Evan Schuman's StorefrontBacktalk

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.

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.

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.

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.

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.

On Thursday (March 29), California reported that FedEx—with an important assist with IBM and Iron Mountain—had lost highly sensitive data from more than 800,000 people in its child support database. Although it’s a very bad situation, it’s a good case study of the “secure the weakest link” approach, where a small hole in Iron Mountain’s distribution network sent the disks through an insecure shipment service. This is a fate that potentially awaits any retail IT shop, because backup disks ultimately have to be transported somewhere.

Almost as unsettling was a rather reckless statement from the department’s director, where she offered unwarranted confidence in the impregnable nature of disk formatting.

Retailers everywhere are finding themselves being hit upside the head with big data. This data is generated by their internal systems, external systems and end customers, and it’s growing at exponential rates. Quietly, this trend is going to add a new player to the corporate ranks: the Chief Data Scientist.

Organizationally, these functional experts will challenge the traditional organizational structure. Data scientists will likely enter an organization through the IT group, because that department is most likely to engage their services to help drive value from information mining projects, pens Retail Columnist Todd Michaud.

When Amazon on Monday (March 19) announced its $775 million cash deal to buy Kiva, a popular robot automation fulfillment center player, it put many of its existing retail clients in a bind. This includes current Kiva clients—Walgreens and Saks, among others—plus other recent (and possibly current) customers, such as Gap, Crate & Barrel, Staples, Dillard’s, Toys’R’Us and Office Depot. How will all of them feel about systems in their warehouses—which know everything about product flow and, even worse, can control speed, accuracy and efficiency of product flow—being owned and controlled by Amazon, a direct rival? Granted, Amazon would have to be crazy to risk being caught using that information or deliberately slowing down operations. But will the latest technology get shared quickly? Or will Amazon hold onto it for extensive testing in its own warehouses?

And what about the psychological impact of having execs at Walgreens or Toys’R’Us having to write checks to Amazon (or to a Kiva account, fully owned by Amazon)? The devices themselves are impressive little robots, capable of carrying a half-ton of products and knowing where to fetch and where to return. For any sci-fi fans out there, we’re talking about intelligent powerful robots controlled by a corporate empire and working in the inner operations of its rivals. What could possibly go wrong?

Due to the (strange? pyschotic? drug-induced?) unusual policies at Amazon, publishers have no idea who their Kindle subscribers are. That puts us here at StorefrontBacktalk in the awkward position of having to make a plea to our Kindle subscribers: Please reveal yourselves, and tell us how you find the Kindle subscriptions. We’re considering some changes to the service and any customer feedback goes to Amazon—and it’s not sharing. Therefore, we’re begging for whatever feedback you want to share to please share it with us directly.

For you Kindle people who have not yet subscribed to our Kindle feed, it’s not bad for convenience when traveling, when you’d like the latest on retail tech and E-Commerce beamed into your Kindle when you’re not looking.

In our attempts to battle the never-ending assaults by Spammers, StorefrontBacktalk had to do something this week for which we need to apologize. Our direct discussion forum—Go Beyond The Story—was recently overrun by Spammers. To make the forum useful, we had to wipe out existing users. We then put in place much better security. Now, we are asking our readers who had signed up for accounts in the forum to please sign up again.

We have also cleaned up our discussion forum on LinkedIn. If you want to jump into a discussion on our LinkedIn page, you simply need to first join the StorefrontBacktalk group forum. For you Facebook fans, we have also reactivated the StorefrontBacktalk‘s Facebook page. We love when people comment on the stories, but we need to insist that only comments relating to a story be posted to that story. For comments that do not directly relate to a story or column, the Go Beyond The Story forum is home. And we want it to be a noisy home, with lots of loud arguments and shouting. That’s how retail discussions are supposed to be.

Most retailers have yet to dip a toe into merged-channel inventory, but Macy’s is already starting to tweak the model. The Macy’s “Store to Door” pilot (if a store is out of a product, it can be shipped to the customer’s home from another store) is set to expand from 23 to 290 of the chain’s 810 stores this year, but with a twist: Items will ship not from the closest store, but from the store where they’re most likely to be remaindered.

