Evan Schuman's StorefrontBacktalk

When it comes to loyalty, many retailers are stuck in the 1990s. Does anyone else find it funny that in a world where you can very easily have a video conference with your kids from a $500 tablet over free Wi-Fi from a random hotel, we’re expected to keep a 3.3- x 2.2-inch piece of plastic in our wallets to get benefits from some of our favorite retailers? All of this, pens Retail Columnist Todd Michaud, in an area—such as CRM—where the application of technology could directly impact a retailer’s top and bottom lines.

MasterCard’s Monday (Jan. 30) rollout of its roadmap for EMV in the U.S. set it on the opposite side of payment security from Visa, with MasterCard pushing for EMV with PIN and Visa arguing that PIN isn’t necessary. MasterCard is backing up its preference with some serious fraud-dollar forgiveness. Oddly enough, the much-smaller MasterCard has trumped—or, more precisely, nullified—Visa’s position, at least as far as retailers are concerned.

Given that greater-than-99-percent of Visa retailers in the U.S. also accept MasterCard, chains must go along with whichever brand has the more strict requirements. Typically, that’s been Visa, but not this time. On EMV-related PCI relaxations, however, the two brands opted to adopt identical policies.

Amazon, which last year was spending millions to fight online sales taxes, is now throwing its E-Commerce competitors under the sales-tax bus. Last week, Amazon sent E-mail notices to South Carolina customers, reminding them that they owe sales tax on Amazon purchases—but without Amazon actually collecting tax when a sale is made, thereby hiking the price a customer pays.

That means Amazon gets to build South Carolina distribution centers and enjoy a five-year holiday from having to collect sales tax—while Overstock.com, eBay and even Wal-Mart become the new big targets in the crosshairs of state tax collectors.

It was just past 10:30 PM on January 15 when police say a shoplifter walked into the Murrieta, Calif., Wal-Mart. But as part of a growing trend, she didn’t try and steal any merchandise. What she did was walk over to an unstaffed counter, pull out what seemed to be wire cutters and cut loose the store’s keys to its safer security devices.

Other thieves have opted for grabbing EAS tag detachers, but the point is the same. Beyond protecting products, retailers need to reinforce protections around the devices that protect their products. How are keys and tag detachers handled when not in use? Is there an explicit policy about ignoring EAS alarms?

With all of the new data coming in from mobile and social, retail IT has a truly strategic psychological problem. The old way of creating interfaces between systems can’t scale and will not deliver the results this new world of information overload demands. You’ve got to stop thinking about interfaces and start thinking about services. You’ve got to stop thinking about batch ETL processing and start thinking about real-time data integration and unstructured data.

You’ve got to start accepting cloud computing as a method of scaling your computing platform up and down, pens Retail Columnist Todd Michaud. In short, you’ve got to rip out most of your information architecture and start over.

As retailers embrace the cloud for its flexibility and convenience, they might want to also consider a very serious potential for loss of control. Legally, we’re talking three different types of control loss: Your loss of access to the data; your customers’ loss of the ability to access your services; and the potential for your confidential data to become public records and to then find its way to your competitors.

Paranoid? Not any more, pens Legal Columnist Mark Rasch. Recently, the U.S. Government took down the copyright pirate site “MegaUpload” and had its founder arrested and detained awaiting extradition.

eBay’s bid to become the link between big U.S. retailers and Australian customers is off to a less-than-sterling start. On January 18, eBay CEO John Donahoe bragged to an earnings call audience that Macy’s used eBay Australia to get a foothold Down Under without creating a brick-and-mortar presence. “Macy’s saw that the Australian dollar was very strong,” Donahoe said. “The Australian consumers are very open to import and they’re looking for brands. And Macy’s opened up a store in eBay Australia, and so they’re now reaching consumers in Australia on the eBay platform without having to have assets reside in the country.”

Well, sort of. Actually, Macys.com was already selling to Australian customers last summer, using third-party vendor FiftyOne to handle shipping, customs, currency issues and customer service. And the Macy’s eBay Australia store currently has no products; Macy’s spokesman Jim Sluzewski said the eBay store was tested only through the end of 2011 and Macy’s is now evaluating its results. So Macy’s wasn’t depending on eBay to reach Aussies, and the eBay store was already closed when Donahoe did his bragging. Other than that, he got it right—we hope.

