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ISIS Launches Trial With Significantly Fewer Retailers Than Planned

Frank Hayes and Evan Schuman — Thu, 17 May 2012 06:12:06 +0000

ISIS has finally named retail names for its mobile-wallet trial this summer in Salt Lake City and Austin. On Tuesday (May 15), the mobile-operator consortium announced that some (but not necessarily all) area Macy's, Dillard's, Foot Locker, Champs Sports, Aeropostale and Jamba Juice stores will be accepting mobile payments during the ISIS trial, along with 19 local merchants in Austin and 29 more in Salt Lake City.

That's not a bad turnout for a normal technology trial. But ISIS is promising just hundreds of locations in cities with a total population of nearly a million—and considering the weak consumer response so far to mobile wallets, anything less than an overwhelming assault may already be doomed.

JCPenney IT “Is A Mess,” Says COO

Frank Hayes — Thu, 17 May 2012 04:29:35 +0000

Now it is IT's turn to take the blame for JCPenney's woes. On Tuesday (May 15), JCPenney COO Michael Kramer told analysts that problems during the chain's terrible first few months under its new "Fair and Square" pricing approach (store traffic down 10 percent, sales down 20 percent) were compounded by out-of-control inventory management and legacy system maintenance that ate up 90 percent of the IT budget—both fundamentally IT problems.

The result: It costs JCPenney at least $600 million per year more than it should to run the chain—which explains a lot about the quarter's $55 million operating loss. "I can think of no other thing to say about our systems and our IT infrastructure, and I have seen a lot of them: It's a mess," Kramer said.

The Delicate Legal, Ethical Dance Of Selling To Children

Evan Schuman — Thu, 17 May 2012 02:16:40 +0000

Here's one for the marketing ethicists out there (is "ethical marketing" an oxymoron?): 18-year-olds come into the retail CRM world as clean slates, even if they have been active E-Commerce and M-Commerce shoppers for eight or nine years. It is illegal to solicit or sell data about children younger than 13—and what can be collected and used about those aged 13 to 17 is highly restricted. When that veteran shopper turns 18, though, can all of his or her juvenile shopping history be sold or even used?

One online payment vendor is preparing to sell tons of youth purchase data—apparently, this is the first time anyone has tried—avoiding immediate legal problems by offering the data in aggregate.

Doing Online Fulfillment In-Store Is Harder Than Macy’s Thought

Frank Hayes — Thu, 17 May 2012 00:37:10 +0000

Macy's efforts to move online order fulfillment into almost 300 of its stores this year got a look from the Wall Street Journal on Monday (May 14), and the result wasn't pretty: The Journal described the in-store Macy's distribution center in a Paramus, N.J., mall as "a dimly-lit, makeshift packing area" and said workers struggled to find merchandise in the store that exactly matched orders specifying colors like "journey" and "magical." Amazon this ain't.

The irony is that Macy's may already have the answer to its product-finding problem—by leveraging a completely different in-store IT initiative.

IKEA’s Online Inventory Problem: It’s Here, But You Can’t Have It

Evan Schuman — Thu, 17 May 2012 00:06:12 +0000

Right before the 2011 holiday season went into ultra-intense mode (in November), IKEA Canada made a key change to its mobile and E-Commerce product availability system. Like many warehouse operations, IKEA crams an awful lot of merchandise into its stores, with much of it dozens of feet in the air, accessible only via forklift.

Under the old system, the site would tell customers that an item was in-store when it was at that store, not differentiating between a product at a lower level and one at a higher level. The problem: Because IKEA safety procedures prohibit forklifts from being used when customers are in the store, customers would come in to purchase their reserved sofa or table, only to be told that it can't be accessed and that they must return some other day.

Do In-Store Sales Just Move Online? It’s Never That Simple

Frank Hayes — Wed, 16 May 2012 23:17:04 +0000

Is online-versus-in-store a zero-sum game? Retailers with E-Commerce experience know the answer, but financial analysts have a different view. In a report this month on online retailing, Citi hits the points you'd expect: Showrooming is bad; "omnichannel" is good. But one of the report's "questions that remain" will likely raise your blood pressure: If, say, 12 percent of your sales are now online, "does that mean that bricks and mortar retailers need 12 percent fewer stores?"

