Evan Schuman's StorefrontBacktalk

The sites for Sears and KMart were down for about three hours on Wednesday (Aug. 15), starting around 9:00 AM New York time, in what the chain said was an intentional outage to prepare for an unspecified infrastructure upgrade for the fourth quarter. Planned weekday outages are becoming more common and, for some chains—such as Home Depot—it can be an ideal time to take the site down. One apparel chain has even been using outages as marketing opportunities.

And when Best Buy recently had its own planned outage, not only did the retailer reveal how dependent its physical stores and call centers have come to be on the site, but it also set itself up for an imminent move to the cloud. And it’s that type of infrastructure improvement that Sears had in mind. “It’s a longer term enhancement that we did want to get complete in advance of the holidays,” said one Sears manager. Outages—they’re not just for disasters anymore.…

Unfortunately, not all acquirers are getting the right message out to merchants. One client recently related that an acquirer told the merchant there was no need to upgrade its devices to read chip cards.Read more...

There are two opposite views on the best way to protect sensitive retail data, including payment cards, CRM, inventory, pricing and payroll. The first is the vault approach: You try and throw up as many high-quality firewall locks as you can, and then place all of your goodies in that protected space. The second approach is minimization: You store the data in as many different secure places as you can, so if anyone breaks in they can only access a tiny portion of your data from that single attack.

Retailers very much want to believe in the first approach—and to find legitimacy in the vendor hype pushing it—because it’s so much easier and cheaper. But, as we detail in our August column for Retail Week, the U.K.’s largest retail publication, the only sound security approach has always been: Assume the bad guys will break in, and then make all of your decisions based on that assumption. Please check out the column in Retail Week or, for those of you who are not Retail Week subscribers, you can read it right here at StorefrontBacktalk. …

"People like me, or the Girl Scouts, who use it one month a year selling a few hundred dollars worth of cookies," he wrote. "They are basically a next-generation ISO that is riding the wave of Apple-fandom to bring credit-card processing to the masses."Read more...

Also, despite what various media reports implied, when Starbucks starts accepting Square payments right before the holiday sales rush it will not be the mobile phone stays in the pocket customer identified by first name and a POS-displayed photograph approach that Square has done with a handful of smaller merchants. No, the Starbucks approach will mirror the exact method it's been using for its own mobile payments for years: Customers will display a 2D barcode on their mobile phone, the Starbucks associate will scan that code, and then the store's existing POS system will handle it normally.Read more...

For example, what happens if a thief manages to scoop up that Wallet ID? Could that give him access to all a customer's payment cards? There's no current mechanism for shutting down all of a shopper's cards. That's the hole with today's fraud systems: Everything at the processor and card-brand level was designed to protect cards, not wallets.Read more...

Tesco's reaction—overreaction? Ludicrously counterproductive overreaction?—was fueled by the interaction of mobile and self-checkout. That mobile/self-checkout part is where barcodes can be fed into systems manually. But if you think this is no more dangerous than a shopper getting a $3 half-gallon of milk for 3 cents, think again. It goes way beyond fake product barcodes to include fraudulent coupons, forged giftcards and SQL injection attacks. Read more...

In that category, Shopkick blew everyone away with an average of 3 hours, 19 minutes and 11 seconds. So why did Shopkick blow everyone else away, average time spent wise? It has to do with the nature of that app, not that its users were so enraptured by the content.Read more...

That's a great idea for large chains. But smaller merchants will have to buy in, too—and they're the reason every attempt to improve payment cards so far has failed.Read more...

Charlotte Russe, a 500-store youth apparel chain, recently cited almost 100 percent read-rates on its text messages, which pretty much indicates the lack of understanding of text open-rates. In E-mail, an open-rate means someone has read the subject line and the from line, and then decided the message is worth exploring. In text, “opening” means far less, if anything at all. But that doesn’t mean there are no good ways to gauge message effectiveness—redemption rates do a wonderful job—and it also doesn’t mean there are not good ways to make those messages get read more often. Consider, for example, a customized honeypot approach—sort of CRM for texting.

Few retailers are using text timing as a means to send such messages more effectively. Most consumers tend to open and respond to texts during certain hours, based on their schedules. To determine those optimal times requires little more than sending some very deep discount offers—offers too good to resist—to get targeted shoppers to respond quickly. By sending two or three such honeypot messages over the same number of weeks (use different days to gather more data), you can map the best times to send messages to those shoppers. This approach goes beyond tailoring the message to the individual shoppers. It also tailors when to send that text.…

It's also another blow to the credibility of Google Wallet and ISIS (both signed up Vivotech as a POS partner) as well as PayPal's in-store payment system (Vivotech put a "Pay with PayPal" button on all those Home Depot PIN pads).Read more...

