Evan Schuman's StorefrontBacktalk

Pity the poor greenback. The National Retail Federation released the results today of its annual holiday shopping survey and neither cash nor checks fared well, having been beaten to a POS by debit cards and check cards.

Those debit/checkcards did their magstrip-tease to the tune of 39.1 percent of all expected consumer purchases, up from 34.3 percent last year. Presidential portraits got the Mr. Bill treatment (terrible play-on-words intended), dropping to 24.3 percent from 28.5 percent last year. Checks dropped sharply to 6.2 percent from 9.1 percent last year.The online survey of 8,090 consumers was conducted Nov. 1-8, with a margin of error of +/- one percent.

Although credit cards are faring poorly compared with debit cards, they’ve actually gained a bit this year, ringing in at 30.5 percent compared with last year’s 28.2 percent and even compared with 2004’s 29.5 percent. Why the slight resurgence for credit cards? “This time of year, people need an option how to finance purchases,” said Phil Rist, VP/Strategy for BigResearch, who did the research study for NRF. “They want to have the option of spreading the payments over time.”…

Is Lowe’s taking advantage of HomeDepot’s customer service woes? The HomeDepot had much of its plans to pour some $350 million over the next six months to boost its sagging customer ratings, which have now fallen below its smaller arch-rival, Lowe’s. But a New York Post report today said that housing market problems are making it difficult for HomeDepot to deliver.

On the likely chopping block? Those self-checkout stations and call boxes that were to allow customers to summon associates to wait on them, the Post reported. “If the macro-economic backdrops continues to worsen, it will be difficult for Home Depot to make good on its commitment to store investment,” said David Schick, an analyst with Stifel Nicolaus.…

We all know that employees are the most likely source of theft at a traditional retail outlet. The latest trend is that identity theft– a huge retail concern with credit cards and especially the newer contactless cards–is also often homegrown.

A fascinating New York Times story today talks about family friends and relatives a likely source of such trust-abuse. The story specifically talks about ex-spouses. This is the problem with Social Security numbers and other lifelong identifications. Once breached, there’s no easy way to start anew.

The most chilling line was about a victim who complained to the District Attorney’s office that multiple checks and an old driver’s license were still missing and that her former friend could still fake her identity whenever she wanted to. The D.A. official told her: “Oh, she won’t do that again.”…

When IT managers at the $2.5 billion Jack-in-the-Box fastfood chain started looking at contactless payment issues this year, it was clear that the RFID-enabled credit cards would be more than a faster way to get customers processed. It would add to the 2,000-restaurant chain's coolness factor and give young customers another reason to check out the chain. This is especially the case with the demographic that fast-food managers most want to cultivate: 18-34-year-old men.

But taking the next traditional step—limited trials in a handful of carefully-watched locations—wasn't going to make the bold statement needed. The company opted instead to immediately rollout out contactless payment to every one of the chain's restaurants—both for the 1,400 restaurants they own and about 600 that are franchised—in 17 states.Read more...

A Rutherford, NJ, vendor is pushing an interesting service, aimed at boosting customer service quality: Take the recordings that many retailers already capture with their customer service reps and make free copies available to that merchant’s customers.

The company, Nice Systems (which is apparently not going to partner with Naughty Systems for the holidays, even though it would be a retail writer’s dream come true), specializes in call recording technology. They’re the people often behind that oddly-phrased “This call is being recorded for quality assurance purposes.” Invariably, the call that they happens is anything but quality and that’s the point. Many customers would rather talk with someone about a problem or an order with, but they also prefer the automatic transcript that an E-mail thread offers. Even IM discussions leave an explicit record of what was ordered and what was promised. The Nice folk want to offer free digital recordings of the conversation so the customers can later prove what was said and how it was said.

Don’t know how many retailers will take them up on it, but it seems like a cost-effective way to encourage customer service reps to be less naughty and more …. you know.…

The approach sounds quite simple. But is IBM’s Watson Research Center’s clipped-tag RFID strategy more simple or more simplistic? The clipped tag approach allows for a good chunk of the tag’s radio antenna to be snapped off, sharply reducing how close it has to be to a reader before it can be read.

