

But this trial is much more an RFID effort than a traditional mobile experiment. Most of the phone's communications capabilities and its display are barely used, with customers having to download a McDonalds application into their phone.

The implantable RFID chip story is getting more frightening, with the Associated Press now reporting a series of tests showing cancers being caused by the implants.

This is potentially significant as Applied Digital has been working aggressively to implant these chips as widely as possible. Although this isn’t likely to have a huge impact on traditional retail RFID efforts, any reliable reports of cancer-causing agents are going to raise questions. With tags being sewn into the layers of clothing, will the cancer reports become more widespread?…

In another unintended consequence example, contactless payment and mobile payment efforts seem to have stunted the growth of retail biometrics. Is this a marketing fault or the death of an idea that never had much of a chance?

A few years ago, retail biometrics had what seemed to be a very bright future. They promised superior security and a permanent CRM association. If that customer switched credit cards, moved to another state, changed their name and changed cellphone companies, the fingerprint would still allow all purchases to be associated with an individual customer.

For more than a year, Visa has ominously warned large retailers that it would enforce a strict Sept. 30, 2007, deadline for many of the nation's largest retailers to either be certified that they comply with industry credit card security requirements or face fines and being expelled from discounted credit card fee programs.

But as the deadline has gotten closer—and the percentage of retailers certified as compliant is still quite low--Visa has been forced to back off, albeit slightly. This month, Visa has been quietly floating memos that will soften the pain for non-compliant retailers, as it's become clear that non-compliants will have strength in numbers come early October.

When the $17 billion retailer reported that pre-tax $168 million possible hit for its data breach, did it see it as anything more than a cost of doing business? And a minor cost at that?

With all of the numbers that TJX issued in its Tuesday earnings statement, the one that has generated the most attention was a $168 million estimated hit associated with the data breach announced in January, which saw consumer information from an estimated 46 million debit and credit cards walk out the door.First, the optimistic side. TJX did not, in fact, say that it actually has spent—or necessarily will spend—anything more than a tiny fraction of those dollars. The overwhelmingly largest charge—a $107 million after-tax figure for the chain's second 2008 fiscal quarter—was merely a "reserve," a nestegg for what TJX fears its costs may be. Theoretically, its costs might be much lower.

In mid-September, London will launch its first large-scale contactless payment trial, with some 2,000 retailers slated to participate. Although Europe has more aggressively embraced various wireless technologies than the U.S., it has sharply lagged the U.S.—and certainly parts of Asia—with contactless payment.

"As in many major cities across Europe, millions of people across in London use contactless ticketing on public transport. However, when it comes to contactless payments, challenges remain with regard to business models and partnerships," said Jonathan Collins, an RFID senior analyst with ABI Research.

How did the TJX breach start? Reports that the attack began using a wireless entry point have been confirmed by multiple investigators, but reports that circulated in March that the attacks began via an in-store employment kiosk have re-emerged.

Could both be true? It’s unlikely, as both entry attempts were reprotedly successful, raising the question of why the second was attempted. Could TJX have actually been the victim of two simultaneous and unrelated attacks, one using wireless and the other a jobs kiosks that was not firewall-protected?

The latest kiosks reports have the terminals being opened and the bad guys using USB drives to load software. Read more.…

In our Retail Week In Review audiocast for Aug. 8, our panel looked at: Consumer Reports story that U.S. consumers lost more than $7 billion over the two years to viruses, spyware and phishing schemes; the Black Hat conference and its demo of how easily cookies can be captured online and used to fake identification; and the security issues surrounding contactless payment, as MasterCard announced this week a sharp expansion of its PayPass contactless card program.

Panelists this week were: Mark Rasch, former head of the U.S. Justice Department’s high-tech crimes unit; Motorola’s Chris Hinsz, who is the newest member of the PCI Security Standards Council; and Dave Taylor, president of the PCI Security Vendor Alliance, whose dayjob is with Protegrity.

Site visitors can listen to the full 30-minute discussion or to panel introduction plus just the conversations about Online or Contactless Payment or Cookies.…

Hewlett-Packard on Wednesday announced that it has created a mobile application that uses imaging algorithms, wireless broadband and the phone's digital camera to allow on-the-fly color matching.

HP is pushing the technology as a way for retailers to help boost sales by, for example, helping sell makeup that matches specific skin shades.

A hospital snack room in Michigan is an unlikely place for a fullblown item-level RFID trial coupled with biometrics, but the 24-hour needs of the facility created the need.

