Evan Schuman's StorefrontBacktalk

After a cook in one of its in-store restaurants was discovered to have typhoid fever, Nordstrom is trying to directly contact customers who might have been exposed to the disease. The retailer is sifting through point-of-sale transactions from the Nordstrom Cafe in the store at San Francisco’s Stonestown Galleria mall in an attempt to identify specific customers who could have been exposed, but that’s proving more challenging than expected, a spokesperson for the chain said on Monday (May 6).

The San Francisco health department notified the store late last Thursday (May 2) that an employee was diagnosed with typhoid and may have exposed customers who ate in the restaurant to it on April 16, 17, 18, 20 or 27. As of this week, no cases of customers or other store associates having the disease have been reported, according to the health department. But Nordstrom is still trying to track down anyone potentially exposed.

Consumer Reports’ Consumerist website is having some fun with an FTD customer’s complaint that a “customer appreciation” special deal was actually more expensive than the price a new customer could find on the floral association’s site. It seems the customer had bought an FTD bouquet for a friend, then later searched the FTD site for Mother’s Day bouquets. “My husband also started looking for FTD arrangements on his computer, and found that the prices listed for him were $3 to $5 cheaper than those listed for me,” the customer wrote to Consumerist. Clearing all the FTD cookies from my browser made my prices drop precipitously. Clicking on the ‘customer appreciation’ email link to FTD brought the prices back up.”

For customers, Consumerist’s wisecrack—”Watch out for the Customer Appreciation price penalty”—seems pretty appropriate. For retailers, though, it raises a serious problem. You want to reward returning customers. You also want to entice new customers with low prices. The easiest way to tell who’s returning (and link them with CRM data) is with cookies—but that’s an invitation to embarrassment if new and returning customers happen to compare notes.

A large group of major chains—Best Buy, JCPenney, Barnes & Noble, Gap, McDonald’s, Toys R Us and Home Depot—has been dealt a major patent legal blow Friday (May 3) when a jury unanimously sided with a Texas company that owns a gift card processing patent.

Technically, the jury verdict didn’t say that those chains had violated the patents, but merely that the arguments from those chains that the Texas company’s (named Alexsam) patents should be ruled invalid failed. The next case will address the issue of whether those chains had in fact violated those patents. That said, much of the evidence that the chains used to indicate why the patents were invalid can be turned right back against them now to prove that their processes are so similar that it must be a patent violation. As a practical matter, it’s unlikely that this case will see another jury trial, as the parties will almost certainly work out a deal, in which the chains would simply buy licenses for the Alexsam patent. The question will be how much they’ll agree to pay for the patents.

When a Kmart suffered the loss of sensitive pharmacy customer information in mid-March during an armed robbery, Sears officials and lawyers quickly reviewed details and made sure to follow all federal rules—especially HIPAA guidelines. Somehow, though, Kmart never got around to mentioning the data loss to the police, who were never able to find the gunman because the only physical evidence he took with him—a disk containing that day’s data backup—was unknown to them, thanks to Sears.

The Little Rock, Arkansas, police investigating the armed robbery—where the gunman slashed the assistant manager’s tires to distract him before ordering him at gunpoint to open the safe—were not happy about being kept in the dark and possibly lied to. The investigating detective, Det. Julio Gil, “only learned of the cartridges being stolen from Kmart when he was called by media,” said Sgt. Cassandra Davis, who is in charge of the Little Rock Police Department’s public affairs unit. The detective “called Kmart and Kmart only then confirmed. He had to call them and ask about it before he learned what (the gunman) had actually taken. No one from Kmart made a report,” Davis said.

Walmart is arguably the most tightfisted retail chain in the world, constantly driving out costs any way it can. So why is the world’s largest retailer now focused on building its own technology instead of buying it off the shelf? According to the chain’s e-commerce chief, that’s the only way it can get a competitive advantage from the technology.

“We can’t do what we need to do and want to do with off-the-shelf solutions,” said Neil Ashe, Walmart president and CEO of global e-commerce, speaking at a retail conference last week. And one of the first big projects to come from the insourcing is a proprietary search engine that has tighter integration with local stores that will let Walmart continuously customize its search without having to wait for outsiders to develop the features it wants.