It's a question that makes perfect sense to stock watchers—but it completely misunderstands how merged-channel retail works.

Will A Store-And-Forward In-Store Mobile Tactic Work?

Evan Schuman — Wed, 16 May 2012 22:24:48 +0000

What if having wireless in-store access isn't really that important? Retailers' efforts to make sure customers have constant Wi-Fi access—to fuel mobile functions such as barcode scanning, demo watching and, potentially, even mobile wallet efforts—has certainly proven problematic, whether the reasons are wireless-unfriendly old buildings or young shoppers gulping all of the bandwidth with movies or games.

Beyond encouraging shoppers to use over-the-air access that chains need do nothing to facilitate, what if apps used the mobile device's memory to play those demos and to look up those barcodes, and then waited to update until the device was reconnected? Shopkick is using one version of this modified store-and-forward mobile strategy, as of an update deployed last month.

Yes, Virginia, We Really Do Need A QIR Program

Walter Conway — Wed, 16 May 2012 14:41:07 +0000

Integrators and resellers seem to be resisting a program that would provide stronger enforcement over, well, integrators and resellers. PCI Council General Manager Bob Russo talked with PCI Columnist Walter Conway about the resistance (the program is "sorely needed"), the pricing and the nature of the training. And given the number of industry insiders Russo worked with to create the program, he bristled at the suggestion that the Council worked in a vacuum on this one.

Russo said the training will be an online course so nobody should have to travel, Conway writes.

Big Data Is Exactly What You Think It Isn’t

Todd L. Michaud — Wed, 16 May 2012 14:13:38 +0000

Who cares about Big Data? You should. All of a sudden, Web logs that were kept simply for troubleshooting purposes can now be mined to determine valuable information about customers' preferences, writes Retail Columnist Todd Michaud.

Logs that are created by physical machines can now be analyzed en masse to look for information to help advance a business. Data from social networks can now be mined for customer sentiment. These problems were too big and too complex before. But now, answers are within reach.

A Better Way To Search StorefrontBacktalk

Evan Schuman — Wed, 16 May 2012 13:45:36 +0000

With more than 3,000 stories, columns and GuestViews in the content database here at StorefrontBacktalk, we thought it was time to do a little upgrading. Starting this week, readers (both free and Premium) can search for stories by limiting the search to just the story’s headline—as opposed to the headline and the full text. (Note: Right below the search bar, readers can choose HED Only or Story And Hed.)

The ability to isolate a search to the headline can be useful in two ways. If you happen to remember that the headline mentioned Target, for example, you need not see every story that mentioned Target (or even used the word “target”). The second way is practical. If you want a story that is primarily about tokens—and not a story that merely mentions the word somewhere—the headline-only search can be helpful.

How Often Do Retail App Users Refer Friends? The Stats Tell Two Stories

Evan Schuman — Thu, 10 May 2012 05:25:46 +0000

ABI Research on Tuesday (May 8) published a survey that found that 45 percent of smartphone users who have downloaded the retail-branded app of a chain visit that brand's store more often. But it's the drilldown behind those stats that is particularly interesting. To start with, it's not merely a self-limiting sample. Rather, it's the universe of shoppers who download, say, the Lowe's app, and who are likely to already be huge fans of that brand.

The most striking thing about those stats is that they are less than 50 percent. That means the opposite it also true; namely, that 54.2 percent of that chain's biggest fans do not find that the app makes them go to the store more.

JCPenney Dumps Associate Sales Commissions

Evan Schuman — Thu, 10 May 2012 05:05:39 +0000

As JCPenney continues to recover from its self-inflicted nice-price-all-the-time effort, the chain's latest cost-cutting move came this week when it quietly killed associate commissions and cut back many of their hours. Cost-cutting is fine, but killing commissions right now—as it desperately tries to fight off E-tail incursions in its stores—seems stunningly ill-advised.

As retailers complain about showrooming—and its posterchild, Amazon—the only meaningful way to fight back is to make the store experience so pleasant, efficient and fun that consumers would much prefer to shop than click away on a phone, tablet or laptop.

MasterCard Aims To Take Mobile Wallet Rivals Apart

Frank Hayes — Thu, 10 May 2012 03:08:06 +0000

What Google, PayPal and ISIS are trying to assemble in mobile payments, MasterCard wants to dismember. On Monday (May 7), the number-two payment-card brand unveiled a mobile wallet and an E-Commerce payment system that are designed to cut out any middlemen horning in between customers and retailers and payment networks.

