StorefrontBacktalk

The Backward World Of Loyalty: “I’d Like A VCR, A Wired Phone and a Plastic Card-Based Loyalty Card, Please”

Todd L. Michaud — Tue, 07 Feb 2012 17:14:42 +0000

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.

Neiman Marcus Goes Down, But Only For A Special Few

Frank Hayes — Thu, 02 Feb 2012 06:46:42 +0000

Why are small problems sometimes the biggest pains? Sometimes because they're the hardest to spot. On January 25, Neiman Marcus' Web site was inaccessible only to customers using Internet Explorer versions 6 and 8 on Windows 7—everyone else was apparently able to get in without difficulty. This sort-of outage should have been easy to fix, but it lasted more than nine hours.

That suggests the Dallas-based high-end retailer made a change in the wee hours—exactly when you'd expect—but then accidentally left test code in the homepage. The result: a Web site that probably worked fine for everyone in IT, just not for all customers.

MasterCard Pushing EMV PIN. Visa? Not So Much

Evan Schuman — Thu, 02 Feb 2012 06:33:25 +0000

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.

Home Depot’s Try At Not Shutting Down Completely Leaves Customers Running In Circles

Frank Hayes — Thu, 02 Feb 2012 05:53:29 +0000

Home Depot took its Web site offline on Wednesday (Feb. 1) to upgrade its version of IBM WebSphere from version 6 to 7. (Exactly why the planned outage began at noon on Wednesday seems a little mysterious, but Home Depot knows its traffic patterns better than we do.) However, in what was apparently an effort to give visitors something to read, the “Pardon Our Dust” default page included a link to Home Depot’s company blog, which even had a new post for do-it-yourselfers on Wednesday.

Only one problem: The new blog post had a link to where customers could buy that product on the site—which, naturally, took the customer to the only page working on the regular site, the “Pardon Our Dust” page. In fact, all the blog’s links went either to that page or to a grim-looking error page headed “Moved Permanently: The document has moved here”—and “here” turned out to be a link to the “Pardon Our Dust” page (from which they could, of course, click on “Blog” again). Enticing customers with products you can’t sell them—and then running them in circles? Sometimes the best thing to do really is to just close the store for the day.

The Never-Ending Dance Of Contactless Security

Evan Schuman — Thu, 02 Feb 2012 04:05:41 +0000

For quite a few years now, the contactless payment world has enjoyed an endless-loop of defend-and-repel games when dealing with contactless security. The game starts with bank assurances that the data being transmitted wirelessly couldn't possibly be enough for a thief to perform a transaction. Next is some public demo of a security researcher wirelessly grabbing data and completing a transaction. This is followed by industry refutations that the system demoed was either out-of-date or some part of the test was unrealistic.

Interestingly enough, there's truth on both sides. But the dance of demo-and-explanation seems to never slow.

Amazon’s New Sales-Tax Strategy: No More Mr. White Knight

Frank Hayes — Thu, 02 Feb 2012 03:22:26 +0000

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.

Thieves Stealing Poorly Protected EAS Keys: An Amazingly Serious Achilles Heel

Evan Schuman — Thu, 02 Feb 2012 03:03:43 +0000

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?

It’s Time to Ditch the Spaghetti Diagrams

Todd L. Michaud — Thu, 02 Feb 2012 02:30:04 +0000

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.

Losing Control Of Almost Everything In The Cloud

Mark Rasch — Thu, 02 Feb 2012 01:22:02 +0000

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.

Macy’s In Australia: No, John, It’s Not All Thanks To eBay

Frank Hayes — Thu, 26 Jan 2012 05:43:05 +0000

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.

As PayPal’s Home Depot In-Store Trial Expands, Can Users’ Sloppy Security Habits Change?

Frank Hayes — Thu, 26 Jan 2012 05:32:08 +0000

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.

The Square Mobile Conundrum: Data Goes In, But It Doesn’t Come Out

Evan Schuman — Thu, 26 Jan 2012 03:51:38 +0000

When a customer walks into a store and gives a payment card to an associate, who charges it on a store-branded mobile device, is that customer interacting with that retailer? If that device is using Square, the answer is "no," but the customer won't know that. If an E-mail address is requested, is it for Square or that retailer?