This discussion, though, is really about a much more strategic and fundamental issue. With showrooming and reverse showrooming and everything in between, does the very nature of retail Web pricing have to be rethought? Once the price comes off the Web page, everything is up for discussion. Customized pricing? Pricing based on how generous shoppers have been with their last five purchases? Is this another way to ditch the bottom-feeder bargain hunters? Will chains offer deeper discounts to people who shop with a short list of their most direct rivals? Will Target.com charge a lower price to someone coming to its site from an Amazon visit as opposed to a Barnes & Noble visit? And could this flex pricing ever make the transition to in-store, leveraging mobile?Read more...

Sometime in mid-July, the machines were given a "routine update" via a blast from a Walmart server, said Walmart spokesperson Ashley Hardie.Read more...

When retailers bank so significantly on in-store connectivity to boost their customers' experience, considering both usability and the store's design is vital. Lee Broom, the interior designer responsible for the look of the recently launched Coast, said the integration of iPads as payment devices was integral to the new store's look. Read more...

But the real problem—Visa's death-grip on payments—isn't one any lawsuit will solve. Big retailers abandoned their store cards because taking Visa was cheaper than maintaining their own credit infrastructure. Now Visa is holding all the cards, and chains are unenthusiastic about any of the alternatives.Read more...

If this approach works—it's already been tested with much smaller merchants—the potential is for payment cards to be associated with anything that the full-blown digital wallets have promised: giftcards, loyalty programs, stored value, etc. Read more...

That theory is crucial to the century-old chain's makeover, which Johnson said will also include all-RFID sales ticketing within six months, elimination of cashwraps by the end of 2013, and a plan to combat showrooming by making 75 percent of its inventory JCPenney-only products to make direct price comparisons impossible.Read more...

Behind this approach is a deal Shopkick cut with Mood Media, one of the largest retail in-store music providers. What this means is any chain that happens to use Mood for audio has a quick-and-easy way to offer mobile marketing. But there's a lot more to this. Those speakers can also offer in-store geolocation.Read more...

That means no signage telling customers about it, no references on the retailer's Web site (and certainly not its homepage), no marketing, no reference in E-mails to customers and no associate training so that at least they can tell customers. The mobile map app itself doesn't even have Walgreens' name, so if a customer using either an Apple or an Android smartphone went searching for Walgreens, he or she wouldn't find it. The only way to download the Walgreens map app is for a shopper to happen to know to search for the vendor's name.Read more...

Apple's billion-dollar third-party payments business takes a larger than Visa cut, sets less flexible than Visa operating rules, and then offers less help than Visa in securing transactions. And this is the company that's supposed to rescue retail from Visa's interchange rates?Read more...

A company called QThru, for example, is making waves with a mobile app that handles product identification and completes mobile payment through scanning an old-fashioned barcode. Its claim to fame: that the app identifies the product within two seconds even when the hand holding the phone (which is taking the picture of the barcode) and the hand holding the product with its barcode are both shaking and when the barcode is incorrectly positioned.Read more...

The purge also sets the stage for the chain's "new technology platform" that CEO Ron Johnson said will be announced in August. From all indications, the focus will be on mobile and in-store, not the datacenter.Read more...

Maybe Apple can’t dominate every in-store device niche after all. A blog discussion at KioskMarketplace this week has kiosk developers debating whether the iPad’s lack of wireless-only connections, relative screen fragility and regular need to be reset makes it a poor choice for kiosk conversion. (The original July 2 post is headlined “iPad kiosks: The cheap, unreliable kiosk solution.”)

As commenters to the post point out, there are workarounds to some of the technical problems (though not to the persistent problem of Apple’s lack of enterprise support). But with a burgeoning crowd of iPad-to-kiosk vendors and given the fact that lots of chains are looking hard at such as approach, it’s worth asking how much of the vaunted Apple experience customers will get from an iPad buried in a kiosk. Customers won’t get to handle it or switch between apps—from their point of view, it’s just another touchscreen running a single kiosk application. Which may make iPad conversions just not worth the trouble for retail chains. But who knows? Maybe Apple has finally found a retail use for the Macintosh: as an oversized iPad emulator.…

Although the original 34,000 First Phone devices (which will still be used in stores) can be hooked up to a portable printer to serve as mobile POS, the 25,000 new stripped-down First Phone Junior units will do price scans and inventory checks but not POS, under the theory that it's not a feature most associates need.Read more...

Drilling into the details of the plan raises questions about how different the site will truly feel, and that speaks to how the data is used and to how aggressive the customization is. For example, the more decisions are made—or, more precisely, perceived by customers to be made—about spend levels and then displaying higher-priced items, the more resistance might be encountered.Read more...