Ironically, while MasterCard's PayPass Wallet for NFC-equipped phones got most of the attention, that's still largely a pipe dream—MasterCard hasn't even talked any mobile operators into giving it access to the NFC chip. But the online payments effort will offer tokenization to reduce PCI scope for E-Commerce. The bad news: You can probably forget about any interchange relief.

Peapod’s QR Train Station Grocery Trial Shows Mobile Bias

Evan Schuman — Thu, 10 May 2012 02:48:03 +0000

In a series of mobile trials in subway and train stations in Philadelphia and Chicago, online grocer Peapod has been trying to drive sales of milk, diapers and dog food to commuters with a few minutes on—and a smartphone in—their hands. The trials had to deal with mobile technologies with a very uncertain future—such as QR codes—and the frustrating logistics of demoing in cramped public transportation centers.

Peapod got the idea from a wildly successful mobile QR trial that Tesco did in South Korean subways. Peapod's attempt is apparently the first to try and replicate the Tesco efforts in the U.S.

Disney’s RFID iPad Trial Is An Important Lesson When Battling Showrooming

Evan Schuman — Thu, 10 May 2012 01:20:58 +0000

As E-tailers continue their incursions into rivals’ physical stores, the only viable defense is to radically upgrade customer service and the overall store experience. Two of the retailers most known for this are Apple and Walt Disney World Resort. Have you ever heard of an E-Commerce site cutting into the revenue at Disney? What specific tactics can brick-and-mortars steal? Here’s a good one: Disney this month is experimenting with an RFID/iPad combo to upgrade its famous FastPass system—for letting people reserve tickets/times and thereby get much faster access to rides and events. As Disney employees carry iPads, customers’ RFID bracelets will interact with CRM and ride information.

It’s fair to argue that Disney has always been the retail exception. It pushed contactless payment by offering deep discounts, and Disney even successfully got customers to use digital biometrics (fingerprints) for park access. But that’s just the point. With a heavy enough emphasis on experience and customer service, shoppers are willing to do almost anything, including—just perhaps—forgetting all about Amazon.

Reusable Shopping Bags Traced To Girls’ Soccer Team Illnesses

Evan Schuman — Thu, 10 May 2012 00:57:34 +0000

Sometimes, we have to wonder how any customers medically survive grocery trips. We’ve reported on germ-laden shopping carts and paper POS receipts loaded with the carcinogen BPA. Late on Wednesday (May 9) came word that one of the nastiest bugs around—the norovirus—infected an Oregon girls’ soccer team and that it was traced to a reusable grocery bag the girls passed around as they shared cookies.

“The latest outbreak of norovirus reinforces the research we have conducted about the propensity of reusable grocery bags to act as hosts for dangerous foodborne bacteria and viruses,” said Dr. Charles Gerba, a microbiologist and professor in the Departments of Soil, Water and Environmental Science at the University of Arizona. “This incident should serve as a warning bell: permitting shoppers to bring unwashed reusable bags into grocery and retail stores not only poses a health risk to baggers but also to the next shoppers in the checkout line.” The scenario isn’t so far-fetched. All it takes is a bag with raw chicken that leaks—or an egg that cracks—and the bag becomes highly contaminated. It then leaves those contaminants on the conveyor belt, which it shares with the bananas being purchased by the next customer. A good hot water washing with a lot of bleach should remove the hazard, but how many shoppers even think to try?

Best Buy Facebook “Joke” Points Out The Risks Of Handling Smartphone Repairs

Evan Schuman — Thu, 10 May 2012 00:27:47 +0000

Corporate data security policies have always been a challenge. In recent years, thumbdrives, corporate telecommuting and smartphones have made such controls problematic. But the assumption has always been that the data being protected was on the hard-disks or RAM of various systems.

A Best Buy incident this month, however, is a grim reminder that saved passwords or tokens can expose employees to sensitive data—and capabilities—far beyond the bits and bytes of that device.