If a marketing opt-in question is posed, who is posing it? And how will customers react when they later learn they weren't sharing with whom they thought they were sharing? Bad news: This is not hypothetical. There is a broader issue at play here. With any of the third-party mobile payment efforts—Google Wallet, PayPal, ISIS, maybe even Apple—there is the potential for this type of confusion.

Target’s Showrooming Futility: It Should Be Winning But It’s Not

Evan Schuman — Thu, 26 Jan 2012 01:37:36 +0000

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.

In Theory, E-Commerce Sites Are Way Too Slow. But Do Customers Care?

Frank Hayes — Wed, 25 Jan 2012 22:58:43 +0000

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.

Fortnum & Mason’s PCI Weakness: Customer Service

Evan Schuman — Wed, 25 Jan 2012 19:22:47 +0000

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.

Hy-Vee Using Twitter To Do An End Run Around Apathetic Associates

Evan Schuman — Wed, 25 Jan 2012 18:49:03 +0000

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.

Should CIOs Now Surrender To Marketing? (Oddly Enough, The Answer Is “Yes. With Limits.”)

Todd L. Michaud — Wed, 25 Jan 2012 02:28:04 +0000

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.

The PayPal Problem: Will It Impact Retailers’ PCI Scope?

Walter Conway — Mon, 23 Jan 2012 20:19:49 +0000

Given that PCI only applies to payment transactions for the five major card brands, PayPal transactions would not normally be in scope. But recent pilot programs by at least one major retailer and an announcement by a POS device vendor has PCI Columnist Walter Conway questioning the conclusion that PayPal transactions will remain out of PCI scope.

If a PayPal card triggers a transaction on an underlying Visa or MasterCard, might that PayPal account be considered a "high-value token" and, therefore, be in scope for PCI? And if the PayPal account is in scope, is it a big deal?

Visa’s Chip-And-No-PIN Plans For The U.S. Making Some Nervous

Frank Hayes and Evan Schuman — Thu, 19 Jan 2012 05:57:25 +0000

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.

Parsing Wal-Mart’s Web Plan: How Far To Push The Stores

Evan Schuman — Thu, 19 Jan 2012 04:25:12 +0000

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.

M-Commerce Report Contradicted By Its Own Numbers

Frank Hayes — Thu, 19 Jan 2012 02:47:01 +0000

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.

Zappos Breach’s Payment Card Pledge Very Risky

Evan Schuman — Thu, 19 Jan 2012 02:27:45 +0000

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?

Sears’ E-Receipt Fear: Buy Once, Return Many

Evan Schuman — Wed, 18 Jan 2012 22:57:01 +0000

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.

Wal-Mart’s Stealth Social Strategy: Pretend This Isn’t About Customers

Frank Hayes — Wed, 18 Jan 2012 22:14:31 +0000

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.

In The Security Vs. Compliance Battle Of The Mind, Security Is Winning

Walter Conway — Wed, 18 Jan 2012 21:58:24 +0000

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 May Force You To Rewrite Your Shoplifting Definitions. And 100 Other Things You Haven’t Yet Thought Of

Mark Rasch — Mon, 16 Jan 2012 19:23:38 +0000

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.

Android Is About To Truly Kill The POS Business Model

Todd L. Michaud — Fri, 13 Jan 2012 22:49:16 +0000

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.

Is Visa Making Up Compensation, Fine Calculations? Court Filings Raise Questions

Frank Hayes — Thu, 12 Jan 2012 06:19:24 +0000

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 In-Store PayPal: Mobile Without The Mobile

Evan Schuman — Thu, 12 Jan 2012 02:52:58 +0000

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.

Guess Google Wallet: Great GUI, Hardly Any Customers

Evan Schuman — Thu, 12 Jan 2012 02:49:22 +0000

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.

Guess CIO On iPad Trial: “This Is The Consumerization Of IT.”

Evan Schuman — Thu, 12 Jan 2012 02:45:07 +0000

Walk into one of about 25 Guess stores this week and you'll see customer-accessible iPads in the men's, women's and accessories departments and even in the dressing rooms. "For the cost of a kiosk, I can put in four or five of these," said Guess CIO Michael Relich. "This is the consumerization of IT."