That improves Macy’s revenue, but also sets it up to take on its most threatening rival—Amazon—where the online giant should be at its strongest.

Sears got a double-barreled lesson this week on the risks of letting third-party sellers put products in its online marketplace at Sears.com. On Monday (Feb. 13), customers discovered an exceedingly revealing product image for a $24.99 lingerie item. Word—well, snickers—passed around the Internet until a Forbes blogger contacted Sears for comment, after which the offending image was removed. Sears thought the problem was resolved. It wasn’t.

It turns out there was at least one more copy of the problem picture—this time on Sears’ ShopYourWay.com Web site.

Every time we hear one of these shipping company nightmare stories—with packages lost or recklessly damaged—it’s a painful reminder of how much retailers are at the mercy of these shipping partners. When a consumer makes an E-Commerce purchase and something happens to the product en route, who does the consumer blame?

There may be a way to flip this problem into an advantage. What if chains viewed every store as a local distribution center? And used local talent to deliver not only to customers but on the same day? This approach enables the merged-channel retailer to extend that experience right back into the customer’s front yard and maybe through the front door.

One of the historic problems with RFID has been its difficulty in being read on metal or near liquids. A creative research team at North Dakota State University announced last week (February 2) an approach to turn the metal of the product into a functional antenna. It doesn’t avoid the metal problem. But it is judo-like in turning the problem around. The big downside for retail, though, is that each of these passive tags will cost 50 cents to one dollar.

The tags are 2 to 2.5 millimeters each, but Research Engineer Cherish Bauer-Reich said her group thinks they can get it down to 1 millimeter. “The tags we’ve developed actually use the metal container as an antenna, rather than having to make and place another antenna on top of the container,” said Bauer-Reich. “Many types of tags have to be spaced away from metal, since it changes the electromagnetic fields around the tags and destroys their ability to communicate. These tags, however, use the metal container as the antenna to transmit information. Because of this unique property, these tags can be used to tag anything from coffee cans at a grocery store to barrels of oil or metal cargo containers, with minimal concern about losing or damaging the tag.” She added that their tag’s high-permeability materials divert current into the tag’s integrated circuit.

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.

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.

Best Buy’s Black Friday disaster is a huge deal precisely because it strikes at the very heart of E-Commerce fears. Namely, a consumer needs to feel confident that once an order is paid for, the product will absolutely be arriving shortly.

Although Best Buy has yet to spell out how this happened, the most likely scenario is that it was the so-called perfect storm of bad timing and possibly a quantity typo. How much of a delay happened while employees desperately tried to find the—unknown to them at that point—non-existent merchandise? In a $50 billion chain, news can travel upstream very slowly. When the news is bad, it travels upstream even more slowly.

As is our tradition, StorefrontBacktalk shuts down for the last two weeks in December, due to the fact that y’all are far too busy (a) supporting the biggest selling weeks of the year until December 25th, (b) supporting the biggest returns-and-exchanges week of the year after December 25th and (c) closing the quarterly books until December 31st on what everyone hopes will be a bigger year than 2010.

That means our next regular weekly issue will arrive on January 5th, 2012. In the meantime, everything else will still be live (the Web sites, our Kindle version, our Twitter tweets, our mobile sites, etc.). And we’ll, as always, send out breaking news alerts if circumstances merit.

A message from our beloved business side: As the NRF Big Show happens next month, StorefrontBacktalk has a couple of last-minute slots for anyone wanting to communicate with NRF attendees. In mid-January, as our readers leave their postmortem holiday shopping meetings with the list of everything that went wrong, every feature management wants to add and a wishlist of products to make it all, it’s a nice time message.

We will also be adding several content channels next year—including several new weekly podcast series, more monthlies, events in addition to our usual weekly and monthly newsletters, and Web sites—and if your marketing people have any interest in getting involved, we now have new opportunities. Some of these new channels were specifically created to enable smaller vendors, with much more limited resources, into our community. If your marketers want to get your brand in the middle of these discussions, please drop us a note.

Late on Wednesday (Nov. 30), the 11-year-long battle between the 288-store 29-state Dillard’s chain and JDA Software/i2 finally closed, when JDA agreed to write Dillard’s a check for $57 million. The vendor’s check was to compensate Dillard’s for what were allegedly lies the software company used when selling a supply chain system. But the filings in the case provide a rare look into how software companies regard sales tactics and it’s essential reading for all IT execs before their next meeting with any software sales rep.