Ebay and retailer Kate Spade are doing something this summer that would have been unthinkable just a few years ago: creating a pop-up store in New York that will feature a gigantic touchscreen store window. Let’s be clear—what would have been unthinkable would be a relatively small (82-store) apparel chain taking on something this technically aggressive, even with a partner as big as eBay to help foot the bill.

Leaving aside all the obvious unanswered questions—from “how do you physically protect a giant touchscreen?” to “how much of an exhibitionist does a customer have to be to browse a web catalog that’s taller than she is, right out in public?”—it’s a testament to how inexpensive and physically tough this kind of technology has become that it’s viewed as practical. Of course, that all assumes that the chain and eBay will actually get it to work as advertised.

If a mobile site redesign’s job is to make a site look better and to deliver more sophisticated functionality, then the mobile site changes at Foot Locker (NYSE:FL) delivered. But if the goal is not to slow things to a Web crawl, it apparently failed. Such is the assessment of mobile performance firm Keynote, which evaluates retail mobile performance every month. After the redesign, Foot Locker site availability plunged from 100 percent to 93.42 percent, Keynote found, according to Internet Retailer. That’s the difference between being ranked as the faster retail site late last year and performing dead last on the publication’s 30-retailer index at the end of April. Its 10-second October 2012 home page load time had slowed to 17.42 seconds in April.

“The newly designed site has double the number of page objects and triple the amount of kilobytes,” said Herman Ng, mobile performance evangelist at Keynote. “Another factor that appears to be slowing down its mobile home page is that it now has multiple objects coming from third-party domains, and some of them have a much slower average load time compared with page objects hosted on the Foot Locker domain.” Hg added: “We also noticed Foot Locker’s site availability, also known as success rate, fluctuated the most out of all the retailer sites on the Keynote index. This means there could be back-end stability issues. Another common reason could be that they didn’t provide a maintenance message to end users when their site was undergoing routine scheduled maintenance.”

A new U.S. Federal Trade Commission (FTC) case illustrates how retail chains can get in serious legal troubles when they use third parties to help mine shopper data. Although the FTC did not, in that case, go after the retailers who either provided the marketing company with access to the data or who purchased the analyzed data, we can expect that, in the future, either the FTC or consumers themselves will go after those chains.

Retailers routinely hire technology companies or marketing companies to help them better know their customers. These outside vendors can help retailers comb through mountains of data to determine the profiles of their customers, their wants and desires. But if retailers want to avoid liability for unfair and deceptive trade practices, they had better ask not only what these companies can do, but also how they plan to do it, writes legal columnist Mark Rasch. Even buying aggregated data from an untrustworthy source, or allowing a third party to mine your consumer data, can lead to big trouble.

When Dominos announced its newest marketing tool, “Domino’s Live,” on Wednesday (May 1), it looked initially like it could be an extremely useful tool for pizza buyers. It’s a Webcam in the Domino’s kitchen that watches the pizza being put together and streams it live for anyone to watch. It’s initially being done as a one-store (in Salt Lake City) pilot that runs just the month of May. The potential advantages of such an approach are significant. A customer could watch his order of a half-pineapple-half-pepperoni pie being made and notice right away that it’s being incorrectly made as an all-pepperoni pie.

By dialing that store immediately, he might be able to have it fixed before it goes in the oven. It would discourage moves such as the time-honored pizza-chain tradition of taking ingredients that drop on the floor and put them right back on the pizza. All things that could truly speak to customer service and that could also give pizza buyers a reason to switch to Dominos. Unfortunately, that’s not quite what Dominos has in mind.

This isn’t something one sees every day. A senior Best Buy executive, instructed to create a blog to conduct Best Buy business, goes outside the Best Buy IT infrastructure to set it up herself—along with some colleagues in HR—using freeware and a $30/month hosting service. If the story stopped there, it wouldn’t be that unusual, as frustrated managers have gone outside the corporate structure for decades, not wanting to wait for their project to rise to the top of someone else’s priority list.