But the Guess iPad trial is hardly being done to save costs. The flexibility of the tablets and sharp, customer-friendly graphics make the devices a much more effective way to show demos and to locate merchandise, check inventory and do anything else that a kiosk would normally do.

With Google’s Social/SEO Mashup, Your Teams Are On A Collision Course

Frank Hayes — Thu, 12 Jan 2012 00:59:27 +0000

After years of making search-engine optimization tweaks to E-Commerce sites to get as high in those search results as possible, retailers are about to face a much more complicated SEO situation. On Tuesday (Jan. 10), Google announced it will now push up search results from Google+ high in its search rankings. The result: Retail sites will suddenly be pushed down in the list of search results by something outside of their SEO control.

But that's just the start. Does anyone really expect that Google won't take this further—and that your traditional SEO and social media teams aren't about to collide?

One Attacker With A Single PC Can Now Bring Down A Whole Server Cluster. Got Any Unhappy Customers?

Frank Hayes — Wed, 11 Jan 2012 17:04:17 +0000

The days of the classic botnet distributed denial-of-service attack may be numbered, and that isn't necessarily good news for retail chains.On January 6, a cyberthief-friendly programmer made public a one-line attack that could enable a single attacker to bring multiple servers to their knees. That moves DDoS out of the realm of requiring a costly botnet for a high-bandwidth mass attack—and brings it into range for a single irritated teenager.

The vulnerability that attack uses is easily fixed. What's really worrisome is what makes the attack practical: the new ability to target server weaknesses that have been known for years—but no one worried about.

CIO Panel At NRF: The Unanticipated Changes From In-Aisle Mobile Payment

Evan Schuman — Wed, 11 Jan 2012 03:57:52 +0000

In-aisle mobile payment isn’t merely a new payment method. It has the potential to force stores to rethink almost all aspects of operations—and few have seriously come to terms with how different environments are going to have to be. At the NRF show in New York City next week, a StorefrontBacktalk IT panel is going to map out the least-anticipated changes. And if you’re around on Tuesday 2–3 PM (1A 21/22 at the Javits Center), please drop by and tell us what we forgot to include. Ann Taylor CIO Mike Sajor, Sears VP/Loss Prevention Bill Titus and the NRF’s Joe Larocca—moderated by StorefrontBacktalk Editor Evan Schuman&mdashlwill look at the neglected items. As a Florida hobby shop discovered while serving as an NCR in-aisle mobile payment beta tester, this in-store mobile payment stuff is a lot harder than it looks.

“It’s really a change management problem,” Sajor said. “Literally everyone has to think through all of the possible change behaviors.” As Sears thinks through in-store mobile issues, it’s seeing how everything will need to change, from the supply chain to customer interactions to SKU-level integrity, inventory and dealing with new threats to the supply chain. “Some significant competitive advantages are going to be lost,” Titus said. The panel will be pure discussion, with no presentations and lots of audience interaction. So please argue with us there. Don’t make me come and find you.

Publix Buy-Online-Pick-Up-In-Store Trial Nixed: Grocery Shoppers Are Different

Evan Schuman — Wed, 11 Jan 2012 03:22:14 +0000

A trial for the Publix grocery chain to allow buy online/pick up right outside the store—similar to what Hannafords has been trialing—has ended with the service being killed. “While our Curbside associates have created many loyal Curbside customers, the number of consistent customers who chose to use this service was considerably less than required to meet our predetermined expectations,” Publix spokeswoman Shannon Patten was quoted as saying.

There is something about grocery chains—unlike almost any other retail segment—where trust is minimalized. For some perishable items—think meats, fruits, eggs or vegetables—where a customer wants to personally inspect items, looking for unripe, moldy items or cracked eggshells. The suspicion that employee-chosen items might inadvertently—or even deliberately—be less picky exists. There’s also a carryover effect, where even boxed or canned goods can suffer from the psychological association with those more delicate items. Grocery shoppers are not averse to tech improvements—see mobile shopping devices, electronic shelf labels or even some instances of self-checkout—but they really don’t want their ability to select to be diminished.