Quick background: JDA was not involved in this matter when the sale was made in 2000 and is only now involved because JDA bought i2 in January 2010. In June 2010, the case went to trial and a Texas jury awarded Dillard’s $237 million. That’s an impressive amount given that Dillard’s had only paid $2.4 million for the software. JDA/i2 appealed and Wednesday’s settlement happened while the appeal was still processing. Dillard’s position has been that JDA lied to them during the sales process and that the $6.1 billion chain didn’t receive the value the vendor had promised.

Just a reminder that StorefrontBacktalk now has five free monthly newsletters, each one focusing on a different key area for us: E-Commerce, Mobile, PCI/Security, In-Store and CRM. The Monthlies—see the descriptions here—are available to anyone via a quick E-mail sign up.

The Monthlies publish the first few days of each month, and they are a great way to catch up on all of the news in a given area. So before you miss the December Monthlies, sign up for your free copy.

Given the dominance of the key U.S. holiday next week (we mean Thanksgiving, not Black Friday), StorefrontBacktalk‘s weekly newsletter won’t publish on November 24. Everything else will still be live (the Web sites, our Kindle version, our Twitter tweets, our mobile sites, etc.), but we need a little time off to burn some turkey and over-season some stuffing.

Speaking of which, we want to tap into the knowledge of our audience with a question that has nothing to do with retail technology. One of us here at StorefrontBacktalk is going to try something new for Thanksgiving: Cooking the turkey on a gas grill. The problem is that, well, it’s me. And my Weber grill seems to have two temperature settings: 750 degrees Fahrenheit and OFF. To be precise, it has tons of settings, but those two numbers seem to be the only heat levels the beast is capable of delivering and maintaining. In a short duration grilling (say 5 to 8 minutes), it’s easy to compensate. But when dinner for a dozen people needs to cook for five hours, I’m open to any tricks to get the temperature to get down to 325 degrees and to stay there. Any suggestions? If you do have any suggestions, please E-mail me at Help Evan To Not Turn His Entree Into Sawdust Held Together By Static Electricity.

Macy’s is testing a merged version of its brick-and-mortar and online inventory systems chain-wide, and it expects to go live with the new system early in 2012. On Wednesday (Nov. 9), Macy’s CFO Karen Hoguet told an earnings call that “we’re going to be able to do [chain-wide merged inventory] very soon. We’re testing it right now. And early next year, I think we’re going to start doing it more and more, with the systems we have today. Having said that, we are going to invest over time in better systems that allow us to maximize the inventory easier without as much manual intervention, but it’s not going to prevent us from doing the site to store to door.”

That merged inventory will presumably be the base for Macy’s item-level RFID efforts, which are slated to go chain-wide by 2013. Merged inventory could also smooth out some of the kinks in Macy’s Search-and-Send program, which lets one store access inventory from another store and have items shipped directly to a customer. That’s currently in only a few dozen stores, but it should be easy to roll out chain-wide once the merged-channel inventory is in place.

Shoplifters and employees who steal are classic in-store loss-prevention problems, but fully one-fifth of shrink is due to administrative errors and supplier fraud—things that LP isn’t designed for but that conventional IT should be a lot better at dealing with. According to the annual “Global Retail Theft Barometer” report out this week from the Centre for Retail Research in the U.K., about 20 percent of shrink worldwide is due to administrative errors (including “pricing mistakes, accounting errors and process failures,” the report says) and fraud or errors by suppliers.

That’s a huge chunk of loss that should be fixable with nothing but better automation. The other 80 percent is predictably split between external and internal theft, though that split varies widely: In the U.S. it’s 36 percent shoplifters and 44 percent employees, while worldwide that’s flipped: 43 percent shoplifting and 35 percent internal theft. But using IT to cut administrative-error shrink has at least one big advantage over Loss Prevention: Those errors aren’t working hard to hide themselves. And if you can use better systems to cut admin-error shrink in half, that’s roughly as good as catching a quarter of your shoplifters.