In this case, though, the executive was Best Buy’s chief ethics officer, who wanted to have a site outside the direct control of corporate. And she learned a lesson about why one wants to be within the protection of a multibillion-dollar chain’s IT department. She learned that when her Best Buy blog was shut down, possibly due to a cyberthief attack.

EBay’s PayPal (NASDAQ:EBAY) Tuesday (April 30) started pushing its new online login system, called Log In With PayPal. The essence of the new program is pretty much “autofill,” in that it autopopulates the forms of any e-tail site that is part of the program. It also allows PayPal users to login in with their PayPal credentials—which is not new—a move that is intended to make it less necessary for shoppers to keep track of dozens of password/login combos for all of their favorite e-tail sites.

From the shoppers’ perspective, that single login is not that exciting, as most have been doing a very insecure replacement: using the same login/password for those dozens of sites. In effect, that’s what PayPal is doing. The security impact is that if there is a breach—at PayPal, at that shopper’s computer, elsewhere—that password can now be used to access all of those sites. At least that’s the hole until PayPal is contacted and the password is shut down or changed.

Amazon will open eight new U.S. distribution centers between now and the holiday selling season, bringing the total to 54—with almost as many DCs outside the U.S., according to the CEO of e-commerce service provider ChannelAdvisor. The result of the ferocious building spree is that Amazon will then have a DC within five miles of most major U.S. cities. Put another—and more frightening—way: That means Amazon will very likely have a DC closer to your customers than many of your stores.

That dramatically cuts Amazon’s delivery costs, and it’s the most obvious explanation of why Amazon flipped its position on online sales taxes in 2011, from the leading opponent to a major supporter: All those warehouses give Amazon a big advantage over its e-commerce rivals, and it doesn’t want those rivals to have a sales-tax advantage in return.

PayPal’s plan to use Discover’s payment-card network to get its in-store payment system into most U.S. stores that accept payment cards isn’t quite working out. Contrary to what the eBay subsidiary has been touting, all stores that accept Discover aren’t automatically able to take PayPal payments—at least not until they and their acquirers explicitly sign on.

Result: Both Walmart and acquirer First Data have declined to accept the system, and Discover is now doing deals with acquirers one by one in order to get PayPal’s system available in more stores. Discover said on Tuesday (April 30) that it has gotten a green light from 50 acquirers, and it is hoping PayPal will be live in 2 million stores by the end of this year, up from 250,000 now.

New anti-fraud technology that NCR (NYSE:NCR) announced last week for its ATMs might find even broader use in point-of-sale PINpads—but not the way that most PINpads are currently designed. The new features, which NCR is calling SPS (for “skimming protection solution”), involve two elements. First—and most technically interesting—is a jammer that disrupts a skimmer that has been attached to the front of an ATM. When a motorized card reader pulls a payment card into the ATM, the electromagnetic jammer prevents a skimmer from reading the mag stripe on the card.

The second, more mundane technology is having the card-reading device send diagnostic information to the bank in real time when there’s evidence of tampering.

The biggest challenge that is facing marketers in the next five to seven years is the quest to become relevant, which means that they need to become data geeks. In fact, it is crucial that they become bigger and better geeks than their IT counterparts. As the pendulum moves from art to science, many marketing leaders find themselves on a platform of skills that are no longer the keys to success, writes retail columnist Todd Michaud.

Instead of IP addresses, they need to think about e-mail segmentation. Instead of database clusters, they need live content marketing. Instead of disaster recovery, they need to wake up focused on integrated marketing across all digital channels. It’s as much science and math as configuring a new router, and that has many marketers nervous. And it should. But as these marketers find their way into this new world of math and science (digital relevancy), they need to be careful to not cross the fine line between being relevant and being just plain creepy.

Sometimes, a program that makes associates happier—even Walmart associates—can also help the bottom line. Consider Walmart’s mobile (and, to a lesser extent, desktop) program to make it easier for associates to find other work within their Walmart store.