32-Point Font Might Save Your IT Career

Todd L. Michaud — Wed, 09 May 2012 19:23:56 +0000

It's you versus the sales guy in an epic battle over your IT career. The sales guy has a polished presentation about the features and benefits of his products and services. You have a status report. The sales guy has access to unlimited resources to make your business partners' wildest dreams come true. You have one really great guy who you've overworked to the point that you carry a ton of personal shame.

The sales guy says, "Yes. Yes. Yes." You say, "No. No. No." In this surreal world, pens Retail Columnist Todd Michaud, you are watching your hard-fought IT career be dismantled by an onslaught of companies that shake your hand and look you in the eye as they pitch your demise one product and service at a time. And you had better buckle-up, Buttercup; it's only going to get worse.

The Analytics Hole: Does Anyone Connect The Dots From Mobile To Web To In-Store?

Evan Schuman — Thu, 03 May 2012 03:10:01 +0000

Retailers spend an awful lot of time and money gathering and analyzing online and in-store stats about customer behavior. But what most seem to not do is try and connect the dots.

What did the shopper do right after scanning that barcode? If the answer can be found in mobile analytics data, you're fine. But if the answer can only be found by overlaying that mobile data with in-store CRM data, most won't see it. What about synching E-Commerce activity with calls to the call center two minutes later? Or linking an E-Commerce search to an in-store POS action 20 minutes later? How about social activity matched with any of the above?

John Lewis’ Mirror Trial The Latest In A Long Line Of Frustrated Efforts

Evan Schuman — Thu, 03 May 2012 02:05:47 +0000

For a half-dozen years, retailers have been struggling to find a way to make mirrors work as an in-store-to-Web sales device. Bloomingdale's was one of the first. Its idea was to let a shopper model prospective new outfits to the mirror, which would then transmit the images live to the Web and allow comments from total strangers or a smaller group of logged in friends.

Seems that it missed the fun social elements of physically shopping together. This week, it was British department store chain John Lewis' turn.

Macy’s, Amazon CFOs Say The Darndest Things

Evan Schuman — Thu, 03 May 2012 00:28:04 +0000

Two major retail CFOs in the last week both spoke with unusual candor. The Macy's CFO admitted how much she doesn't like coupons, but said that efforts to minimize them are doomed to fail.

And Amazon's CFO offered two interesting stats: One shows that Amazon is collecting a lot more state sales taxes than is generally perceived, and the second reports that almost 40 percent of Amazon's sales these days are not from products the E-tailer directly sells.

Walmart’s Online Cash Creates New Fraud Problem

Evan Schuman — Wed, 02 May 2012 20:51:03 +0000

When Walmart launched its E-Commerce cash program on April 26, did it open the door to evil-minded rivals by giving them the means to falsely lock up merchandise? That is just one example of the many implications behind Walmart's move to enable people to use cash to make online purchases.

Beyond new security holes on the risk side, the reward side is equally huge. While everyone seems to have focused on the general unbanked audience, a much more interesting prospect for this program is teenagers. Plus, this is sort of an anti-showrooming move, where online shoppers are being lured into the stores. Revenue sharing between Walmart channels is also a point of nervousness with this program. And a store's inability to cancel such online orders—even if the customer then finds the item on the shelf—is problematic, too. This is a rare example of the kinds of compromises—between online and in-store operations—chains must make these days.

The Privacy Triple Play: Digital Giftcards Using Facebook Data And Geolocation

Evan Schuman — Wed, 02 May 2012 20:37:24 +0000

The challenge of giftcards has always been getting customers to remember them when they're actually near the store where they can be used. With that goal in mind, a giftcard service—working with Gap and Sephora—is trying for a marketing triple play: mobile geolocation on top of Facebook data on top of customized giftcards. When a customer is near a retailer whose giftcard they have, it will loudly flag that fact to the customer.

The geolocation opt-in alerts are an interesting twist, especially when a consumer is walking in a city (locally or when traveling) and has no idea that a particular retailer has a store three blocks to the right.

Walgreens’ Searchable Database Of Employee Expertise Has Huge Potential

Evan Schuman — Thu, 26 Apr 2012 05:10:26 +0000

On Tuesday (April 24), Walgreens rolled out what it calls the “first online find your pharmacist” search tool. The idea is that different pharmacists have different backgrounds, different specialties, and this approach enables customers to connect with someone best suited for their medical issues. Whereas this specific app is narrowly focused on drug stores, could the concept work in other areas of retail?