This is intended to address privacy and fraud concerns. But even if retailers and/or consumers snap off the antennaadult bounce house, will it’s read-range be short enough to be secure? IBM’s position that it would have to be right next to a reader sounds far too familiar, given how much of the industry said the same things about regular RFID tags until researchers continually proved that to not be the case. When it comes to RFID and privacy, the industry has a very severe credibility problem.…

Newgistics has made a nice little living selling software to help retailers handle product returns. On Monday, the Austin vendor launched a package designed to help with large-scale recalls.

I am envisioning their launch presentation to investors: “People, only invest in this if you believe that American manufacturers are going to screw up a lot more in the next two years.” Betting on manufacturers to botch product safety. Now why can’t my mutual fund invest in that?

The Newgistics program supposedly helps retailers and manufacturers manage “each phase of the recall process, from customer notification to product disposition,” said a company statement. “Once a company has developed the product recall message in conjunction with the Consumer Products Safety Commission, Newgistics works closely with the company to promptly deliver customized recall information to impacted consumers via E-mail or postcard. As a key component of the online recall program, customers can access the Returns Center, an online portal that captures customer information, creates a dynamic return label and conveys recall status information to the retailer or manufacturer. Alternatively, companies can implement the recall program offline, providing consumers with a dynamic return label along with the recall notification.”…

A Toronto POS vendor named Volanté POS Systems issued a news release this week touting its Java-based, wireless point of sale Linux product. Although that on its own wouldn’t typically be note-worthy, this news release included a claim so bold I had to share.

“Research has shown that the number of POS terminals running Linux in North America has increased 80 percent since 2002,” said the start of the second paragraph. Any statement that can be attributed to nothing more specfic than “research” always brings a smile to our BS-detecting hearts. This one didn’t disappoint. That figure certainly sounds impressive, until one thinks about how few POS units were running on Linux back in 2002. *sigh*…

The 176-store grocery Meijer chain is testing RFID-based smartcarts in two stores near Detroit, trying to learn how it takes for customers to complete a shopping trip.

A Detroit News story reports that the retailer also wants to know if carts are in one of four locations: in the corral, in the shopping area, near checkout or in the parking lot. The chain, which operates in Michigan, Ohio, Indiana, Illinois and Kentucky, wants to see if the data will be reliable and will allow managers to juggle cashiers to keep lines to fewer than seven customers. Initial plans are to not track customers as they move throughout the store, but the AeroScout smartcarts are able to do that.

The paper said Meijer is also preparing to do in-store Wi_Fi Internet access and self-checkout lane trials.…

For powerful retail brands, the lure of a branded Web site can change almost everything. Consider HomeDepot’s findings with its catalogue business, where the retail giant is folding two catalogs it had launched barely a year ago.

The two discontinued catalogs–Paces Trading Company and 10 Crescent Lane—will now have their products touted instead on homedepot.com as well as the core Home Depot catalog, according to a report in Direct Marketing News.

Lois Boyle, president of direct marketing agency J. Schmid & Assoc., Shawnee Mission, KS, was quoted as saying the move was “no surprise. Just because you have a database of names, it doesn’t mean you understand their wants and needs or that they want to relate to you in that way.”…

A six-month trial with 500 participants—lead by 7-Eleven, Nokia and MasterCard—has been launched in Dallas. The NFC-enabled phones using MasterCard’s PayPass will process 7-Eleven customer transactions, but with less dependence on the card issuer.

The trial will use over-the-air NFC payment provisioning using Giesecke & Devrient’s new chip management approach. “Previous trials have relied on card issuers managing the provision of each handset before handing them over to each trial participant — a method that would be a barrier to the wide scale adoption of NFC payments,” said a recent ABI Research advisory.

The payment process itself—let alone the security and device issues—have made such trials challenging. “This trial tests a trusted third party model, placing G&D’s new offering in the middle ground between issuer and operator,” said ABI Research senior analyst Jonathan Collins. “Success could help provide a blueprint for other (mobile virtual network operators) and major wireless operators to start to test and deploy NFC themselves.”…

When EBay announced its June that it would launch a contextual Web ad service (a la Google's AdWords) to be called EBay AdContext, officials there said the service was slated to launch in December. On Friday, officials said private beta test results are still being dealt with and that the launch is now slated for next year's first quarter.