Walmart (NYSE:WMT) has announced that it is expanding—to chainwide—an experiment to let associates more easily see work opportunities in other departments at their store, as a way to supplement their pay. “For example, a bakery or deli associate can now request to work an available shift in electronics or the lawn and garden area and vice versa,” the Walmart statement said, adding that “this program is showing value beyond filling available shifts. It’s providing associates the opportunity to help build their careers by learning about different departments, which helps strengthen our stores and benefit associates and our customers.”

Near field communication (NFC) is retail’s whipping boy these days, with almost every analyst and vendor going out of their way to point out how poorly it’s done and how bleak the NFC future is. And although deep shopper apathy about NFC has justified many of those critiques, major chains—wanting to keep their options open—have hesitated in outright attacking NFC. That’s why a blistering critique from the world’s third largest chain, Tesco, is so potentially devastating.

“NFC was revolutionary 10 years ago but I think it just might have passed its sell-by date,” Lyndon Lee (Tesco Enterprise Consultant Architect) told attendees at a mobile payments conference in London this week, according to a report in NFC World. “Is mobile NFC at the right place, at the right time? I don’t see any real movement or activity. NFC usability is not really revolutionary and, for the general public, is it really that cool? I think the next generation won’t think it’s cool enough for them and they won’t use it. Mobile NFC is unappealing.”

The cooperation of retailers like Lord & Taylor in the Boston bombing investigation proved to be invaluable and provided the most important clues to catching the two terrorism suspects. But retailers should be wary about using that incident as an invitation to increase the amount of surveillance that they conduct both inside and outside of their stores. Video surveillance, although a very powerful tool for certain things, can lead to loss of customer confidence, and even to liability, writes legal columnist Mark Rasch.

In the United States, it is generally presumed that the use of video surveillance technology in non-”private” places (“private” as in bathrooms and changing rooms) is perfectly legal. Unlike audio surveillance, which is regulated by federal and state law, there appears to be little regulation of video surveillance technologies. Retailers regularly employ them for loss prevention purposes, inventory management, and to defend themselves in liability lawsuits such as workers’ compensation claims or “slip and fall” claims by customers. Video surveillance technology can also be useful in tracking customer behavior and traffic patterns; footfall analysis; to evaluate the effectiveness of advertising or displays; and even to evaluate the gender, age and behavior of customers.

With all of the in-store changes being pushed by mobile—including the long-overdue-predicted disappearance of the cashwrap—retailers are going to be moving payments in-aisle and pretty much anywhere instore. Does facial recognition make sense? One vendor on Tuesday (April 23) tried, with a system that allows facial recognition to unlock a refrigerator, which determines which products are removed based on weight.

Although the current version of the system has serious technical limitations, the potential is probably greater for facial recognition than any other technology. Unlike PIN, cardswipes or any other form of biometrics, facial recognition has the promise to do far more than verify identity, including guessing at emotional state, gender, age and other attributes. Selling suntan lotion? How about the ability to identify shoppers with deep tans? Want to be able to tailor suggestions made to first-time shoppers based on gender or age? With a thermal scan comes the ability to pitch hot cocoa to shoppers whose skin is especially cold or ice-cold lemonade to those whose skin is especially hot. (It could factor in the outside temperature so that it doesn’t confuse someone who has been working in the sun with someone who is just running a fever. And if that shopper does have a fever, how about 50 cents off Tylenol?)

Online sales taxes are marching toward reality much faster than anyone would have expected even a month ago. The “Marketplace Fairness Act,” which would allow states to collect sales taxes through online retailers even if the merchants don’t have physical operations in those states, is being debated in the U.S. Senate this week after being fast-tracked to avoid the Senate Finance Committee, where every previous version of the bill since 2001 has died.

One key element of the bill that won’t relieve the tax pinch but should simplify the implementation: A state can’t start requiring collection of the taxes until it provides free software that nails down all the complexities of that state’s sales tax structure, including automatic calculation of what rates are owed on which products for any location in the state.