In this eye-opening Detroit News story, the Fast Track Convenience room at Garden City Hospital used RFID tags on all products to charge purchases by–among other methods–deducting cash value on employee ID cards. Employees who can’t grab their ID cards can instead use a biometric thumb scan. With vendor assistance, the project’s initial setup cost the hospital $25K. A story worth reading and thinking about. (Note: Look closely at the photo the paper shot on-site. Love the product-level warning label placed directly on the tag: “Remove Before Microwave Use.” More “fun with microwave oven” potential than I had anticipated with item-level tagging.)…

The bandwidth, input and software limits of smartphones makes even the most basic mobile purchases difficult. PayPal's market entry is a quintessential "more is less" strategy.

EBay's PayPal unit formally entered the mobile payment space Tuesday, arguing that their checkpoint gets more valuable as they reduce the number of features. (Now if only Microsoft could think that way.)

Tuesday actually marked the day PayPal issued a news release about MobileCheckout, which has been fully functional and available since June 11, a full month before the announcement, according to PayPal spokesperson Jamie Patricio.

Tired of various challenges with RFID? A pair of Pennsylvania inventors have been awarded a patent for an RFID-like tracking system that uses light instead of radiowaves. The argument is that it would be more amenable to a crowded warehouse and that it would be less susceptable to unauthorized intercepts.

Patent 7,232,067 (Registering Multiple Similar Items with Flickers) calls for LED tags that will emit visible light, infrared, or ultraviolet. .Read more...

New figures from IDTechEx, the British RFID analysis firm, predicts RFID spending to move sharply toward active tags.

Today, IDTechEx reports, active tags represent some 12.7 percent of the RFID market, a figure that it predicts will hit 26.3 percent by 2017. If cell phone RFID modules are added in, the figures get even more dramatic.…

With the $81 Billion Euro retail giant Metro Group having formally gone into full-fledged RFID deployment, a senior executive there says the efficiencies the chain saw in trials was too compelling to not deploy.

The chain has informed all of its suppliers that they need to ship all RFID pallets to Metro fully RFID tagged by October 1, 2007, said Gerd Wolfram, an IT managing director for the chain.

One of the key hurdles to full-scale RFID deployments with U.S. retailers has been low read accuracy rates, but Wolfram said that wasn't what his people found in European testing. "It's not a problem at all on the pallet level," he said, adding that pallet-level read rates were "about 100 percent."

Sometimes, it’s the simplest ideas that can solve the biggest problems. Consider the supply-chain global outsoutcing issues with clothing. A huge concern is the lack of accuracy of garment measurements.

Enter a a tiny device called an e-tape. I have to give credit to legendary retail analyst Paula Rosenblum, who has now launched her own firm called Retail Systems Research and who started raving about e-tape.

What it does is take the measurement from the garment and wirelessly send it to a PC. So what? Assuming the person doing the measuring places the device properly, this unit sidesteps most of the common errors, such as reading the measurement incorrectly or writing it incorrectly. It also avoids language issues frequently encountered overseas. Not bad for a handheld device.…

Best Buy CIO Bob Willett is arguing that RFID can be a huge boost for retailers, but only if they can convince people they won’t abuse the data.

Willett, in a keynote address at the ERIexchange show in Boston this week, credited some RFID trials with already boosting sales in some isolated areas, according to this story in Computerworld. “Before I’m carried away in a box, I’d like to see checkouts gone from the store,” Willet said. “The technology is there to do it today with RFID. The first major retailer that can do it will be remembered forever and a day as a champion of the consumer.”…

When Hewlett-Packard this week unveiled its prototype Retail Store Assistant—a kiosk that offers customized individualized promotions transmitted directly to a customer's smartphone—it took a business pragmatic position in the personal shopper battle.

There's little debate that customized shopping—taking the CRM customer-specific data one major step beyond the minimally effective coupons at the end of checkout—is almost certainly going to be a key in-store technology over the next few years, especially with grocers. But the form that this customized shopping will take is a key debate.Read more...

Low tag read rates are still preventing RFID from gaining the necessary survival momentum as of mid-2007, even though the potential benefits are looking more attractive, according to a report issued Tuesday from U.K.-based RFID analyst firm IDTechEx.

"The tagging of pallets and cases to meet retail mandates is still struggling to take off," said IDTechEx CEO Raghu Das. "This year, IDTechEx expect that only 375 million tags will be used for this sector, the main reason for this is that the read performance is still not satisfactory for most companies. For example, George Chapelle, CIO of Sara Lee, reports that on frozen and dry foods they achieve about a 70 percent read rate, and on chilled foods the read rates is about 30 percent using Gen 2 tags. With such poor read rates, they cannot realize internal benefits."