The delay is not especially severe, but the program could see more delays next year. On June 21, EBay spokesperson Ali Croft said EBay "expects" AdContext to be live "later this year," but she added at the time that "the official launch timing will depend on how the Beta goes." On Friday, Croft said that EBay was working through the private beta feedback and that the program was now slated to launch in January, but she quickly amended that to "first quarter."Read more...

A recent report that raised serious scientific questions about how secure the new contactless credit cards are could ultimately depress online sales, as consumers might doubt overall credit card security protections.

Jupiter Research retail analyst Patti Freeman Evans told the rest of the panel that the problems with contactless security perceptions could impact a lot more than merely those contactless cards. It could easily impact E-Commerce sales as it plays off of the existing consumer fears that it's easy to get ripped off online because security is so lax. "This just feeds into all of the fears that people were having about this kind of technology and it undermines the credibility of the credit card security systems overall," Evans said, adding that fraud concerns are "the biggest inhibitor to people transacting online. This just fuels the fire of consumer fears that they already have."Read more...

Retailers have for years argued that their online and offline operations should be seen as one. A recent survey suggested that the persuasion was working and that some retailers may regret it.

The survey by Gomez, an internet performance tracking company, shows that many consumers who have a bad online experience are now avoiding the in-store experience from that same retailer. In some instances, that truly is a Catch-22 situation. Nordstrom, for example, has a reputation for delivering extremely personalized and attentive customer service for people visiting their stores. That high-touch attribute is quite difficult to replicate online, setting themselves up to disappoint online visitors. Those disappointed unhappy online visitors would then potentially punish the brick-and-mortar locations as well.

“Retailers have been very slow to understand that, to the consumer, it’s one brand,” said Paula Rosenblum, a retail technology analyst for the Retail Systems Alert Group. “They’re not structured for it. They’re not compensated correctly for it and, in many ways, their technology isn’t set up to accommodate that.” To read the full story, please click here.…

When a group of university-based scientists decided to test the security of contactless credit cards, even they were unprepared for how remarkably non-secure they’d be. That was the backup for the highlight of this week’s StorefrontBacktalk Week In Review show, featuring panelists Patti Freeman Evans, from Jupiter Research, Paula Rosenblum, from the Retail Systems Alert Group, Greg Buzek from IHL, former federal prosecutor/security expert Mark Rasch and Jessica Bryan from Gomez, along with special guest Kevin Fu, Computer Science Professor at the University of Massachusetts and the chief author of the contactless payment report. StorefrontBacktalk Editor Evan Schuman moderated.

To hear what the panel thought and to listen to the arguments, please click here.…

With an eye on ever-increasingly small payment devices, a Los Angeles company Thursday introduced what it dubbed the world’s smallest card-based contactless payment fob, measuring in at 28.5 mm by 23.6 mm (1.125″ x 0.93″).

The company, Oberthur Card Systems, said that the sub-card–named VersaFOB–is snapped out of a full size card at the end of the production process and then inserted into a key-chain casing. MasterCard Worldwide has approved the mechanism as a PayPass product, Oberthur said.

The idea is that the device can be housed in whatever form a company would want, giving them flexibility in how the device would be used. “Until now, most contactless payment fobs have required custom equipment and unique processes to produce,” said Oberthur President Philippe Tartavull. “Regardless of the final shape of the VersaFOB, it is based on a regular-sized card body and can be personalized and mass produced using industry standard practices. This enables Oberthur Card Systems to manage production costs and lower the barriers to entry from a cost perspective.”…

Safeway stores have started installing devices that will plug into existing POS units and use tactile keys to help visually-impaired shoppers make purchases without having to read a screen.

The idea is to help those shoppers privately enter PINs and other confidential data. The chain—which owns Safeway, Vons, Pavilions, Randalls, Tom Thumb, Genuardi’s, Dominick’s, Pak ‘n Save Foods and Carrs—has already equipped every California store with “several of the devices and they will be installed across the country over the next 12 months,” said a Safeway statement.…

As doubts about existing contactless security procedures are running rampant, MasterCard is swooping to rollout early next year a realtime PIN-based debit card fraud detection program, according to a Computerworld story.