PayPal’s expansion of its in-store payments trial at Home Depot (up from 400 PayPal employees to all PayPal users) marks a huge jump in the trial’s scope—and risk. On January 19, PayPal opened up the trial to include 51 stores (up from the initial 5) and said all PayPal users could now sign up for the system. That should give both PayPal and Home Depot much more useful information on who will use the system, and how.

But PayPal’s approach—which essentially reverses 50 years of payment-card advances by eliminating any physical authentication device—still presents a big challenge when it comes to security. The ability to check out with just a mobile phone number and PIN—no plastic card, NFC-enabled phone or other authentication hardware required—means anyone who can acquire that phone number plus PIN has a free shot at the legitimate customer’s account.

In a futile attempt to fight showrooming, Target is pressuring its suppliers to make it more difficult for Target’s customers to price compare. The most bizarre part is that Target is trying to game a system where it already has a huge competitive advantage.

The historic argument has been that E-tailers have a huge convenience advantage and that a retailer must combat that by leveraging its experience/ambiance advantage. But with showrooming, the customer has already driven to the store, parked, walked to the aisle and found the desired product. The physical store has the convenience advantage 10 times over.

Speed-tuning for retail Web sites may have finally hit a wall. A report released Wednesday (Jan. 25) says Nike, JCPenney, JCrew and Amazon had the fastest retail sites in 2011. But the survey also notes that the most popular and profitable sites are actually slower to load than the average site, because they contain so much content, and that content delivery networks don’t actually speed up load times.

In theory, load times of 3 seconds or more should cost retailers half their customers. If that’s true, E-tailers should be going out of business. Maybe it’s time to dump those theories.

Historic British retailer Fortnum & Mason—with roots dating back to 1704—is finding that PCI compliance doesn’t end with IT. The chain had to confess last week that a customer service rep was asking customers to E-mail their full credit-card data—including CVV—to process routine refunds.

Clearly, one errant employee is something every chain has. But this example brings up a too-often overlooked PCI fact: Compliance is an issue for every employee. Mobile payment, being a disruptive factor, will only make things worse, because it creates many more opportunities for payment-card data to be captured/retained against the rules.

When the $7.3 billion Hy-Vee regional grocery chain on Monday (Jan. 23) rolled out its in-store mobile app, it encouraged customers to use Twitter to report out-of-stock items. It’s a wonderful move, acknowledging—and addressing—a communication hole that exists because of an outdated management structure.

In a typical chain store, what happens when a customer discovers a problem, be it an incorrect price label or an out-of-stock or expired product? It’s up to the customer to track down an associate. What happens then? Usually nothing, because it’s quite unlikely it’s the primary responsibility of that employee to deal with that problem.

In the power struggle between retail marketing and retail IT, IT is getting its server farms kicked. It started with E-Commerce and is now growing with mobile and social. What has to go? If it can go in the cloud, get rid of it. E-Mail? Gone. Web hosting? Out of here. CRM? Exit, stage right. If it can be easily outsourced by specialist firms or even done by people in the business unit, you need to let it go.

It’s time to evict Web and mobile app development, and pretty much any marketing initiative that isn’t core to your business. Heresy? Certainly, pens Retail Columnist Todd Michaud. But it’s necessary.

With Visa’s clarification on January 13 that its U.S. EMV deployments will include Chip-and-no-PIN, retailers are trying to decide if this is a good thing or a bad thing. On the bad side, this forces retailers to immediately trust the chip technology perhaps a bit more than they want to.

“When I think about secondary validation, that gives me more of a warm fuzzy even though we have people saying that I have a more sophisticated chip and that my smart device has got some protection sitting in it,” said Bill Titus, the Loss Prevention VP at Sears.

Few statements are parsed as aggressively for hidden signals and clues as those from Wal-Mart corporate. And few topics have to be handled more delicately than how aggressively Wal-Mart senior management will push merged-channel strategies on its stores. Therefore, the statement issued Monday (Jan. 16) by Wal-Mart about its new E-Commerce chief and how he is expected to interact with stores is getting a lot of close inspection.

Wal-Mart has recently been trying to more closely align stores with various online, mobile and social efforts. But like all major chains, brick-and-mortar management resistance is non-trivial.

Want to drive customers to all your retail channels? Give them a more satisfying Mobile-Commerce site—at least that’s what one analyst says. In a study released on January 12, ForeSee argued that only Apple and Amazon have M-Commerce sites that really stand out for customer satisfaction. Customers said the Web sites of other big chain are better than their mobile sites, which hurts the chains’ ability to get customers to return through any channel.

It’s a fine theory. Trouble is, it doesn’t actually seem to work for most of the 16 retailers that ForeSee looked at, ranging from Best Buy and eBay to Avon and Target.