When Gap looked at buy-online-pickup-in-store programs, the president of Gap digital saw the programs that others chains have as very efficient. Indeed, far too efficient. It allowed the shopper to come in, get their merchandise and leave far too quickly. The chain on June 10 will launch its answer to this feature, something called reserve-in-store, and it is designed to get the shopper into the store and to keep them there for as long as practical.

The most concrete difference between the two approaches is that Gap will force shoppers to pay for their goods in-store. After it’s reserved online, the customer has until the end of the next business day to show up, pay and pick it up. That’s good for getting shoppers deeper into the store, but not so good for guaranteeing the sale.

It is IT’s worst nightmare: What if an armed violent criminal hits the store and empties the safe and, perhaps unintentionally, takes our unencrypted data backup? It happened to Kmart at its store in Little Rock, Ark., according to a statement parent company Sears issued Monday (April 22). The statement, which came more than a month after the March 17 armed robbery, was forced by rules from the Health Insurance Portability and Accountability Act (HIPAA). At 8:55 PM, some 55 minutes after the store had closed, the intruder confronted the store’s assistant manager, who had just closed the store for the night, when he went into the parking lot to get to his car.

The thief stabbed the assistant manager’s car’s front driver side tire, presumably so that the assistant manager would be occupied when the thief pointed a silver gun at him and ordered him to open the store and to then open the safe, according to the police report. The thief helped himself to the contents, including about $6,000 in cash and that day’s backup disk. The disk, which was unencrypted and apparently not password-protected, included the full names, addresses, dates of birth, prescription numbers, prescribers, insurance cardholder IDs and drug names for some 788 customers, according to Sears.

A proposed law to let states collect online sales tax was fast-tracked by the U.S. Senate on Thursday (April 18). That means the measure, which was officially introduced on Tuesday (April 16), will bypass the Senate Finance Committee, whose chairman opposes the bill. A series of votes on the bill will likely begin this week. The bill, known as the “Marketplace Fairness Act,” would allow states to require online retailers to collect sales tax, even if the e-tailer doesn’t have a physical presence in the state.

Different versions of the proposal have been introduced in Congress for years, but all have died without a floor vote. Senate Majority Leader Harry Reid used a special process under Senate rules to bypass the usual procedure. The proposal showed some life last month when it passed a test vote 75-24 during the budget debate. A big difference this time around: Amazon.com (NASDAQ:AMZN), previously the biggest opponent of Congressional approval for online sales-tax collection, now supports the measure.

When Amazon was awarded a patent this week to allow for anonymous online purchases—anonymous from shopper to shopper, not anonymous to Amazon—it could be the world’s largest e-tailer taking its next step into payments. The actual money part of the payments are still to be handled through the same means Amazon does today—payment card, bank account debits, gift cards, Amazon Store Card, etc.—so it’s not about Amazon becoming a processor. What it does, though, is add a layer on top to allow consumer-to-consumer transactions to be done without sharing private information with strangers. (Or, much worse than strangers, relatives.)

When this approach would make sense depends on the nature of the transaction. If the purchase involves the seller sending a physical product to the recipient, the recipient has little choice but to reveal name and street address. But for digital purposes, it could work well. And it might even work with physical shipments, assuming the recipient uses a post office box or some similar alternative.

On Monday (April 15), the U.S. Federal Trade Commission (FTC) cut a deal with some manufacturers whereby they agreed not to include “phone home” software, which would tell the leasing company the address of the computer or other device without the express consent of the lessee. The retail bottom line: All of those apps you’re using to gather shopper information may now legally require very specific notices. That, plus the always-feared opt-out for gathering any geolocation data. Uh-oh.

The FTC consent decree involves shoppers who lease computer equipment and other devices equipped with GPS tracking or other tracking software, pens legal columnist Mark Rasch. If a consumer fails to make a scheduled payment, or if they default on the terms of the contract, the leasing company would activate the software, which could do things like turn on the cameras on the computer, capture keystrokes on the computer, or use either Internet protocol or GPS tracking to determine the exact location of the computer. In this way, the retailer would be able to engage in a form of “electronic repossession” of the device, either shut it down completely, or sending someone in to actually physically retrieve the device.