The story said MasterCard will use a proprietary risk-scoring model that will look at factors such as account spending, transaction histories and device-level activity to calculate the likelihood of fraud on an individual ATM transaction, such as if a card that in the past has been used only domestically were to be used in a large transaction in a foreign country. MasterCard has for years offered a similar fraud-detection capability for credit card and signature-based ATM transactions.…

An ink defense to the growing fake receipt scam has been rolled out by UK paper supplier Vanguard. The introduction is not coincidentally timed for the holiday shopping return season, with a National Retail Federation survey published Wednesday showing some 52.4 percent of retailers complaining of counterfeit receipt scams.

The Vanguard tactic uses two layers of ink, somewhat similar to the scratch lottery cards. According to a story in The Retail Bulletin, “a cashier simply strikes a fingernail over the ink. If a new layer or color is revealed, the receipt is genuine. Discreet and simple, the inspection can be carried out unknown to the fraudster, giving the cashier valuable time to alert security.”

Vanguard isn’t the only outfit to try and get clever with retail receipt printing this week. NCR on Halloween introduced a new two-sided thermal printing package, allowing retailers to post highly-customized messages on the back of customer receipts. NCR was trying to position the printer as a logical CRM companion. Tracy Flynn, an NCR VP, was quoted in a statement saying: “With two-sided printing, the need for preprinted rolls is eliminated, which removes outdated messaging in exchange for customizable, targeted advertising and marketing initiatives on the back of each receipt.” …

Accusations that RFID-based contactless credit cards can be easily read by thieves are nothing new, but this time, a group of scientists at the Univ. of Mass. has gone quite far to try and prove it.

The group tested about 20 samples from various contactless credit cards and concluded that "the cardholder's name and often credit card number and expiration are leaked in plaintext to unauthenticated readers" and "our homemade device costing around $150 effectively clones one type of skimmed cards." Perhaps of greatest concern is the report's conclusion that "RFID-enabled credit cards are susceptible in various degrees to a range of other traditional RFID attacks such as skimming and relaying." To read the full story,

The latest batch of test results from Keynote Systems released Tuesday is giving more evidence to those who argue that E-Commerce sites must be simplified, reliable and fast even if it means that they are not as gorgeous.

Consider the clothing retailer that came out as number one in both of Keynote's rankings (for speed and reliability): Zappos, a $600 million shoe merchant, which easily beat out much better funded rivals including JC Penney, Kohl's, Banana Republic and Nordstrom. On the other end of the spectrum, the Gap had a lock on last place in both categories. A quick look at the sites of Zappos and the Gap shows why. Zappos' homepage uses tiny images and lots of text. It's design is a bit crowded, but it's functional and efficient. The Gap's site's homepage autoplays music over a brightly-colored Flash presentation that autoplays. To read the full story,

In their efforts to dominate retail software, the several-year-old war of words between SAP and Oracle has leveled off at a merely obnoxious level and has no signs of stopping. Although the back-and-forth rhetoric is nothing new–we ‘ve reported repeatedly on both Oracle’s and SAP’s inclination to not let reality stand in the way of a good news release.

But a new story from the Bloomberg news service puts the distortions beyond carelessness and aggressiveness and argues that it’s a deliberate campaign, intended to force one side to prematurely react to the other. A good read, either way.…

A major Wall Street analyst firm delivered a good news/bad news joke to Yahoo on Tuesday: The good news is that your online advertising space is doing much better than we feared. The bad news is that you're not.

The Cowen and Company report downgraded Yahoo to Neutral from Outperform after it included that Yahoo's recent drop in marketshare--attributed by Yahoo to an industry-wide drop in banner ads and paid search--was a Yahoo-only situation. Don't mean to pile on, but another report today—from eMarketer, which tracks Web ads—also pours HTML unhappiness unto Yahoo's yodel. The eMarketer report gives Yahoo nemesis Google control of 25 percent of all U.S. online ad spending in a calendar year, which is the first time any company has controlled that big a slice of the Web ad market. To read the full story,