What if chains asked all associates to pour into a database their specialties and backgrounds? What if a Best Buy site could steer you to a store and a specific associate who owns—and is, therefore, highly familiar with—your specific surround-sound system? What if you are a cross-country athlete and want to find a Sports Authority associate who is an expert in that specific sport? Perhaps the database might reveal a much more narrow area: A Macy’s associate who is familiar with Irish wedding gift traditions. A Home Depot employee with experience restoring Victorian mansions. The idea of creating an extensive, searchable database—Web-accessible, too—of all of your associates’ experience and expertise seems relatively low cost with two huge upsides. One: Possible new sales. Two: The very act of creating such a database sends out the message of credibility and a true desire to help the customer.

Best Buy Express Kiosk Acting Very Differently Than It Was Supposed To

Evan Schuman — Thu, 26 Apr 2012 04:37:43 +0000

Best Buy will "reexamine our processes around the Express kiosks" after an embarrassing column from a Time Magazine writer, who just happened to try one of the machines at a Hilton in Chicago. The tested Best Buy Express kiosk—which is owned and handled by a vendor that also creates them for Macy's and Apple—referred the customer to "a store representative" even though there obviously were none, offered an electronic receipt but then forced a written one and, most critically, offered significantly stricter rules for product return.

All this despite a rule that the kiosks are supposed to have the same policies as Best Buy stores. This situation also renews questions about how much—or how little—control retailers should have over kiosks that loudly proclaim their brands.

eBay’s Love-Hate Relationship With NFC

Evan Schuman — Thu, 26 Apr 2012 02:12:15 +0000

eBay CEO John Donahoe, the man who popularized NFC standing for Not For Commerce, seems to have developed a love-hate relationship with near-field communication. He hates NFC and firmly believes it will never be adopted by large retailers, unless it is adopted by large retailers—in which case, he'll love it.

Oh, and Donahoe not only believes that NFC will never be adopted by large chains, but he has a specific prediction of when that adoption will happen—just in case he's wrong. And, no, we're not making any of this up.

Wal-Mart MoneyCard Break-In Offers Lessons For New Payment Tactics

Evan Schuman — Thu, 19 Apr 2012 01:14:34 +0000

As retailers accelerate payment experiments, a recent Wal-Mart experience with a well-established approach offers a cautionary tale. A Buffalo, N.Y., woman this month walked into her local Wal-Mart, gave an associate $1,000 in cash and asked for it to be loaded onto a Walmart MoneyCard, in preparation for a vacation. A couple days later, the customer discovered that the money had been removed by a thief in another country.

The fact that it was a thief who stole the funds is undisputed. However, the immediate next actions of Wal-Mart and Green Dot—which manages MoneyCard for Wal-Mart—is a textbook example not of what should not be done, but how it shouldn't be done.

7-Eleven’s New Age-Verification Provides Proof For Police, But Is Far From Perfect

Evan Schuman — Wed, 18 Apr 2012 23:48:58 +0000

7-Eleven on Monday (April 16) started a new age-check system, one that provides digital proof that a specific person's credentials were checked at a specific date and time. This will provide the nation's largest convenience-store chain with a new independent way to fight back when police say that an underage customer's driver's license had never been checked.

But it won't address many of today's age-ID problems, including waiving license checks if the associate thinks the person is old enough, license photos often being bad enough to fool weak authenticators, and under-age consumers using the driver's license of an older sibling. Still, 7-Eleven has crafted ways to deal with some of those gotchas with the new system.

With IBM’s POS Sale, History Really Does Make A Difference

Greg Buzek — Wed, 18 Apr 2012 22:43:18 +0000

The POS industry on Monday (April 16) had the most significant announcement in the last 10 years, as Toshiba TEC announced the purchase of the IBM Retail Store Solutions Business. The fact that IBM RSS was for sale was one of the worst kept secrets in the industry among analysts.

Several years ago, when Tom Peterson was general manager of RSS, it was a much larger group than the $1.15 billion in revenue reported in the release. Pretty much everything that wasn't mainframe or core supply chain fit under RSS, writes GuestView Columnist Greg Buzek.

Supreme Court: Can A Retailer Resell Cheap Foreign Products For A Profit In The U.S.?