When Amazon’s Zappos apparel unit announced on Sunday (Jan. 15) that more than 24 million customers had their information potentially stolen from its site, Zappos took the radical—but wise—move of wiping out all of its passwords. That caused massive disruptions to the company, shutting down customer service phone access and access to the site from outside the U.S., in addition to inconveniencing all customers.

But it was the unequivocal declaration that payment systems had not been touched that raised eyebrows. At this early stage of a breach investigation—knowing that cyberthieves tend to be quite good at hiding their tracks and creating misleading tracks—is such a blanket promise to customers reckless?

As retail rapidly moves to integrate mobile into almost every aspect of its customer interactions, many in IT and Loss Prevention are wisely scared about the security holes that will crop up during the rush. One such exec, William Titus, LP VP at Sears, said on Tuesday (Jan. 17) that one of his biggest fears involves mobile electronic receipts.

“The E-receipt problem is that the customer now has a valid receipt. I can’t bring it in. I’m not checking it off and signing off on it. So the ability to use that fraudulently increases unless you have a true returns management system,” Titus said.

Retail chains have been using Facebook and other social media to connect with customers for years, but now someone is trying to use it to acquire new suppliers—and, astonishingly, it’s Wal-Mart. On Wednesday (Jan. 18), the retail giant launched a contest to let would-be suppliers pitch their products with YouTube videos, which customers can vote on to choose their favorite products. The winners get a chance to have Wal-Mart sell their wares online or in-store.

But what’s really clever is how the contest uses social media as stealth customer engagement—an area where Wal-Mart hasn’t been exactly brilliant in the past.

If ever there was an argument where security trumped compliance, the debate about tokenization versus encryption is it. Readers have made that point abundantly clear following a recent column describing the PCI scope reduction benefits of tokenization versus encryption.

The shift in emphasis from compliance to being secure is not new, but PCI Columnist Walter Conway was struck by how pronounced a perspective change retailers are experiencing.

Mobile payment is going to change retail in an unknown number of unknown ways, and your lawyers will have healthy employment. Consider in-aisle checkout and shoplifting rules, pens Legal Columnist Mark Rasch. Today, customers who put products in a concealed place—a pocket, backpack, purse, etc.—while still in the store can be convicted of shoplifting even if they have yet to reach the POS checkout area.

The conceal part of that action is considered evidence of criminal intent. Now let’s see you try and enforce that rule when you have in-aisle mobile checkout.

This year—2012—will be the beginning of the end for the traditional POS platform. Even though many analysts predicted that Apple, and its iPad, would be the David that finally took down the Goliaths, Retail Columnist Todd Michaud is arguing that Google will land the fatal blow.

The POS defense has been that chains need hardened systems. That argument worked when tablets were $500 and even $400. But now that Android tablets have fallen below $100, the argument falls apart. You could have four spares in the backroom and still be ahead.

No retailer likes being fined by Visa or MasterCard for letting thieves steal payment-card data, and most grumble privately about how that process is arbitrary and rigged against merchants. But a lawsuit now unfolding in Utah has uncovered a remarkable level of detail about how arbitrary card brands can be.

The lawsuit is challenging everything from issuing banks’ contracts to Visa’s claims for counting up card fraud and pinpointing who’s to blame—in addition to $1.3 million in card fraud that Visa says the restaurant enabled via an alleged security breach for which there’s no concrete evidence.

Home Depot’s trial to let shoppers pay in-store with PayPal—a program confirmed late last week, which is loosely related to PayPal’s wallet—is interesting more for what it doesn’t do than what it does. It’s a baby-step program in two ways.

On the mobile front, it’s the first retail trial of PayPal’s mobile payment program and it doesn’t use a mobile device at all. (OK, that’s more an embryo step than a baby step.) On the payment front, this is also a test of Home Depot accepting a rectangular magstripe card that doesn’t say MasterCard, Visa, American Express, Discover or Home Depot on it.

Mobile wallets face a time-honored Catch-22: because very few stores support the technology, consumers have very little reason to bother getting it. Exactly how barren is this dial-tone desert for Google Wallet, currently the only actively being trialed game in mobile town?

We have our early clues from the CIO of the $2.5-billion 481-store Guess chain, one of the first test sites for Google Wallet in “a couple of stores” in California since May. In total, how many customers have tried Google Wallet? Says CIO Michael Relich: “Five or six.” Not 500 or 600 customers, mind you. Five or six.