Mark Rasch — Wed, 18 Apr 2012 17:50:19 +0000

Buy low, sell high. Pretty simple. But a case currently before the U.S. Supreme Court tests whether manufacturers can prevent retailers from buying their products for the lowest price simply by, for example, printing the labels for the products outside the United States.

Take the example of a bottle of L'anza brand shampoo, suggests Legal Columnist Mark Rasch. The manufacturer in California sells the shampoo for, say, $5 a bottle in the U.S., but sells the same shampoo overseas for only $3 a bottle. It is perfectly legal for a retailer to buy the genuine shampoo overseas, import it back to the U.S., and then resell it for a profit. But add a label to the bottle of shampoo, and the situation may change.

Unhappy With Your POS System? Take A Peek At Your Last POS RFP. Don’t You Feel Bad Now?

Todd L. Michaud — Wed, 18 Apr 2012 15:58:17 +0000

As retailers—over the years—have asked for POS improvements, vendors have responded by baking changes into the core products. The problem is that the results are now over-burdened with so many options they are a nightmare to use, tragically difficult to support and wallet-emptying to purchase.

Retail Columnist Todd Michaud has a suggestion: Go pull out the last POS RFP you put together and see what percentage of requirements that were in the RFP are actually in use today. It's a safe bet you'll be surprised, especially if it was a long time ago.

The Sign Of POS Hardware End Times: IBM Sells All Of Its Point Of Sales To Toshiba

Evan Schuman — Wed, 18 Apr 2012 15:55:48 +0000

When IBM on Tuesday (April 17) announced it was selling its entire POS business to Toshiba TEC for US$850 million, it was arguably the most explicit sign yet that the retail POS hardware business is on its last legs. Not IBM's POS business, but retail POS activity in general.

Beyond IBM's history of selling out key areas (printers, laptops, disk drives, etc.) a year or so before the market is about to die, this time it's the popularization of in-store tablets along with the integration of mobile and E-Commerce that is aggravating POS's demise. Retail Columnist Todd Michaud predicted in January that this year would see the death of the traditional POS. IBM apparently agrees. (Related Story: Unhappy With Your POS System? Take A Peek At Your Last POS RFP. Don't You Feel Bad Now?

A Real Sign Of Change At Wal-Mart: The Board Adding A Google VP

Evan Schuman — Tue, 17 Apr 2012 23:02:56 +0000

When Wal-Mart announced Monday (April 16) that it was nominating Google exec Marissa Mayer to its board of directors—indeed, it was expanding the size of the board so she could be added—the retailer telegraphed an awful lot about its thoughts on social media, merged channel and, in particular, mobile.

It's striking, though, how much of a contrast the 36-year-old Mayer makes compared with the existing members—with an average age of 60, the board is heavily weighted with CEOs of non-tech companies, venture capitalists and Wal-Mart veterans. The board seems to be acknowledging that it may not be the ideal group to oversee Wal-Mart's moves into the worlds of Twitter, Facebook, YouTube, geofencing and Foursquare.

Stealing From A Wal-Mart? Better Not Drive A Rental

Evan Schuman — Tue, 17 Apr 2012 14:15:15 +0000

A pair of accused Wal-Mart thieves in North Carolina learned a valuable lesson last week: If you're going to shoplift from the world's largest retailer, it's not a great idea to drive to the heist in a rental car.

It seems that as they exited the Havelock Wal-Mart with multiple yet-to-be-paid-for HP desktop computers, store officials did not stop them, but they did jot down their license plate number. Police found that it was from a car rental company, which happened to be able to remotely shut down the engine. And GPS was involved, too. Yep, this was a dual-shoplifter takedown, ultra-geek style.

New Jersey Giftcard Law Is Much More Complicated For Retailers Than Even Its Critics Believe

Frank Hayes — Thu, 12 Apr 2012 04:31:47 +0000

The great New Jersey giftcard exodus continues. On April 5, Blackhawk Network and InComm announced they'll pull their giftcards from New Jersey retailers to avoid a new state law requiring them to collect and store the purchaser's ZIP code. (American Express giftcards are already gone from the state.) Their complaint: It's an IT project that's all cost and no business benefit. But in a merged-channel world, that's not the only problem with the new law.

In fact, what lawmakers probably thought was a simple idea runs into a buzzsaw of complexities—and the IT project is the easiest part of the problem.